Brewer v. Bureau of Indian Affairs, 1997 DSD 1

ALVINA BREWER,
Plaintiff,
v.
THE BUREAU OF INDIAN AFFAIRS
of the Department of the Interior, United States Government,
Defendant.
[1997 DSD 1]

United States District Court
District of South Dakota - Western Division
CIV. 96-5045

MEMORANDUM OPINION AND
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

Filed Jan 13, 1997.

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Plaintiff is a retired and re-employed employee of the Bureau of Indian Affairs (BIA), Pine Ridge Agency for Education, at the girl’s dormitory of the Pine Ridge High School. On May 29, 1996, plaintiff commenced this action to recover back pay wrongfully withheld from her wages. The original complaint alleged claims against Laurence T. Lorenz, the Director of the Office of Personnel Management; Norma Tibbits, William Gipp, and Basil Brave Heart, employees or former employees of the BIA in their official and individual capacities; the BIA of the Department of the Interior; the United States Government; and the Office of Personnel Management.

[¶2]  On October 11, 1996, defendants filed a motion to dismiss for lack of subject matter jurisdiction based on the following grounds: (1) plaintiff has not alleged any statute which waives the sovereign immunity of the United States with respect to her claims; (2) plaintiff has failed to plead either statutory waivers or specific exhaustion of administrative remedies which would be prerequisite to suit under the Administrative Procedure Act (APA) or the Civil Service Reform Act (CSRA); and (3) CSRA provides the exclusive remedy for federal employees claiming losses incurred in connection with federal employment and pay. Plaintiff has responded.

[¶3]  On October 15, 1996, prior to the filing of an answer by defendants, plaintiff filed a motion to amend complaint together with a copy of the amended complaint dismissing all defendants except the BIA of the Department of the Interior, United States Government. On December 17, 1996, the Court granted leave to amend. However, as demonstrated below, the amended pleading fails to cure the jurisdictional deficiencies regarding the remaining governmental defendant and therefore does not defeat defendant’s motion to dismiss. See generally Norbeck v. Davenport Community School Dist., 545 F2d 63, 70 (8th Cir. 1976) (concluding that it was not an abuse of discretion to deny a party the right to amend where the allegations contained in the amended complaint did not remedy the deficiencies present in the original complaint).

FACTS

[¶4]   In her amended complaint, plaintiff alleges that in 1962 she was originally employed by defendant BIA as an educational aide in the girls’ dormitory at Pine Ridge High School. See Amended Complaint at ¶ 4. In 1984 she became the dormitory manager and continued said position until her retirement on January 1, 1988. Id. at ¶ 5. Thereafter, the BIA requested plaintiff to return to her position as dormitory manager and as part of the inducement for her return, the BIA promised to seek payment of her full salary without deduction for her annuity. Id. at ¶¶ 7-8.1. In the event that it was not then possible for her to receive her full salary without deduction, plaintiff alleges that the BIA promised to seek payment of her full salary without deduction for her annuity at such time as it became possible to do so. See Plaintiff’s Amended Complaint at ¶ 10.{fn1} Furthermore, as part of the inducement for her return, the BIA promised to inform her of any change in the law which would permit her to receive her full salary without deduction from her annuity in the event that she was not eligible for full salary without deduction upon her re- employment. Id. at ¶ 9. Plaintiff alleges that based upon these promises and commitments, she agreed to return to the BIA. Id. at ¶ 11.

[¶5]  Thereafter, unbeknownst to plaintiff, Congress enacted the Federal Employees Pay Comparability Act of 1990 (FEPCA),2. Pub.L. 101-509, Title V. Nov. 5, 1990, 104 Stat. 1427 (5 USC §§ 3132, 3304a, 3324, 3326, 3405, 3594, 4502, 4505a, 4521, 4521 note, 4522-23, 5102, 5104, 5108, 5109, 5301, 5301 note, 5302, 5303, 5303 notes, 5304, 5304 note, 5304a, 5305, 5305 notes, 5306-8, 5311, 5313-16, 5318, 5331, 5333, 5335, 5361, 5363, 5371, 5372, 5372 note, 5372a, 5373, 5367, 5376 note, 5377, 5378, 5378 note, 5382, 5383, 5391, 5392, 5403, 5405, 5524a, 5532, 5541, 5541 note, 5542-45, 5547, 5595, 5706b, 5723, 5753-55, 5901-3, 8335, 8335 note, 8344, 8425, 8431, 8468, 8476); Pub.L. 102-378, § 3, Oct. 2, 1992, 106 Stat. 1355 (5 USC §§ 5304 note, 5305 note, 5378 note, 5545); Pub.L. 103-89, § 3(b)(2), Sept. 30, 1993, 107 Stat. 982 (5 USC § 5304 note); Pub.L. 103-123, Title VI, §628, Oct. 28, 1993, 107 Stat. 1266 (5 USC § 5305 note); and Pub.L. 103-178, Title III, § 303(a), Dec. 3, 1993, 107 Stat. 2034 (5 USC § 5305 note).{fn2} which permitted exceptions to the reductions in pay for both emergency employment purposes, as well as for exceptional difficulty in recruiting or retaining a qualified employee. Id. at ¶ 12. Plaintiff contends that the BIA breached its obligation to inform plaintiff of this change in law. Id. at ¶ 13. She further alleges that the BIA also failed to provide copies of the Federal Personnel Manual System Notices and Manual changes to her in a timely manner, which would have informed her of the changes in the law and regulations permitting her to obtain her annuity as well as her earned salary. Id. at ¶ 14.

[¶6]  In December of 1992, plaintiff became aware of the changes brought about by FEPCA, informed her supervisors of said changes, and submitted her request to obtain her salary without deduction of her annuity. Id. at ¶¶ 15-16. On August 23, 1994, nearly two years after plaintiff submitted her request, the Office of Personnel Management agreed plaintiff was entitled to and qualified for her full salary without deduction for her annuity. Id. at ¶¶ 17-18. Plaintiff alleges that defendant has arbitrarily and capriciously failed and refused to pay her the salary which was deducted from her earnings from the effective date of FEPCA through August 23, 1994, which amounts to approximately $35,000 plus interest.3. The Court arrived at the $35,000 amount by multiplying the number of pay periods from November 5, 1990, through August 23, 1994, which is approximately 100 by $350, which is the amount plaintiff alleges defendant withheld each pay period. See Plaintiff’s Responsive Brief at Appendix A, pg. 3. Furthermore, approximately $15,400 plus interest was allegedly withheld from the date of plaintiff’s request for a waiver of deductions on December 18, 1992, through August 23, 1994. This figure was arrived at by multiplying the number of pay periods from December 18, 1992, through August 23, 1994, which is approximately 44, by the $350 figure.{fn3} Id. at ¶ 19. Plaintiff asserts that she has exhausted all available administrative remedies. Id. at ¶ 20. Finally, plaintiff alleges jurisdiction pursuant to 28 USC 1331 and FEPCA. Id. at ¶ 3.

STANDARD OF REVIEW

[¶7]  Subject matter jurisdiction is a threshold issue which must be assured in every federal action. Kronholm v. Federal Deposit Ins. Corp., 915 F2d 1171, 1174 (8th Cir. 1990) (citing Barclay Square Properties v. Midwest Fed. Sav. & Loan, 893 F2d 968, 969 (8th Cir. 1990)). According to the Eighth Circuit Court of Appeals,

A court deciding a motion under Rule 12(b)(1) must distinguish between a “facial attack” and a “factual attack.” In the first instance, the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6). The general rule is that a complaint should not be dismissed “‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’”4. A plaintiff’s claim should not be dismissed for failure to state a claim unless it is patently clear that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. McCormack v. Citibank, N.A., 979 F2d 643, 646 (8th Cir. 1992); Murphy v. Lancaster, 960 F2d 746, 748 (8th Cir. 1992); and 5A Charles A. Wright & Arthur R. Miller Federal Practice & Procedure § 1357, at 325 (1990) (quoting Conley v. Gibson, 355 US 41, 45-46, 78 SCt 99, 102, 2 LEd 2d 80 (1957)). For purposes of a motion to dismiss for failure to state a claim, all well-pleaded factual allegations contained in plaintiff’s complaint are taken as true. McCormack, 979 F2d at 646; Murphy, 960 F2d at 748; and 5A Wright & Miller Federal Practice & Procedure § 1357, at 304. Because a motion pursuant to Rule 12(b)(6) tests the formal sufficiency of the plaintiff’s statement of a claim for relief, as opposed to the merits of such a claim, motions pursuant to Rule 12(b)(6) must be read in light of Fed. R. Civ. P. 8(a), which sets forth the requirements for pleading a claim. 5A Wright & Miller Federal Practice & Procedure § 1356, at 294-96. Rule 8(a) states in pertinent part that “[a] pleading which sets forth a claim for relief, ... shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief... .”

{fn4} In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.

Osborn v. United States, 918 F2d 724, 729-730 n.6 (8th Cir. 1990) (citations omitted).

[¶8]  Although defendant does not explicitly state whether its Rule 12(b)(1) motion presents a facial or factual attack, the distinction can be determined from defendant’s argument. The basis for defendant’s argument is derived from the allegations set forth in plaintiff’s complaint. Therefore, defendant’s motion presents a facial attack in which case the plaintiff’s complaint will not be dismissed unless it appears beyond doubt that she cannot prove any set of facts in support of her claim which would entitle her to relief.

DISCUSSION

[¶9]  The doctrine of sovereign immunity provides that the United States cannot be sued unless it gives its consent, and this consent defines a court’s jurisdiction to hear a particular case. United States v. Sherwood, 312 US 584, 586, 61 SCt 767, 769, 85 LEd 1058 (1941). Pursuant to the Tucker Act,

The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.

28 USC § 1491. In addition, the district court does have concurrent jurisdiction to grant monetary relief on claims under $10,000. See 28 USC § 1346(a)(2). See generally United States v. Mitchell, 463 US 206, 212-18, 103 SCt 2961, 2965-69, 77 LEd2d 580 (1993) (recognizing that while the Tucker Act constitutes a waiver of sovereign immunity it does not standing alone create any substantive right enforceable against the United States for money damages).

[¶10]  Plaintiff’s claim is essentially one against the United States for the payment of damages in the amount of $35,000 plus interest. Because the claim is in excess of $10,000, it is within the exclusive jurisdiction of the United States Court of Federal Claims. See Mullally v. United States, 95 F3d 12, 14 (8th Cir. 1996); Charles v. Rice, 28 F3d 1312, 1321-23 (1st Cir. 1994); Weeks Constr., Inc. v. Oglala Sioux Housing Auth., 797 F2d 668, 674-75 (8th Cir. 1986); State of Minnesota by Noot v. Heckler, 718 F2d 852, 857-58 (8th Cir. 1983); Sellers v. Brown, 633 F2d 106, 107-08 (8th Cir. 1980); Polos v. United States, 556 F2d 903, 905 (8th Cir. 1977); Maxy v. Kadrovach, 696 FSupp 425, 429 (W.D. Ark. 1988).

[¶11]  Plaintiff alleges that jurisdiction of this court arises under 28 USC § 1331 and FEPCA.5. It is well settled that 28 USC § 1331 does not provide a waiver of sovereign immunity for award of monetary relief. See generally United States v. Perry, 706 F2d 278, 279 (8th Cir. 1983) (“in the absence of a waiver of sovereign immunity, this statutory provision [§ 1332] affords no jurisdictional grounds.”); Gochnour v. Marsh, 754 F2d 1137, 1138 (5th Cir. 1985); Alamo Navajo v. Andrus, 664 F2d 229, 233 (10th Cir. 1981); and Beller v. Middendorf, 632 F2d 788, 790 (9th Cir. 1980). Plaintiff is seeking review under 28 USC § 1331, rather than review under 5 USC § 702 of the Administrative Procedure Act (APA). Even so, the 1976 amendment to the APA providing for review of agency action clearly does not waive sovereign immunity as a bar to actions requesting monetary relief against the United States. See 5 USC § 702; Bruce v. United States, 621 F2d 914, 918 (8th Cir. 1980) (“It is now well established that the Administrative Procedure Act, 5 USC § 702, does not provide an independent basis for subject matter jurisdiction.”); and Califano v. Sanders, 430 US 99, 97 SCt 980, 51 LEd 2d 192 (1977) (APA is not an independent source of federal jurisdiction).{fn5} See Plaintiff’s Amended Complaint at ¶ 3. However, “the use of [either] of these statutes to entertain a claim and to grant a judgment for damages greater than $10,000 would infringe on the exclusive jurisdiction of the Court of Claims.” Polos, 556 F2d at 905 n.5 (citing Carter v. Seamans, 411 F2d 767, 771 (5th Cir. 1969)) (noting that the Tucker Act supplies jurisdiction for claims for money damages against the United States only in the Court of Claims and additional waiver of sovereign immunity may be found in the Back Pay Act, 5 USC § 5596). See also Weeks, 797 F2d at 675 (citing Marcus Garvey Square, Inc. v. Winston Burnett Construction Co. of California, Inc., 595 F2d 1126, 1132 (9th Cir. 1979); DSI Corp. v. Secretary of Housing and Urban Development, 594 F2d 177, 180 (9th Cir. 1979)) (recognizing that waivers of sovereign immunity other than the Tucker Act should not apply when the United States is the real party in interest); Mitchell v. United States, 930 F2d 893, 896 n.3, 897 (Fed. Cir. 1991) (determining that service member’s suit for back pay falls within Claims Court’s Tucker Act jurisdiction and does not lie in district court); Nero v. Cherokee Nation of Oklahoma, 892 F2d 1457, 1464-65 (10th Cir. 1989); Com. of Mass. v. Secretary of H.H.S., 816 F2d 796, 799-800 (1st Cir. 1987); Spectrum Leasing Corp. v. United States, 764 F2d 891, 895 n.8 (D.C. Cir. 1985); Clark v. United States, 691 F2d 837, 839 (7th Cir. 1982). But see Ward v. Brown, 22 F3d 516, 520-21 (2d Cir. 1994) (finding that the Back Pay Act provides an independent waiver of sovereign immunity to vest jurisdiction in the federal district court). Therefore, plaintiff’s attempt to build subject matter jurisdiction in this Court are unavailing, and her claim shall be dismissed for lack of jurisdiction.

[¶12]  The Court is cognizant of its authority pursuant to 28 USC §16316. 28 USC §1631 provides as follows:

  Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred.{fn6} to transfer this matter to the United States Court of Federal Claims to cure want of jurisdiction if such transfer is found to be in the interests of justice. See Weeks, 797 F2d at 676 (remanding a case in which the district court failed to consider the option of exercising its discretion to transfer the case instead of dismissing it outright); Polos, 556 F2d at 905-906 (remanding a case in order for the district court to transfer the matter to the United States Court of Federal Claims). However, this Court declines to exercise its authority to transfer in the interests of justice because the United States Court of Federal Claims would most likely dismiss the action based on the Civil Service Reform Act of 1978 (CSRA), Pub.L. 95-454, Oct. 13, 1978, 92 Stat. 1111. See Mullally, 95 F3d at 14 (finding that a transfer would not be in the interest of justice because the Court of Federal Claims would most likely dismiss the claim).

[¶13]  In 1978 Congress overhauled the civil service system through enactment of the CSRA which prescribes the protections and remedies available to federal employees for personnel actions or injuries sustained in the context of personnel actions. See 5 USC §§ 1101-05, 1201-22, 2301- 05, 7501-14, and 7701-03; Lindahl v. OPM, 470 US 768, 773, 105 SCt 1620, 1624, 84 LEd2d 674 (1985) (recognizing that the CSRA “comprehensively overhauled the civil service system”). Because the remedies available to federal employees under the CSRA are exclusive, the CSRA bars suit for money damages under the Tucker Act. See United States v. Fausto, 484 US 439, 453, 108 SCt 668, 677, 98 LEd2d 830 (1988) (concluding that the CSRA repealed “the judicial interpretation of the Back Pay Act-or, if you will, the Back Pay Act’s implication-allowing review in the Court of Claims of the underlying personnel decision giving rise to the claim for backpay.”). See generally Schweiker v. Chilicky, 487 US 412, 108 SCt 2460, 101 LEd2d 370 (1988) (barring of money damages under Bivens); Bush v. Lucas, 462 US 367, 103 SCt 2404, 76 LEd2d 648 (1983) (barring of money damages under First Amendment claim); and Premachandra v. United States, 739 F2d 392, 394 (8th Cir. 1984) (barring of money damages under FTCA).

CONCLUSION

[¶14]  After reviewing the arguments presented by both parties, this Court finds that it lacks jurisdiction to reach the merits of plaintiff’s claim. Furthermore, it would not be in the interests of justice to transfer this matter to the United States Court of Federal Claims because said Court would most likely dismiss the action based on the CSRA. Accordingly, it is hereby

[¶15]  ORDERED that defendant’s motion to dismiss (Docket #6) is granted. A judgment of dismissal shall be issued forthwith.



United States v. Gay, 1997 DSD 2

UNITED STATES OF AMERICA,

Plaintiff,

v.

ROYCE GAY,

Defendant.

[1997 DSD 2]

United States District Court

District of South Dakota - Western Division

CR96-50078

MEMORANDUM OPINION AND ORDER

DENYING DEFENDANT’S MOTION TO SUPPRESS EVIDENCE

Filed Jan 13, 1997

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On September 19, 1996, defendant was indicted for possession of controlled substances with the intent to distribute, a violation of 21 USC § 841(a)(1). Defendant filed a motion to suppress all evidence seized as a result of a search of defendant’s residence on or about August 7, 1996, as well as information obtained from defendant by the pretrial services officer and information contained in the alcohol and drug evaluation obtained at the request of the defendant’s attorney and submitted to pretrial services. The motion was referred to Magistrate Judge Marshall P. Young who held a suppression hearing concerning the motion on November 6, 1996. Magistrate Judge Young’s findings and recommendations are that the motion be denied. See Docket #25.

FACTS

[¶2]  On August 6, 1996, Sergeant Floyd Wilcox received a citizen’s complaint from defendant’s former father-in-law, Larry Bettelyoun, indicating that defendant had recently received a large shipment of marijuana which he was selling from his house (Tr. 64-65).

[¶3]  On the morning of August 7, 1996, Officer Peter Plenty Bulls of the Oglala Sioux Tribe Public Safety Commission was approached by Caroline Bettelyoun at the police department on an unrelated matter concerning a domestic dispute (Tr. 8-9). She sought his assistance in the retrieval of her grandchild from defendant’s residence because her daughter Carrie Bettelyoun, defendant’s girlfriend, and the defendant were fighting (Tr. 9-10). Officer Plenty Bulls agreed to accompany Caroline to defendant’s residence in an attempt to keep the peace (Tr. 8-10).

[¶4]  Officer Plenty Bulls followed Caroline to defendant’s residence which was a trailer whereupon she knocked on the door (Tr. 9). Defendant opened the door and Caroline advised him that “I came to get my grandchild because you are fighting.” (Tr. 9-10). Officer Plenty Bulls testified that defendant said “okay” and turned into the residence so they followed (Tr. 9). Officer Plenty Bulls followed Caroline into the trailer without stating his purpose for being there (Tr. 10-11). They did not ask permission to come into the trailer; however, there was no protest or objection to their entering the trailer (Tr. 10).

[¶5]  Upon walking into the trailer, the officer was in between the kitchen and the living room (Tr. 12, 25). He immediately detected a strong odor of pot or marijuana (Tr. 12). He did a visual search for signs of a disturbance and observed what appeared to be broken dishes or cups on the kitchen floor (Tr. 12, 29). He further observed on the kitchen table in front of him an ashtray with some cigarette butts, which he suspected to be marijuana (Tr. 13). He confirmed that it was marijuana by picking up one of the cigarette butts and smelling it. Id. Thereafter, the officer questioned defendant about the marijuana and informed him that he was under arrest for possession of marijuana (Tr. 14, 28).

[¶6]  At approximately 9:39 a.m., Officer Plenty Bulls used defendant’s telephone to call the dispatcher to request a criminal investigator (Tr. 14-15). Thereafter, defendant’s mother, Colleen Bettelyoun, arrived at the trailer (Tr. 16, 28-29, 54). Defendant started to clean up a broken dish in the kitchen, whereupon the officer told him to stop (Tr. 29). Defendant then picked up several roaches from the ashtray on the table, ran outside, crushed them, and threw them away (Tr. 30, 63). Defendant was handcuffed and placed in the police car (Tr. 31). The officer went and retrieved two of the roaches from the porch area on the ground. Id.

[¶7]  Sergeant Floyd Wilcox arrived on the scene shortly thereafter (Tr. 15, 32). At approximately 10:25 a.m., Criminal Investigator Lloyd Wilcox of the Oglala Sioux Tribe Public Safety Commission also arrived (Tr. 16, 54, 58). Officer Plenty Bulls apprised the other two officers about the situation as it existed at that time including his detection of the strong marijuana odor, the marijuana butts in the ashtray, defendant’s sweeping of the domestic dispute evidence, and defendant’s attempt to throw the roaches outside (Tr. 55, 59-62). Sergeant Wilcox also advised C.I. Wilcox of the August 6, 1996, tip that defendant had received some marijuana (Tr. 55, 65).

[¶8]  Officer Plenty Bulls’ police log entry at 10:25 a.m. states, “Lloyd is here, he said we have probable cause to search the residence, we are in the process of doing that now.” (Tr. 33) (Hearing Exhibit 9). Officer Plenty Bulls testified that this statement meant that they were going to apply for a search warrant, that they did not search the residence other than a “sweep” search (Tr. 33). Before the application for a search warrant was undertaken, the officers reentered the trailer and conducted a “sweep” search to discover (1) the whereabouts of defendant’s girlfriend Carrie Bettelyoun; (2) whether the propane was turned on in the trailer; and (3) additional evidence (Tr. 19, 34, 36, 65). They observed seven marijuana cigarette butts and some marijuana particles and seeds in the wastebasket (Tr. 36, 58, 78). Officer Plenty Bulls testified that during the sweep he just looked, and he did not touch or move any items (Tr. 34). However, C.I. Wilcox testified that he opened up a kitchen cabinet door, found a brown paper bag which he opened, and discovered a large amount of marijuana in two baggies (Tr. 37, 56, 77). He then closed the bag placing it in its original place and shut the cabinet door. Id.

[¶9]  Next, C.I. Wilcox called Stanley Star Comes Out, a Criminal Investigator with the Oglala Sioux Tribe Public Safety Commission, from defendant’s residence in order to obtain a search warrant (Tr. 22). C.I. Wilcox testified that he advised C.I. Star Comes Out about the Plenty Bulls’ observations, including the marijuana cigarette butts, and also the fact that he believed there was a large amount of marijuana in the house, based upon what he was told and what he observed (Tr. 66-67). Although C.I. Wilcox told C.I. Star Comes Out about the baggies of marijuana he discovered in the closed cabinet, the search warrant affidavit signed by C.I. Star Comes Out only references the marijuana cigarette butts and not the large amount of marijuana found in the kitchen cabinet (Tr. 69-70).

[¶10]  At approximately 11:38 a.m., after the “sweep” search and the discovery of the two baggies in the kitchen cabinet, Carrie Bettelyoun was located (Tr. 35, 68). She signed, as a co-resident, a consent to search the house (Tr. 18, 56, 68). However, no search was apparently conducted pursuant to her consent (Tr. 18).

[¶11]  Chief Judge Pat Lee of the Oglala Sioux Tribal Court signed a search warrant based upon the affidavit filed by C.I. Star Comes Out (Tr. 47-48). The search warrant was executed at approximately 1:35 p.m. and the items found in the inventory, Exhibit 11, were secured (Tr. 22, 76). The first item in the inventory is the seven marijuana butts which were found in a wastebasket by Officer Plenty Bulls (Tr. 76) (Hearing Exhibit 11). The second item, marijuana cigarette butts seized and residue, were found outside the house by Officer Plenty Bulls after they had been tossed there by defendant. Id. The third item, the brown Hardware Hank’s sack with the baggies of marijuana, was observed in the kitchen cabinet by C.I. Wilcox prior to the search warrant. Id. The other items contained in the inventory including the float, marijuana cigarette, sandwich baggies clamps, address book, pipe, key, safe, contents, and money, were found in the search pursuant to the search warrant. Id.

[¶12]  At the suppression hearing, three exhibits were received pursuant to the defense claim of violation of defendant’s Fifth and Sixth Amendment rights when he talked to the pretrial services officer and underwent an alcohol and drug evaluation (Tr. 79). On the pretrial services notice to defendant which he signed, defendant indicated that he did not wish to have a lawyer during his interview. See Docket #22 (Exhibit #4). The other two exhibits are authorizations by defendant to release information to the pretrial services officer and to release confidential information on drug or alcohol abuse programs. See Docket #22 (Exhibit ##5, 6).

STANDARD OF REVIEW

[¶13]  The Eighth Circuit Court of Appeals has set forth the following procedure for a district court to undertake when reviewing a magistrate judge’s findings and recommendations.

Once a proper objection is made to a magistrate judge’s finding, the district court must review that finding de novo. Taylor v. Farrier, 910 F2d 518, 521 (8th Cir. 1990); 28 USC § 636(b)(1). “In conducting [de novo] review, the district court must, at a minimum, listen to a tape recording or read a transcript of the evidentiary hearing.” Branch v. Martin, 886 F2d 1043, 1046 (8th Cir. 1989).

Jones v. Pillow, 47 F3d 251, 252 (8th Cir. 1995). Upon review of the suppression hearing transcript and consistent with the following discussion, the Court accepts Magistrate Judge Young’s recommendation to deny defendant’s motion to suppress.

DISCUSSION

[¶14]  Defendant has filed a motion to suppress the following items: (1) all evidence seized as a result of a search of the defendant’s residence on or about August 7, 1996; (2) information obtained from defendant by the pretrial services officer in violation of his Fifth and Sixth Amendment rights; and (3) information contained in the alcohol and drug evaluation obtained at the request of defendant’s attorney and submitted to pretrial services, also in violation of his Fifth and Sixth Amendment rights.

[¶15]  A.  SUPPRESSION OF EVIDENCE

[¶16]  1.  INITIAL ENTRY

[¶17]  Defendant contends that Officer Plenty Bulls’ initial entry into defendant’s trailer was unjustified; thus, the plain view doctrine is inapplicable and there was no probable cause or basis for a search warrant. It is well understood that “‘[T]he Fourth Amendment has drawn a firm line at the entrance to the house.’” United States v. Vance, 53 F3d 220, 221-22 (8th Cir. 1995) (quoting Payton v. New York, 445 US 573, 590, 100 SCt 1371, 1382, 63 LEd2d 639 (1980)). Law enforcement may not cross that line absent a search warrant unless there is consent to the search, search incident to a lawful arrest, or exigent circumstances. United States v. Selberg, 630 F2d 1292, 1294 (8th Cir. 1980). Magistrate Judge Young determined that the initial entry into the trailer was justified under both the consent and exigent circumstance exceptions to the warrant requirement.

[¶18]  Law enforcement may search an area if they obtain a voluntary consent from someone possessing adequate authority over the area. United States v. Chaidez, 906 F2d 377, 380 (8th Cir. 1990). Furthermore, “a voluntary consent need not amount to a waiver, consent can be voluntary without being an ‘intentional relinquishment or abandonment of a known right or privilege.’” Id. (citations omitted). The proper test for voluntariness is “whether the totality of the circumstances demonstrates that the consent was voluntary.” Id. The prosecution has the burden of proving voluntariness by a preponderance of the evidence. Id. “‘The touchstone of the Fourth Amendment is reasonableness.’” United States v. Sanchez, 32 F3d 1330, 1335 (8th Cir. 1994) (quoting Florida v. Jimeno, 500 US 248, 250, 111 SCt 1801, 1803, 114 LEd2d 297 (1991)). Thus, if it was reasonable for Officer Plenty Bulls to have concluded that defendant voluntarily consented to his entry into the trailer, the search passes muster under the Fourth Amendment. Sanchez, 32 F3d at 1335. Under the totality of the circumstances, this Court finds that the officer reasonably concluded that defendant voluntarily consented to his entry.

[¶19]  Officer Plenty Bulls accompanied Caroline Bettelyoun to defendant’s trailer to keep the peace. There was no evidence presented at the suppression hearing indicating that at the time Officer Plenty Bulls entered the trailer, he had any prior knowledge or reason to believe that defendant was involved in illegal drug activities, as to draw an inference that the officer was there for any ulterior motive. The evidence only indicates that Sergeant Wilcox had knowledge concerning the tip from Larry Bettelyoun from the previous day (Tr. 64-65). When Caroline, accompanied with Officer Plenty Bulls, knocked on defendant’s door, defendant opened the door and Caroline advised him that “I came to get my grandchild because you are fighting.” Officer Plenty Bulls testified that the defendant said “okay” and turned into the residence so they followed. See United States v. Shabazz, 883 FSupp 422, 426 (D. Minn. 1995) (citing United States v. Turbyfill, 525 F2d 57, 59 (8th Cir. 1975)) (defendant’s opening of a door constituted an implied invitation to enter); United States v. Donlon, 909 F2d 650, 655 (1st Cir. 1990) (determining that defendant’s opening of a screen door equated to permission to enter).

[¶20]  Officer Plenty Bulls’ testimony further indicates that defendant was fully aware that the officer was with Caroline since he was standing next to her at the door (Tr. 12). Although Officer Plenty Bulls did not specifically state his purpose for being there, defendant knew that they were there to get the child from Caroline’s initial statement to defendant. While it is also true that the officer did not specifically request permission to come into the trailer, defendant left the door open, said “okay,” and there was no protest or objection to either of them entering the trailer. See generally Shabazz, 883 FSupp at 427; United States v. Armstrong, 16 F3d 289, 295 (8th Cir. 1994) (apprising suspect of his right to refuse to consent to search, although important factor in determining voluntariness of consent, is not required for consent to be voluntary). Furthermore, there is no evidence that threats, show of force, or restraints were employed by the officer. Therefore, under the totality of the circumstances, this Court finds that the officer reasonably concluded that defendant voluntarily consented to his entry.

[¶21]  The Court further finds that in addition to defendant’s voluntary consent to enter, the officer had a right to enter under the exigent circumstances exception to the warrant requirement. According to the Eighth Circuit Court of Appeals, exigent circumstances exist “when law enforcement officials have a ‘legitimate concern for the safety’ of themselves or others.” Vance, 53 F3d at 222 (citing United States v. Antwine, 873 F2d 1144, 1147 (8th Cir. 1989)). See generally Selberg, 630 F2d at 1295; Mincey v. Arizona, 437 US 385, 392, 98 SCt 2408, 2413, 57 LEd2d 290 (1978) (“Numerous state and federal cases have recognized that the Fourth Amendment does not bar police officers from making warrantless entries and searches when they reasonably believe that a person within is in need of immediate aid.”). A reasonable warrantless entry is justified when there is a reasonable fear of harm. Vance, 53 F3d at 222 (citations omitted). The evidence of record supports the conclusion that Officer Plenty Bulls’ entry was justifiable on safety of others grounds.

[¶22]  On the morning of August 7, 1996, Officer Plenty Bulls was approached by Caroline Bettelyoun at the police department concerning a domestic dispute. She sought his assistance in the retrieval of her grandchild from defendant’s residence because her daughter Carrie Bettelyoun, defendant’s girlfriend, and the defendant were fighting. Officer Plenty Bulls agreed to accompany Caroline to defendant’s residence in an attempt to keep the peace. The officer had a legitimate concern for the safety of the grandchild, as well as for Carrie Bettelyoun who was reportedly fighting with defendant, and Caroline Bettelyoun who was attempting to retrieve her grandchild. It was not unreasonable for the officer to follow Caroline into defendant’s trailer in order to keep the peace.

[¶23]  2.  Plain View Doctrine

[¶24]  In United States v. Hughes, 940 F2d 1125 (8th Cir. 1991) the Eighth Circuit set forth the following three-prong test for a valid plain view seizure:

(1)  “the officer did not violate the Fourth Amendment in arriving at the place from which the evidence could be plainly viewed,” (2) the object’s incriminating character is immediately apparent, and (3) the officer has “a lawful right of access to the object itself.” Horton v. California, 496 US 128, 136-37, 110 SCt 2301, 2308, 110 LEd2d 112 (1990).

Id. at 1126, 1127 (quoted in United States v. Hatten, 68 F3d 257, 260 (8th Cir. 1995)). The purported plain view seizure of the marijuana cigarette butts in the ashtray meets all three requirements.

[¶25]  First, as previously set forth, Officer Plenty Bulls’ initial entrance into the trailer was lawful. Second, the incriminating nature of the evidence was immediately apparent. Upon walking into the trailer, placing him in between the kitchen and the living room, the officer immediately detected a strong odor of pot or marijuana. He did a visual search for signs of a disturbance and observed what appeared to be broken dishes or cups on the kitchen floor. He further observed on the kitchen table in front of him an ashtray with some cigarette butts, which he suspected to be marijuana. He confirmed that it was marijuana by picking up one of the cigarette butts and smelling it.

[¶26]  Third, Officer Plenty Bulls had a lawful right of access to the ashtray on the kitchen table. At the suppression hearing, there was no evidence presented that the officer opened containers or otherwise engaged in an unlawful search to discover the marijuana cigarette butts in the ashtray. The kitchen table with the ashtray was immediately to his right when he first stepped into the trailer doorway, as there was no divider between the living room and the kitchen areas (Tr. 25-26). Thus, the ashtray was clearly in plain view. Therefore, this Court concludes that the plain view seizure of the marijuana cigarette butts was valid and obtained in accordance with defendant’s Fourth Amendment rights.

[¶27]  However, the evidence seized during the sweep search was not pursuant to a valid plain view seizure. At the time of the sweep search, defendant was already arrested, handcuffed, placed in the patrol car, and probably on the way to the jail. It was not unreasonable for the police officers to reenter the trailer to turn off the propane in the trailer and to determine the whereabouts of defendant’s girlfriend Carrie Bettelyoun in light of the previous report that she had been fighting with defendant. Thus, any evidence that the officers inadvertently came across while searching for the propane shutoff or for Carrie Bettelyoun would be justifiable under the plain view doctrine. See generally Coolidge v. New Hampshire, 403 US 443, 465-66, 91 SCt 2022, 2037-38 (1971). However, C.I. Wilcox clearly did not inadvertently discover the baggies of marijuana when he opened up a kitchen cabinet door, found a brown paper bag which he opened, and discovered a large amount of marijuana in two baggies. Hughes, 940 F2d at 1126-27. The discovery of the seven marijuana cigarette butts in the wastepaper basket fails under the same analysis. The purpose of the officers’ reentry was to search for the propane shutoff and Carrie Bettelyoun, not for additional evidence prior to the arrival of a search warrant.

[¶28]  3.  Search Warrant

[¶29]  C.I. Wilcox called C.I. Star Comes Out in order to obtain a search warrant. C.I. Wilcox testified that he advised C.I. Star Comes Out about Officer Plenty Bulls’ observations, including the marijuana cigarette butts in the ashtray, and also the fact that he believed there was a large amount of marijuana in the house, based upon what he was told and what he observed. Although C.I. Wilcox told C.I. Star Comes Out about the baggies of marijuana he discovered in the closed cabinet, the search warrant affidavit signed by C.I. Star Comes Out only references the partially smoked marijuana cigarette butts and not the large amount of marijuana found in the kitchen cabinet. See Docket #22 (Exhibit #1) (Affidavit for Search Warrant). Chief Judge Pat Lee of the Oglala Sioux Tribal Court signed a search warrant based upon the affidavit filed by C.I. Star Comes Out. After a review of the affidavit for the search warrant, the Court concludes that there was sufficient probable cause for Judge Pat Lee to issue the warrant.1 As noted by Magistrate Judge Young, the marijuana cigarette butts in the ashtray, plus Larry Bettelyoun’s tip the previous day, formed the basis for the officers’ determination that there was sufficient probable cause to request a search warrant.{fn1} Therefore, the items which were discovered in the search pursuant to the search warrant which include the float, marijuana cigarette, sandwich baggies clamps, address book, pipe, key, safe, contents, and money were validly seized by law enforcement.

[¶30]  4.  Inevitable Discovery Doctrine

[¶31]  The government contends that the evidence discovered during the sweep search, which includes the two baggies of marijuana in the kitchen cabinet and the marijuana in the wastebasket, falls under the doctrine of inevitable discovery. As stated by Judge Wollman, “[t]he inevitable discovery exception to the exclusionary rule articulated in Nix v. Williams, 467 US 431, 440-50, 104 SCt 2501, 2507-12, 81 LEd2d 377 (1984), allows the government to show by a preponderance of the evidence that the evidence seized would have been discovered in any event by lawful means. Id. at 444, 104 SCt at 2509.” United States v. Halls, 40 F3d 275, 276 (8th Cir. 1994). The Court finds that the government has shown by a preponderance of the evidence that the marijuana in the kitchen cupboard and the wastebasket would have been discovered in any event during the lawful search pursuant to the search warrant.

[¶32]  Officer Plenty Bulls’ initial entry was lawful based upon consent and exigent circumstances, and the marijuana cigarette butts in the ashtray were lawfully seized under the plain view doctrine. These marijuana cigarette butts formed the basis for probable cause for the search warrant. As set forth by Magistrate Judge Young, the fact that the officers were applying for a search warrant and did not mention the unlawful search of the kitchen cabinet in the affidavit for the search warrant set in motion a search warrant that would have inevitably discovered the marijuana in the cabinet and wastebasket. See Vance, 53 F3d at 222; Murray v. United States, 487 US 533, 541-44, 108 SCt 2529, 2535-36, 101 LEd2d 472 (1988). Accordingly, defendant’s motion to suppress evidence seized at defendant’s trailer is denied.

[¶33]  B.  PRETRIAL SERVICE INTERVIEW

[¶34]  Defendant contends that the initial interview conducted by the pretrial services officer violate the defendant’s Fifth Amendment rights against self-incrimination or his Sixth Amendment right to counsel. On the pretrial services notice informing him of his rights which defendant signed, defendant indicated that he did not wish to have a lawyer during his interview. See Docket #22 (Exhibit #4). Defendant suggests that Minnick v. Mississippi, 498 US 146, 111 SCt 486, 112 LEd2d 489 (1990), precludes the government from any additional contact with the defendant where the defendant has invoked his right to remain silent and right to counsel. However, explicitly exempt from Miranda’s coverage are those “questions to secure the ‘biographical data necessary to complete booking or pretrial services.’” Pennsylvania v. Muniz, 496 US 582, 601, 110 SCt 2638, 2650, 110 LEd2d 528 (1990) (citations omitted); United States v. Reyes, 908 F2d 281, 287-88 (8th Cir. 1990) (inquiry about suspect’s name and other routine questions not interrogation because information elicited only for purposes of obtaining pretrial release). Based on the foregoing, defendant’s request to suppress information obtained from defendant and contained in the pretrial services bail report is denied.

[¶35]  C.  PENNINGTON COUNTY ALCOHOL AND DRUG EVALUATION

[¶36]  Defendant requests that all parts of the Pennington County Sheriff’s Office City/County Alcohol and Drug Program Evaluation dated October 10, 1996, except those portions submitted as an exhibit at the pretrial detention hearing on October 16, 1996, be suppressed. Defendant contends that the evaluation was obtained at defense counsel’s request and was inappropriately released by the Pennington County Sheriff’s Office to the US Probation Office without the consent of defendant or defense counsel or without notice to them, in violation of defendant’s Fifth and Sixth Amendment rights.

[¶37]  On September 24, 1996, defendant signed both an “AUTHORIZATION TO RELEASE INFORMATION TO PRETRIAL SERVICES OFFICER” and a specific “AUTHORIZATION TO RELEASE CONFIDENTIAL INFORMATION (DRUG OR ALCOHOL ABUSE PROGRAMS) UNRESTRICTED COMMUNICATION.” See Docket #22 (Exhibit ##5, 6). The authorization to release information to the pretrial services officer included medical records, as well as psychological and psychiatric records. Moreover, the specific release authorized the release of confidential information on drug or alcohol abuse programs unrestricted communication. Accordingly, defendant’s request to suppress the Pennington County Drug and Alcohol Evaluation is denied.

CONCLUSION

[¶38]  Based upon the above discussion, defendant’s motion to suppress must be denied. Officer Plenty Bulls’ initial entry was lawful based upon consent and exigent circumstances. Having established that the officer had a right to be in the trailer, the plain view seizure of the marijuana cigarette butts in the ashtray on the kitchen table was appropriate under the plain view doctrine. This discovery formed the basis for law enforcement to obtain a search warrant based on C.I. Star Comes Out’s valid affidavit of probable cause which did not include reference to the marijuana discovered in the kitchen cabinet during the sweep search. The search pursuant to the search warrant would have resulted in the discovery of the two marijuana baggies in the kitchen cabinet and the marijuana in the wastebasket even if law enforcement officials had not already been alerted to their existence. In addition, information obtained from the initial pretrial service interview and that from the Pennington County Drug and Alcohol Evaluation was lawfully obtained pursuant to the pretrial services notice and the authorizations signed by defendant. Accordingly, it is hereby

[¶39]  ORDERED that the Magistrate Judge’s findings and recommendations are accepted to the extent they are consistent with the above discussion and defendant’s motion to suppress (Docket #16) is denied.



United States v. Van Brocklin, 1997 DSD 3

UNITED STATES OF AMERICA,

Plaintiff,

v.

DARRELL DEAN VAN BROCKLIN;

Travis Edward Atterberry; Lawrence Kermit Pyatt,

A/k/a Kermit Lawrence Pyatt; and Susan Kay Hastings,

Defendants.

[1997 DSD 3]

United States District Court

District of South Dakota - Western Division

CR. 94-50067

MEMORANDUM OPINION

APPROVING FINDINGS AND RECOMMENDATIONS

Filed Jan 15, 1997

RICHARD H. BATTEY, Chief Judge

PROCEDURAL BACKGROUND

[¶1]  Pursuant to 28 USC § 636(b)(1)(B), this case was referred to Magistrate Judge Marshall P. Young for the purpose of submitting to the Court proposed findings and recommendations for the disposition of this case. On October 17, 1996, Magistrate Judge Young filed findings and recommendations relating to the claims of Thomas and Frances Buczek, James and Holly Van Brocklin, Arlan and Jean DeJong, and Keith and Marcia Moon. (Docket #641).

[¶2]  Claimants claim an interest in the property pursuant to a Proposal and Acceptance agreement signed by the claimants and John Charlson on behalf of Custom Craft Home Center, Inc. (Custom Craft). Claimants also believe that they have a possessory interest in the property involved in this claim involving four townhouses located in Lawrence County. They also claim they have an equitable interest based upon the material and labor furnished.

[¶3]  The townhouses which are the subject of this action were constructed on land acquired by Custom Craft from Darrell Van Brocklin and Cheryl Van Brocklin. Custom Craft was a corporation of which Darrell Van Brocklin and Cheryl Van Brocklin owned fifty percent and John and Cather Charlson owned fifty percent. It is the interest of Darrell Van Brocklin that the government seeks in this forfeiture arising out of Darrell Van Brocklin’s multiple convictions. See Deposition of Cheryl Van Brocklin, Ex. 10, July 30, 1996, Docket #602.

[¶4]  Petitioners were given notice of their right to object to the findings and recommendations. According to the Eighth Circuit Court of Appeals, “[O]bjections must be timely and specific to trigger de novo review by the District Court of any portion of the magistrate’s report and recommendations.” Thompson v. Nix, 897 F2d 356, 357-58 (8th Cir. 1990). On October 28, 1996, objections were timely filed to the findings and recommendations regarding Custom Craft, Thomas and Frances Buczek, James and Holly Van Brocklin, Arlan and Jean DeJong, and Keith and Marcia Moon. (Docket #658). On November 6, 1996, the government filed its response to the claimants’ objections. (Docket #662). Therefore, a de novo review is triggered by this Court pursuant to 28 USC § 636(b)(1). In performing a de novo review of the record in this case, this Court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.” See id.

[¶5]  The issue is whether the Proposal and Acceptance creates a valid, binding contract between Custom Craft and the prospective homeowners. Applying South Dakota law, the magistrate judge stated that for a contract to be valid involving the sale of land it must satisfy the statute of frauds. To satisfy the statute of frauds the agreement must “contain all material terms and conditions of the oral agreement between the parties.” The magistrate judge noted that at the hearing the parties who testified stated that “the Proposal and Acceptance did not define the terms of the agreement between the prospective homeowners and Custom Craft but instead was prepared to assist Custom Craft in obtaining construction loan financing from Norwest Bank.” There was otherwise no building contract as such. Magistrate Judge Young stated that South Dakota does not recognize a statute of frauds exception for part performance. The magistrate judge concluded that “[b]ecause the Proposal and Acceptance was not a valid contract between the parties defining the terms and conditions of the construction of the townhouses and because there is no consideration and no meeting of the minds, it is my finding and recommendation that it does not create a valid lien against the premises.” It was also pointed out by Magistrate Judge Young that petitioners may be entitled to mitigation after the sale of the property if the “sweat equity” of the petitioners which arose after the filing of the lis pendens by the government increased the value of the premises.

FACTUAL BACKGROUND

[¶6]  Custom Craft obtained four construction mortgages so that it could build four townhouses for its employees, James Van Brocklin, Keith Moon, Thomas Buczek, and Arlan DeJong. Norwest Bank has a first mortgage on each townhouse. The claimants completed a form entitled “Proposal and Acceptance.” These documents were completed in order to provide documentation so that Custom Craft could obtain financing for the proposed townhouse project. (TR 18:5-19:5; 23:22-24:1). The Proposal and Acceptance of Thomas and Frances Buczek was dated November 5, 1993. The Proposal and Acceptances of James and Holly Van Brocklin and Arlan and Jean DeJong were dated November 4, 1993. Keith and Marcia Moon’s Proposal and Acceptance agreement is undated.

[¶7]  In June of 1993, ground was broken on the townhouse project. (TR 9:20). Two months later, on August 18, 1994, Darrel Van Brocklin was indicted. Claimants were employees of Custom Craft and the government seeks forfeiture of Van Brocklin’s interest in Custom Craft. The claimants testified they were aware of Darrell Van Brocklin’s indictment. Four days later, on August 22, 1996, the government filed a lis pendens on the four townhouses. The claimants admit they had actual notice of the lis pendens. Actual notice not withstanding they would have received constructive notice pursuant to South Dakota Codified Laws Ch. 5-10. Despite actual notice of the filing of the lis pendens all the claimants continued to expend money and time in the preparation of the townhouses. Prior to the time of the filing of the lis pendens, the Moons had expended $500, the DeJongs had expended $798.40, and the Buczeks had expended $713. Following the filing of the lis pendens, the Moons, DeJongs, and Buczeks expended $12,009.66, $14,256.12, and $17,485.57, respectively.

[¶8]  Keith Moon testified that the townhouse project came about when he worked for John Charlson. At the time of the project, Charlson was a shareholder in Custom Craft. (TR 7:21-25). Charlson had told Mr. Moon that if he wanted to build his own home that he could do it at Custom Craft’s cost. (TR 8:1-2) It was several years later before Mr. Moon could proceed with the townhouse project.

[¶9]  According to Mr. Moon, the project started with the foundation work. (TR 9:23-25). The Moons were not responsible for pouring the foundation. (TR 10:20). Mr. Moon testified that the townhouse owners built all the aerial walls for the foundation work and did all the coating on the structures. (TR 9:23-25). Mr. Moon testified that his arrangement with Custom Craft was that he and his wife were supposed to do the “painting, trim work, carpet and vinyl, putting in the cabinets, and the dirt work, and things similar to these.” (TR 10:7-12).

[¶10]  Mr. Moon stated that the Proposal and Acceptance Agreement was “written so the bank for appraisal purposes [would] know what’s included in the project and what is not.” (TR 18:5-19:5). Mr. Moon said that the materials were Custom Craft’s obligation and any labor above $65,000 was Mr. Moon’s obligation. (TR 19:9-20:5). Exhibit 4, the Performance and Acceptance Agreement signed by the Moons and Charlson, states that “we propose hereby to furnish material and labor.” Mr. Moon explained that the materials and labor furnished by Custom Craft was for the sum of $65,000 but admitted the agreement, Exhibit 4, did not specify what items or labor were considered to be above the $65,000. (20:2-5).

[¶11]  The Moons are claiming a total of $12,509.66. (Exhibit 1). According to Mr. Moon, $500 of that was expended before August 23, 1994, the date the government filed the lis pendens on the four townhouses involved in this claim. (TR 11:6-10; see also Exhibit 8). The $500 included $100 for the foundation coating, $200 for building design, and $100 for legal paperwork. (TR 11:12-20). Mr. Moon testified that the expenses listed in Exhibit 1 were not performed while he was an employee of Custom Craft. (TR 13:21-14:11). Moon also stated that the $500 in expenses was on behalf of the entire project and not just his townhouse individually. (TR 14:16-24).

[¶12]  The Proposal and Acceptance signed by Charlson and the Moons is not notarized and does not contain an accurate legal description. (TR 12:22-13:1). The Moons did not pay any down payment at the time the agreement was signed. (TR 13:2-5). According to the Proposal and Acceptance Agreement, “Payment [was] to be made as follows: during construction and final at closing.” (Exhibit 4). No payment was made by the Moons during construction. (TR 16:5-24). Mr. Moon testified that the closing of the townhouse never occurred. (TR 13:12-14). He stated that the Proposal and Acceptance was “written to give the bank a figure to develop a long-term financing loan ...” and was not written to define the parties’ responsibilities in the project. (TR 23:22-24:1). He stated that Exhibit 4 defined what would be included in the project upon completion. (TR 24:6-10). Mr. Moon testified that he considered the Proposal and Acceptance a binding document that he was going to buy this particular piece of property. (TR 25:1-3).

[¶13]  Mr. Moon understood that Darrell Van Brocklin was a shareholder in Custom Craft and president of the company. (TR 15:8-12; 25:23-26:9).

[¶14]  Arlan and Jean DeJong also built one of the four townhouses at issue. Mr. DeJong was also employed by Custom Craft at the time the Proposal and Acceptance was signed. (Exhibit 3). Both the DeJongs testified at the hearing. The DeJongs claim that they have expended $15,054.52 on the townhouse project. (TR 30:22-23; see also Exhibit 7). Prior to the filing of the lis pendens the DeJongs spent $798.40 and after the filing $14,256.12. (TR 30:17-21). The $798.40 was expended on the following: $653.40 in a loan commitment fee; $45 for a credit report; and $100 for labor. (TR 30:24-31-2).

[¶15]  Mrs. DeJong testified that she did not believe the construction of the town homes would be affected by the Van Brocklin indictment. (TR 32:1-4). She stated that the loan relating to the loan commitment fees was never closed because of the filing of the lis pendens. (TR 32:12-15). According to her, the DeJongs do not have any record ownership in the townhouse. (TR 32:16-18). However, they have claimed an interest in the property. (TR 33:2-7). The basis for the DeJongs’ claim, according to Mrs. DeJong, is reflected in Exhibit 3, the Proposal and Acceptance agreement signed by the DeJongs and Charlson. Mrs. DeJong stated that there was no contractual agreement which clearly indicated that it was her and her husband’s responsibility to complete the basement’s foundation and coating work. (TR 33:12-20).

[¶16]  The DeJongs moved into the townhouse on December 27, 1994. (TR 35:3-6). The DeJongs made $600 monthly payments to Custom Craft to cover the interest on the construction loan which Custom Craft had with Norwest because Custom Craft could no longer make those payments. (TR 35: 13-25). The first payment of $600 was made to Custom Craft on March 24, 1995. (Exhibit 7). The last payment was made on January 9, 1996, directly to Norwest.

[¶17]  Mr. DeJong testified as follows regarding the agreement between Custom Craft and the DeJongs:

Well, Custom Craft -- this is a standard contract that we wrote that listed what we were to receive, the building as it would be completed. And to keep costs down besides buying the materials at cost, it was agreed that we do -- this is basically a verbal agreement; we would do much of the construction work ourselves, finishing; I did a little bit of framing, but basically installed carpet, painting. A lot of this work and some of this work like the finishing of the coatings on the cement work, the subcontractors simply subtracted that much from what he charged Custom Craft, and so this was a verbal agreement just to keep the costs down.

(TR 38:9-20). The DeJongs did not make any down payment at the time they signed the Proposal and Acceptance. (TR 39:23-25). Mr. DeJong testified that he was aware that there was a lis pendens filed which affected the title to his property. (TR 40:22-25). Mr. DeJong stated that Exhibit 3, the Proposal and Acceptance, did not define the terms of his agreement with Custom Craft. (TR 41:4-7). He stated that his testimony would be similar to Mr. Moons’ that some items in the agreement were items that the employees were required to perform on their own time. (TR 41:8-10).

[¶18]  Frances Buczek testified that $713 was spent prior to the filing of the lis pendens. (TR 43:6-10). The $713 included the following: $413 for a loan application fee; $100 for building the basement window frames; $100 for coating the foundation; and $100 for construction cleanup. (TR 43:17-19). Mrs. Buczek testified that $600 monthly payments were first made to Custom Craft for interest on Custom Craft’s loan with Norwest. (TR 44:16-24). She stated that later they started making the payments to Norwest. (TR 44:16-24).

[¶19]  Counsel for the Buczeks also stipulated that the answers of Mrs. Buczek would be similar to those of the other claimants regarding the Proposal and Acceptance between the Buczeks and Custom Craft. (TR 46:7-12; see also Exhibit 2).

[¶20]  Neither James nor Holly Van Brocklin testified at the evidentiary hearing.

STANDARD OF REVIEW

[¶21]  The Eighth Circuit Court of Appeals has set forth the following procedure for a district court to undertake when reviewing a magistrate judge’s findings and recommendations.

Once a proper objection is made to a magistrate judge’s finding, the district court must review that finding de novo. Taylor v. Farrier, 910 F2d 518, 521 (8th Cir. 1990); 28 USC § 636(b)(1). “In conducting [de novo] review, the district court must, at a minimum, listen to a tape recording or read a transcript of the evidentiary hearing.” Branch v. Martin, 886 F2d 1043, 1046 (8th Cir. 1989).

Jones v. Pillow, 47 F3d 251, 252 (8th Cir. 1995). The Court “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 USC § 636(b)(1) (emphasis added). In assessing this matter, this Court has performed a de novo review which included consideration of the actual testimony of the hearing transcript and any exhibits presented at the evidentiary hearing.

DISCUSSION

[¶22]  Claimants have listed five objections to the findings and recommendations filed by Magistrate Judge Young. Claimants’ objections are summarized as follows: (1) to the magistrate judge’s finding “distinguishing post lis pendens filing work from prior work;” (2) to his finding that claimants did not rely upon the Proposal and Acceptance; (3) to his finding that “[t]he townhouse claimants paid nothing, either as a down payment or during the construction phase as provided for in the Proposal and Agreement;” (4) to his finding that the oral agreements between the claimants and Custom Craft differed from the Proposal and Acceptance as to the items which Custom Craft was to provide in the construction of the townhouses; and (5) to his finding that claimants’ sweat equity was “invested after financing had been refused, rendering closing impossible.”

[¶23]  “De novo review of those portions of the magistrate’s report and findings to which a party timely objects is mandated by statute, 28 USC § 636(b)(1) ... .” Taylor, 910 F2d at 520; see also Jones, 47 F3d at 252; Belk v. Purkett, 15 F3d 803, 815 (8th Cir. 1994); Thompson, 897 F2d at 357 (stating, “If written objections are filed, the District Court shall conduct the required de novo review as to those portions of the magistrate’s report and recommendation to which objection is made”) (citing 28 USC § 636(b); Branch, 886 F2d at 1045-46). Therefore, this Court as required will perform a de novo review of the specific objections of the claimants.

I. REVIEW OF LEGAL CONCLUSIONS

[¶24]  This Court must first review the legal conclusions reached by the magistrate judge. After reviewing the legal conclusions, this Court will consider the objections made by the claimants and if those findings have any effect on the legal conclusions reached by this Court.

[¶25]  This Court must apply the applicable law when determining the issues in this case. Federal law is used when interpreting the meaning of terms in a federal statute, United States v. BCCI Holdings (Luxembourg), 48 F3d 551, 554 (D.C. Cir. 1995) (citations omitted), but in forfeiture actions, ownership of property is determined by state law. United States v. Lester, 85 F3d 1409, 1412 (9th Cir. 1996).

A. DID THE PARTIES INTEND THE PROPOSAL AND ACCEPTANCE TO BE A CONTRACT FOR THE SALE OF LAND?

[¶26]  The issue is whether the Proposal and Acceptance was a valid contract for the sale of land. Even if the Proposal and Acceptance is a valid contract, meaning that the four elements of SDCL § 53-1-21. Elements essential to existence of a contract are:

(1)  Parties capable of contracting;

(2)  Their consent;

(3)  A lawful object; and

(4)  Sufficient cause or consideration.{fn1} are satisfied, a court should not “create a contract for the parties which they did not intend.” Amdahl v. Lowe, 471 NW2d 770 (SD 1991). According to South Dakota law, if a writing is ambiguous parol evidence may be introduced to establish the intention of that writing when it was entered into by the parties. Delzer Constr. Co. v. South Dakota State Board of Transp., 275 NW2d 352, 355 (SD 1979). The issue of whether a contract is ambiguous is a question of law to be resolved by a court. Id. The intention of the parties is a question of fact to be resolved by the jury, the finder of fact. Id. (party had moved for summary judgment and the court held that what the parties intend under the contract is a question of fact for the jury). Given the posture of this case, this Court is the finder of fact. Therefore, this Court must first consider if the Proposal and Acceptance is ambiguous. If this Court concludes that the Proposal and Acceptance is ambiguous, then this Court must look to the intent of the parties when they entered into it. The Court cannot make a contract where none exists. The parties claiming a contract have the burden and responsibility to complete the contract according to the law of contracts. They have not met the burden here.

[¶27]  According to South Dakota law, a contract may be “ambiguous when ‘it is reasonably capable of being understood in more than one sense.’” Enchanted World Doll Museum v. Buskohl, 398 NW2d 149 (SD 1986). This Court finds that the Proposal and Acceptance may reasonably be understood in more than one sense. The Proposal and Acceptance is ambiguous in that it does not on its face clarify that it was an agreement for the sale of the townhouses.

[¶28]  As to the intent behind the Proposal and Acceptance, the testimony revealed that the agreement was created to provide the bank with a statement of what would be included in the finished product so that Custom Craft could obtain financing for the project. Mr. DeJong testified that the Proposal and Acceptance was “a standard contract that we wrote that listed what we were to receive, the building as it would be completed.” The testimony of the claimants was that the Proposal and Acceptance did not clarify the responsibilities between the claimants and Custom Craft. (TR 33:12-20; TR 38:9-20). Mrs. DeJong testified that “there was no contractual agreement which clearly indicated that it was her and her husband’s responsibility to complete the basement’s foundation and coating work.” Only one claimant, Mr. Moon, testified that he thought the Proposal and Acceptance created a binding document for the sale of the townhouses. (TR 25:1-3). Mr. Moons’ testimony regarding the Proposal and Acceptance is conflicting. Mr. Moon also testified that the Proposal and Acceptance was “written so the bank for appraisal purposes [would] know what’s included in the project and what is not.” (TR 18:5-19:5). Mr. Moon explained that the materials and labor furnished by Custom Craft was for the sum of $65,000 but admitted the agreement, Exhibit 4, did not specify what items or labor were considered to be above the $65,000. (TR 20:2-5). According to Mr. Moon, the agreement creates a binding document for the sale of land but the document is not binding as to the duties for which the agreement states that Custom Craft would be responsible. Given the testimony of the other claimants and Mr. Moon, the Court concludes that the intent of the Proposal and Acceptance was to create a document which would show what would be included in the finished product so that the document could be presented to a bank in an effort to obtain financing, not an agreement for the sale of real estate.

B. CONSIDERATION

[¶29]  This Court will discuss the issue of consideration since both plaintiff and claimants presented the issue and the magistrate judge’s legal conclusion was based in part on the fact that the claimants did not give any consideration to Custom Craft.

[¶30]  For the Court to be required to amend the forfeiture order, the standard which must be established by the claimants is set forth in 21 USC § 853 (n)(6) as follows:

(6)  If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that—

(A)  the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or

(B)  the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section;

the court shall amend the order of forfeiture in accordance with its determination.

21 USC § 853(n)(6) (emphasis added).

[¶31]  The applicable standard in this case is 21 USC § 853(n)(6)(B). In interpreting the meaning of 21 USC § 853(n)(6)(B) the Court in United States v. Reckmeyer stated as follows:

The legislative history of § 853(n)(6)(B) convinces us that Congress intended to permit general creditors who give value to the forfeited estate in an arm’s-length transaction to recover. We hold that general creditors who have a legal interest in the forfeited estate and who gave valuable consideration to the estate without knowledge of the potential forfeitability of the defendant’s assets may recover the value so conveyed under § 853(n)(6)(B).

Reckmeyer, 836 F2d at 207 (4th Cir. 1987) (emphasis added).

[¶32]  The government urges and the magistrate judge concluded that the contract between the parties did not satisfy the element of consideration. The South Dakota Supreme Court has established that a promise to pay constitutes consideration. State v. Murphy, 48 NW2d 225, 226 (SD 1951); See also Heinert v. Home Fed. Sav. & Loan Ass’n, 444 NW2d 718, 721 (SD 1989) (mutual promises are sufficient to constitute consideration). However, given that the intent of the Proposal and Acceptance was not to create a contract for the sale of land but to provide information to the bank for financing purposes, in signing the agreement the parties involved were not making mutual promises to each other for the sale of the townhouses. The parties did not have a “meeting of the minds.” See SDCL 53-3-3 (“consent is not mutual unless the parties all agree upon the same thing in the same sense”).

[¶33]  Another element required to create a valid contract is consent. See SDCL § 53-1-2. In Amdahl, one issue for the Court was whether the seller consented to the sale of 880 acres of land. Amdahl, 471 NW2d at 774. According to the court, “A party’s intentional conduct which constitutes a manifestation of assent will bind a party even though the party’s conduct does not truly express his or her state of mind.” Id. In Amdahl, the seller of the property had signed a statement to sell 880 acres. Id. The seller later attempted to argue that she intended to consent to the sale of 400 acres not 880. Id. The court in Amdahl concluded that the seller had consented to the sale of 880 acres. Id. The court noted, “Where, as here, the agreement describes the subject matter and the description does not admit of two meanings, the fact that one of the parties thought it was something else does not affect the contract.” Id. In this case as discussed above, the Proposal and Acceptance is not clear as to the meaning to the document. Also, the combined testimony of the claimants leads this Court to the conclusion that the intent of the Proposal and Acceptance was to state what would be included in the townhouses when they were finished so that Custom Craft could obtain financing for the project. The intent of the Proposal and Acceptance was not to create an agreement for the sale of land; therefore, the document did not create a binding document to sell the townhouses to the claimants. Given that the Proposal and Acceptance was not intended a contract for the sale of land, there is no consideration or consent creating a valid contract.

C.  STATUTE OF FRAUDS

[¶34]  SDCL 53-8-2 states, in part, as follows:

Contracts required to be in writing--Statute of Frauds. The following contracts are not enforceable by action unless the contract or some memorandum thereof is in writing and subscribed by the party to be charged or his agent, as authorized in writing: ...

(3)  An agreement for sale of real estate or an interest therein, or lease of the same, for a period longer than one year. However, this does not abridge the power of any court to compel specific performance of any agreement for sale of real estate in case of part performance thereof; . ...

SDCL § 58-8-2 (1990). The South Dakota Supreme Court has stated as follows regarding the requirements necessary to meet the statute of frauds, “The writing referred to in SDCL [§ ] 53-8-2 need not be in one document, the writings may consist of disjointed memoranda or protracted correspondence. As long as the substance of the contract can easily be inferred from the various writings, the requisites of the statute are met.” Wiggins v. Shewmake, 374 NW2d 111, 115 (SD 1985). This Court must consider whether the Proposal and Acceptance is a sufficient writing to satisfy the statute of frauds.2. If there is not a contract (oral or written) for the sale of land, then it is not necessary for the Court to determine if the statute of frauds was met. The majority of the testimony at the evidentiary hearing regarding the oral agreements between Custom Craft and the claimants dealt with the fact that the oral agreements established who was responsible for what in the completion of the townhouses. Claimants did not testify that there were oral agreements which created a contract for the sale of land. However, it is apparent to this Court that claimants must have thought that they had a contract for the sale of the real estate or the claimants would not have continued to spend their own money in an attempt to complete the project. Therefore, this Court will consider if the writing, in this case the Proposal and Acceptance, is sufficient to satisfy the statute of frauds.{fn2}

[¶35]  First, this Court must look to federal law to determine what is meant by the term “interest” as used in section 853(n)(6)(B). The Fourth Circuit stated as follows when construing what Congress meant by “interest in the property:”

We begin with the “assumption that the legislative purpose is expressed by the ordinary meaning of the words used.” Richards v. United States, 369 US 1, 9, 82 SCt 585, 591, 7 LEd2d 492 (1962). The Supreme Court has held that the term “interest” “comprehends all forms of real and personal property.” Russello v. United States, 464 US 16, 21, 104 SCt 296, 299, 78 LEd2d 17 (1983). The Court referred with approval to Black’s Law Dictionary’s broad construction of “interest” as “‘[t]he most general term that can be employed to denote a right, claim, title, or legal share in something.’” Id. at 21, 104 SCt at 299 (quoting Black’s Law Dictionary 729 (5th ed. 1979)). Black’s Law Dictionary defines a “legal interest” as an “interest in property or in claim cognizable at law in contrast to equitable interest.” Id. at 805. Thus the term “legal interest” encompasses all legally protected rights, claims, titles, or shares in real or personal property.

Reckmeyer, 836 F2d at 205. Using the definition of interest set forth in Reckmeyer, this Court must consider whether the claimants have a “right, claim, title, or legal share” in the townhouses.

[¶36]  Under South Dakota law, in order for claimants to have a “right, claim, title, or legal share” in the townhouses the statute of frauds must be satisfied. South Dakota law requires that a valid contract for the sale of real property must satisfy the statute of frauds. See SDCL § 53-8-2. If the statute of frauds is not satisfied, the writing is not admissible for the purpose of enforcing the contract. Brauger v. Snow, 405 NW2d 643, 646 (SD 1987). The South Dakota Supreme Court has set forth what is required under the statute of frauds for a contract involving the sale of real estate:

The statute of frauds requires that contracts for the sale of land must not only be in writing and signed by the party who is to be charged, but the writing must contain all the material terms and conditions of the oral agreement between the parties. Boekelheide v. Snyder, 71 SD 470, 26 NW2d 74 (1947); Carpenter v. Murphy, 40 SD 280, 167 NW 175 (1918); Phelan v. Neary, 22 SD 265, 117 NW 142 (1908). To satisfy the statute of frauds, a memorandum for the sale of land must describe the land, the price, and the contracting parties; it need not detain the form or delivery of the deed, the time and place of payment, or any other matters. 2 A. Corbin, Corbin on Contracts, Section 499 (1950) (Corbin on Contracts). See Boekelheide, 71 SD at 475, 26 NW2d at 77; Phelan, 22 SD at 268-9, 117 NW at 144. The statute of frauds requires only the writing evidence the substance of the contract. Wiggins v. Shewmake, 374 NW2d (111), at 114 (SD 1985); Aamot v. Eneboe, 352 NW2d 647 (SD 1984); Drake v. Sample, 279 NW2d 685 (SD 1979). There is no fatal ambiguity if the contract terms are sufficiently certain to make the acts required of each party clearly ascertainable. Wiggins, 374 NW2d at 115.

Amdahl v. Lowe, 471 NW2d 770, 774-75 (SD 1991). It is not required that “[t]he memorandum ... embody the exact terms of the contract, ‘it is sufficient that the substance of a contract for the purchase of real property is inferred from the writing[.]’” Wiggins, 374 NW2d at 114.

[¶37]  In Amdahl, the court concluded that the memorandum contained a general description of the land, that the purchase price was described, that the parties were identified, and the memorandum “set forth the essential terms in sufficient detail to determine the obligations of each party.” The Proposal and Acceptance between the claimants and Custom Craft does not satisfy the statute of frauds because the acts required of each party are not clearly ascertainable. See Amdahl, 471 NW2d at 475. The claimants testified that the Proposal and Acceptance was an agreement telling the bank what would be included in the project once it was completed and not an agreement clarifying the duties of the parties. The testimony of the claimants at the hearing revealed that the parties had established oral agreements which determined the responsibilities between the parties. The claimants have not pointed to any writings which clarify the duties of the parties. The substance of the agreement regarding the duties of the parties is part of an oral agreement and no writings exist which clarify those duties. These duties are material to the writing because they are essential in establishing what is included in the $65,000 price set forth in the proposal and acceptance which was to be paid by the claimants.

[¶38]  The claimants also urge that the part performance by them creates an exception to the statute of frauds. The Magistrate Judge, relying on Werner v. Norwest Bank South Dakota, concluded that South Dakota does not extend the part performance exception to the statute of frauds. Werner v. Norwest Bank South Dakota, 499 NW2d 138, 141 (SD 1993). The court in Werner stated, “[T]his Court has not recognized ... that we extend statute of frauds exceptions to include part performance.” Id. (citing 73 AmJuR2d Statute of Frauds, § 408, at 36 (1974)). The court concluded, “that the actions by Werner were performed either subsequent to the alleged contract or without justifiable reliance, we find no reason to consider adopting the [part performance] exception at this time.” Id. The Werner case dealt with an agreement to loan money and whether it should have been in writing; it did not deal with the sale of real estate. Taken in context, the court’s statement in Werner may have only dealt with an exception of part performance as to the provision of the statute of frauds requiring a writing to enforce a contract involving an agreement to loan money.

[¶39]  In this case, claimants have requested specific performance of the townhouses. However, SDCL § 53-8-2 permits a part performance exception to the statute of frauds when an individual is requesting specific performance. In Skjoldal v. Myren, the South Dakota Supreme Court stated, “To constitute part performance, the facts relied upon must be unequivocally and, ordinarily, exclusively referable to the contract.” Skjoldal, 191 NW2d 809, 813 (SD 1971) (citing 81 C.J.S. Specific Performance § 54, p. 538). See also Austin v. Cash, 906 P.2d 669, 673 (Mont. 1995). As stated previously, the contract involved in this case did not clearly state the responsibilities of the parties. Therefore, any part performance by the claimants was not clearly expressed in the Proposal and Acceptance who would be responsible for what given that the parties had oral agreements designating their duties.

D. SPECIFIC PERFORMANCE

[¶40]  Under South Dakota law for specific performance to be permitted “the contract with all its material terms and conditions must be proved by evidence so clear and satisfactory the mind of the trial court as to leave no doubt of the agreement.” Skjoldal, 191 NW2d at 811. South Dakota law requires that an obligation may not be specifically enforced if the terms of the agreement “are not sufficiently certain, to make the precise act which is to be done clearly ascertainable.” See 21-9-2(6).

[¶41]  In this case, the precise acts of the parties are not clearly ascertainable. The claimants testified that the agreement did not clarify who was responsible for the performance of specific duties in the construction of the townhouses. Mr. Moon testified that the agreement was not specific as to what labor was considered to be over the $65,000 contract price. Claimants testified that oral agreements with Custom Craft established who was responsible to perform specific duties in the construction of the townhouses. Even after hearing the oral testimony of claimants, the Court is not certain as to who was required to perform which jobs and the magistrate judge concluded the testimony of who was required to perform what jobs conflicts with the duties listed in the Proposal and Acceptance. Specific performance could not be awarded in this case because the material terms and conditions of the Proposal and Acceptance did not provide evidence so clear as to leave no doubt in the mind of this Court.

[¶42]  In Sabow v. Hall, 323 NW2d 861, 863 (SD 1982), the South Dakota Supreme Court stated,

It is clear from these facts and circumstances that the parties did not intend the offer and agreement to purchase to be a final or complete agreement on the terms and conditions of sale. The offer and agreement to purchase is therefore not a contract upon which specific performance could be based.

Id. Given the testimony of the claimants at the evidentiary hearing, it is also clear that in this case the parties did not intend the Proposal and Acceptance to be the final terms of their conditions for sale. Claimants testified that it was not meant to define the agreements of the parties but was meant as a vehicle for Custom Craft to obtain financing for the project. Since the agreement was not meant to be a final or complete agreement, the Court may not award specific performance to the claimants.

[¶43]  The third reason why specific performance may not be permitted in this case is established in SDCL § 21-9-4. That statute states as follows:

Mutuality of remedy or full performance by plaintiff required for specific performance. Neither party to an obligation can be compelled specifically to perform it, unless the other party thereto has performed, or is compellable specifically to perform, everything to which the former is entitled under the same obligation, either completely or nearly so, together with full compensation for any want of entire performance.

SDCL § 21-9-5 (1987). In this case, neither party was able to fulfill their obligation and neither party is entitled to specific performance. Custom Craft was unable to convey title because of the filing of the lis pendens and the claimants were unable to obtain financing so they could not pay “the rest” of the money due to Custom Craft at closing. “Mutuality of remedy” is not present; therefore, claimants are not entitled to specific performance.

[¶44]  The court in Reckmeyer required both a “legal interest” and “valuable consideration” for a claimant to recover under section 853(n)(6)(B). Without a valid contract at law for the sale of land, a claimant does not have a legal interest in the property. The parties do not have a contract for the sale of real estate which satisfies the statute of frauds; therefore, claimants do not have an interest in the property as required by section 853(n)(6)(B).

II. REVIEW FACTUAL FINDINGS

[¶45]  Claimants object to the magistrate judge’s distinguishing between work done prior to and following the filing of the lis pendens.3. The lis pendens was filed by the government on August 22, 1994.{fn3} Whether the claimants performed the work prior to or following the filing of the lis pendens is irrelevant given the legal conclusion reached. If claimants do not have a legal interest in the property, then pursuant to 21 USC § 853(n)(6) the Court is not required to amend the forfeiture order; therefore, when work was done by the claimant is irrelevant. When the work was done by the claimants may come into play when determining if the claimants have any equitable remedies at a mitigation hearing.

[¶46]  Claimants’ second objection is to the magistrate judge’s conclusion that the claimants did not rely on the Proposal and Acceptance. In reviewing the record, that Court finds only one express statement that could constitute reliance on the part of any of the claimants involved. Mr. Moon testified that he considered the Proposal and Acceptance a binding document that he was going to buy this particular piece of property. (TR 25:1-3). This Court believes that the record is clear. If the parties had not relied on the fact that they had an agreement with Custom Craft for the purchase of the townhouses, the parties would not have extended the money which they extended during the construction of the townhouses. However, the claimants have not alleged that the parties’ reliance should estop the government from arguing that the statute of frauds and that therefore a valid contract did not exist between the parties.4. In concluding that the claimants relied on the fact that they believed they had a binding contract for the sale of real estate with Custom Craft, this Court in no way is implying that this reliance was justified. It is not necessary for the Court to consider that issue.{fn4} The fact that reliance exists does not change the legal conclusion reached by this Court. Reliance may also come into play if the Court had concluded that South Dakota recognized part performance as an exception to the statute of frauds.

[¶47]  Claimants’ third objection is to the magistrate judge’s conclusion that “[t]he townhouse claimants paid nothing, either as a downpayment or during the construction phase as provided for in the Proposal and A[cceptance].” The claimants argue that serious money was expended during the construction phase. Placing claimants’ objection in context, the magistrate judge stated,

The claimants argue that because Norwest Bank at the time of the loan was an innocent bona fide purchaser, the townhouse claimants should be entitled to the same treatment. The difference here is that the bank gave consideration of $65,000 per townhouse to Custom Craft for their note and mortgage. The townhouse claimants paid nothing, either as a downpayment or during the construction phase as provided for in the Proposal and Acceptance.

The magistrate judge’s statement related to the fact that the claimants had not paid any consideration to Custom Craft. Given the Court’s conclusion above, the claimants’ objection does not change the legal conclusion reached by this Court.

[¶48]  Claimants’ fourth objection to the findings and recommendations of the magistrate judge is an objection based on a factual finding and not a legal conclusion. The magistrate judge stated,

The testimony by the prospective homeowners was that the Proposal and Acceptance did not define the terms of the agreement between the prospective homeowners and Custom Craft, but instead was prepared to assist Custom Craft in obtaining construction loan financing from Norwest Bank. The homeowners testified that they had oral agreements between themselves and Custom Craft whereby they were to perform sweat equity, including providing carpeting, painting, trim labor, vinyl floor coverings, installation of cabinets, and dirt work.

The Proposal and Acceptance indicates that Custom Craft was to provide these items.

Claimants argue that the only conflict between the two agreements is that the agreement said “carpet.” However, the Court’s reading of the transcript reflects that there are additional conflicts which exist. Mr. Moon stated that he and his wife were responsible for the “painting, trim work, carpet and vinyl, putting in the cabinets, and dirt work.” However, the Proposal and Acceptance stated also refers to painted objects and trim of the doors. In addition, the Proposal and Acceptance that Custom Craft “propose[d] to furnish material and labor” in accordance with the specifications listed in the proposal. However, Mr. Moon testified that the labor above the $65,000 cost to Custom Craft was to be provided by the townhouse owners. Mr. Moon testified that this was not contained within the Proposal and Acceptance agreement. This Court concludes that conflicts did exist as to the agreement. This Court finds that conflict exists at least as to which party was to perform the carpeting, tile work, and painting. However, the extent of the conflict does not change this Court’s legal conclusion that the Proposal and Acceptance was not a binding contract for the sale of land under South Dakota law.

[¶49]  Once again, claimants’ fifth objection also fails to have any binding effect on the legal conclusion reached by this Court. Claimants object to the following statement made by the magistrate: “Indeed, the sweat equity was invested after financing had been refused, rendering closing impossible.” Claimants argue that financing was accepted, not rejected. Claimants’ financing was originally approved; however, after the lis pendens was filed financing was rejected. (TR 32:12-15). At least some sweat equity could have been performed prior to financing being refused, since the claimants testified to some “sweat equity” which was performed prior to the filing of the lis pendens. However, the relevant date is the date on which the lis pendens was filed. In addition, this objection is immaterial as to the conclusions of law reached by this Court.

CONCLUSION

[¶50]  Based upon the record in this case, this Court adopts the magistrate judge’s findings. This Court holds that the Proposal and Acceptance agreement between the parties did not constitute a contract to sell real estate. A valid contract creating ownership rights in the townhouses was not created since the writings involved failed to satisfy the statute of frauds. As stated elsewhere in this opinion, the Court cannot make a contract between the parties. At best this Proposal and Acceptance was a financing document. The arrangement between Custom Craft and the claimants, employees of Custom Craft, was an oral agreement coupled with part performance. The claimants have failed to meet the elements set forth in 28 USC § 636(n)(6)(B) by a preponderance of the evidence. Claimants have failed to establish an interest in the townhouses as required by section 636(n)(6)(B). Claimants are not entitled to specific performance under South Dakota law.

[¶51]  This Court has not yet addressed whether claimants may be entitled to an equitable remedy based on the dollars extended by the claimants in “sweat equity.” This Court agrees with the magistrate judge that if the “sweat equity” by the claimants increased the value of the property subject to forfeiture, claimants may be eligible to be reimbursed at a mitigation hearing following the sale of the property.



Berry v. Assembly of God, 1997 DSD 4

JACOB O. BERRY,

Plaintiff,

v.

ASSEMBLY OF GOD,

Defendant.

[1997 DSD 4]

United States District Court

District of South Dakota - Western Division

CIV. 96-5061

MEMORANDUM OPINION GRANTING

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

Filed Jan 29, 1997.

RICHARD H. BATTEY, Chief Judge

PROCEDURAL HISTORY

[¶1]  On July 31, 1996, plaintiff Jacob Berry filed a complaint against defendant Assembly of God. On October 7, 1996, Berry’s first amended complaint was filed and on November 6, 1996, he moved this Court to permit him to file a second amended complaint. The Court granted Berry’s motion to amend on November 15, 1996. Berry’s second amended complaint alleges that a previous pastor of the Assembly of God, Morris Conklin, delivered him to Satan. As a result, Berry stated that he has suffered loss of property, destruction of livestock, and legal problems occurring on Satanic feast days. Berry informed the General Council of the Assembly of God of his “delivery to Satan.” No action was taken by the defendant after the General Council was informed. Berry alleges negligence and/or willful misconduct on the part of Assembly of God. Berry claims that as a result of defendant’s action he has suffered intense mental anguish, emotional distress, loss of sleep, problems on the job, and problems in social relationships. Berry has requested actual damages of $85,000 and punitive damages of $9,915,000.

[¶2]  On October 31, 1996, Assembly of God moved this Court to grant summary judgment in its favor because (1) this Court does not have subject matter jurisdiction over this cause of action, (2) Berry has failed to state a claim for infliction of emotional distress, (3) Berry’s complaint is barred by the statute of limitations, and (4) his complaint is barred by the doctrines of res judicata or estoppel. On November 12, 1996, Berry filed his response to Assembly of God’s motion for summary judgment and his statement of material facts. On November 15, 1996, this Court entered an order that any amendments in Berry’s second amended complaint would apply to the Assembly of God’s pending motion for summary judgment.

SUMMARY JUDGMENT STANDARD

[¶3]  Under Rule 56 of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and the inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶4]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” Matsushita, 106 SCt at 1356, and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Id.

[¶5]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083, 119 LEd2d 265 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). To survive summary judgment there must be evidence that “reasonably tends to prove” plaintiff’s theory; defendants meet the burden under Fed. R. Civ. P. 56 when it is conclusively shown that the facts upon which the nonmoving party relied to support the allegations were not susceptible of the interpretation which was sought to give them; only reasonable inferences can be drawn from the evidence in favor of the nonmoving party. Id. (citations omitted).

[¶6]  Finally, should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Elec. Co-op, Inc., 838 F2d 268 (8th Cir. 1988) laid such thoughts to rest. He stated that, “a trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.” Id. at 273. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from the trilogy of Matsushita, Celotex, and Anderson). Under this trilogy, it is incumbent upon the nonmoving party, based upon the showing set forth by the moving party, to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991).

FACTS

[¶7]  According to the Eighth Circuit:

To be material, the disputed facts must be facts which, under the substantive law governing the issue, might affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 91 LEd2d 202 (1986)... . The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather, the dispute must be outcome determinative under prevailing law. Howland v. Kilquist, 833 F2d 639, 642 (7th Cir. 1987).

Holloway v. Pigman, 884 F2d 365 (8th Cir. 1989).

[¶8]  Even if you accept all the facts of the plaintiff as true, defendant believes that it is entitled to summary judgment as a matter of law. Viewing the facts most favorably toward the nonmoving party, the Court finds the facts as follows:

1.  In 1983, Berry lived in Newell, South Dakota and was a member of the Newell Assembly of God whose pastor was Morris Conklin.

2.  Berry had personal disputes with Conklin prior to 1983 which involved the rubbing of Berry’s hand when Conklin shook Berry’s hand after church services; the manner in which Berry’s foot was handled at Berry’s foot washing ceremony; and Conklin’s giving of canned goods to Berry as a gift.

3.  Berry was emotionally abused by Conklin’s criticizing him for wearing dirty jeans to church; Conklin accusing Berry of not paying a tithe; Conklin’s statement that Berry was not supported after a house fire; Conklin’s accusation that Berry did not take communion in the church; and Conklin’s statement that he did not care where Berry worked while Berry was having a difficulty finding a steady job.

4.  Under Conklin’s direction, families were ruined and the church membership ceased. Berry openly criticized Conklin. Berry called other members of the church inquiring about the problems he perceived to be taking place within the church. On May 1, 1983, Berry “cornered” Conklin with criticism of other members of the church. Later that same day, Conklin asked him to attend a meeting at the church.

5.  At this meeting on May 1, 1983, Berry was read the verse from I Corinthians 5:5. It was not until March of 1996 that Berry began to realize that the reading of this scripture played a vital role in causing Berry’s problems. Berry believes that the ex-communication ceremony was unjustified and that he was delivered to Satan by the reading of that scripture.

6.  After Berry was delivered to Satan, he subconsciously began to fear that bad things would happen to him, and that as a result of his delivery to Satan, bad things did happen to him.

7.  Berry stated that May 1 is “Satanic Feast Day” and that when the adverse events occur on that day Satan is “leaving his footprint ... .”

8.  Berry stated that the following events have happened on one of the four “Satanic Feast Days,” February 2, May 1, August 2, and November 1, and that the Assembly of God is responsible for them:

a.  Berry experienced fires which were connected to the satanic.

b.  Berry had to buy medicine for a cow that suffered from an infection.

c.  Berry had a land payment which was due on May 1, 1984.

d.  Berry had to enter prison on April 30, 1986, due to satanic deception.

e.  Berry harassed and assaulted a co-employee. As a result, Berry was subsequently imprisoned and a writ of habeas corpus was denied on April 30, 1994.

f.  Berry received a response from the Federal Court of Appeals on February 2, 1994.

g.  Berry received a letter from an attorney on April 30, 1994, which stated that the attorney would not represent Berry in a malpractice action against the attorney who “first mishandled Plaintiff’s assault case.”

h.  Defendant’s lawyer stated that the parties should get together and discuss issues in a letter dated February 1,1996.

i.  Berry receives defendant’s motion for summary judgment on October 31, 1996.

9.  In 1984, Conklin left Newell. Berry had no contact with Conklin after June 7, 1983, except when he called Conklin in March of 1996. It was during this conversation that Conklin admitted delivering him to Satan.

10.  According to Berry, the first time Berry complained about the actions of the Assembly of God was in 1984. At that time, Berry contacted the South Dakota District Council. The Assembly of God alleges that the first time he contacted anyone was in November of 1989. This dispute is not material given the Court’s decision in this case. Berry next complained in his letter to David Nelson dated November 15, 1989. The parties disagree as to whether the letter contains an allegation of “homosexual harassment.” The Court concludes that such a dispute is also not material to the issues of this case.

11.   Defendant alleges that Berry wrote to the General Council of the church in August of 1993 and that for several years prior to that Berry had no communication with the church or any of its members. Berry denies confronting the General Council of the Assembly of God until March of 1996. He stated that he could not have confronted the council as to the damages he suffered until that time because it was not until March of that year that he realized his delivery to Satan had caused his problems. The Court concludes that this factual dispute is not material given the conclusion reached by this Court.

12.  Berry previously filed suit against Conklin in this Court. Berry voluntarily dismissed the lawsuit out of fear.

13.  Defendant states that “Berry contends that he was a victim of spiritual forces, and therefore, the Church should have engaged in ‘spiritual warfare’ on his behalf.” Berry denies that “spiritual warfare” is part of the complaint. Given the decision of the Court in this case, this factual dispute is not material to the case.

14.  Berry has not received any medical care since 1993. Berry has not seen a psychiatrist or psychologist for any emotional abuse which he has suffered.

DISCUSSION

[¶9]  This Court will first consider if it has subject matter jurisdiction to hear this case. Assembly of God urges this Court that it is entitled to summary judgment because this Court does not have subject matter jurisdiction over this cause of action. Berry has alleged subject matter jurisdiction based upon diversity of jurisdiction and arising under jurisdiction. See 28 USC §§ 1331, 1332.

[¶10]  The First Amendment to the United States Constitution protects the free exercise of religious beliefs. US Const. amend. I. The Fourteenth Amendment applies the First Amendment to the states. See City of Rapid City v. Kahler, 334 NW2d 510, 512 (SD 1983). Given the religious affiliation of the Assembly of God, this Court is confronted with the issue of whether the First Amendment bars the Court’s subject matter jurisdiction. Bible Way Church of Our Lord Jesus Christ of Apostolic Faith of Washington, D.C. v. Beards, 680 A.2d 419, 427 (D.C. Ct. App. 1996). The First Amendment prohibits this Court from hearing cases which will entangle it in “matters of ecclesiastical cognizance.” See Serbian Eastern Orthodox Diocese for United States of America and Canada v. Milivojevich, 426 US 696, 708, 96 SCt 2372, 2380, 49 LEd2d 151 (1976); Watson v. Jones, 80 US 679, 727, 20 LEd2d 666 (1871) (court should accept decisions of church involving “questions of discipline, or of faith, or ecclesiastical rule, custom, or law”); Beards, 680 A.2d 419; Burgess v. Rock Creek Baptist Church, 734 FSupp 30 (D.D.C. 1990).

[¶11]  Long ago the United States Supreme Court held that courts should not “revise or question ordinary acts of the church,” including the excommunication from membership. Bouldin v. Alexander, 82 US 131, 21 LEd 69 (1872). A well-established rule of law is that “[c]ivil courts are bound to accept the decision of the highest judicatories of a religious organization of hierarchical polity or matters of discipline, faith, internal organization, or ecclesiastical rule, custom, or law.” Serbian Eastern Orthodox Diocese v. Milivojevich, 426 US 696, 96 SCt 2372, 2382, 49 LEd2d 151 (1976). This does not mean that the church is above the law, but a court must take care to avoid a controversy which involves “‘religious doctrine and practice.’” Beard, 680 A.2d at 427 (quoting Burgess, 734 FSupp at 31).

[¶12]  The Court will first consider cases which have addressed the issue of whether the matter involved was one of “ecclesiastical cognizance.”

[¶13]  In Lewis v. Holy Spirit Ass’n for Unification, 589 FSupp 10 (D.C. Mass. 1983), plaintiff, a member of the church, alleged several claims against the church sounding in contract and tort, including torts of brainwashing and indoctrination. In considering the torts of brainwashing and indoctrination the court noted that “initiation procedures and conditions of membership in a religious organization are generally not subject to judicial review.” Id. at 12 (citing Turner v. Unification Church, 473 FSupp 367, 371 (D.C.R.I. 1978); United States v. Ballard, 322 US 78, 64 SCt 882, 88 LEd2d 1148 (1944); United States v. Seeger, 380 US 163, 85 SCt 850, 13 LEd2d 733 (1965)). The court stated that plaintiff may have intended to plead the tort of intentional infliction of emotional distress. Id. To prove the tort of intentional infliction of emotional distress, two elements that plaintiff must prove are that “defendant intended to inflict emotional distress or knew or should have known that distress would result to the plaintiff from its conduct [and] that the conduct was extreme and outrageous.” Id. The court concluded that plaintiff’s complaint failed to state a claim upon which relief could be granted for such a tort. Id.

[¶14]  In Beards, plaintiff accused defendant church of negligent failure to account for church funds. Id. at 423. The court concluded that it would only be permitted to address this issue if well-established accounting principles applied to the church. Id. at 427-28. The court determined that such well-established principles could only apply to the church if the principles were so universal that every church applied them and the church took it for granted that such principles should be adopted or the church had adopted such principles. Id. at 428. The court noted,

Accounting is an area riddled with major subjective decisions. When the entity in question is a religious society, those subjective decisions raise questions of internal church governance which are often themselves based on the application of church doctrine. For example: What should be the collection, tithing, or offering practices of the church? ... Who in the church establishes the spending priorities? Should the pastor have one or more discretionary funds? ... In each case, who makes the decision?

Id. at 429. The court found that the complaint did not allege that universally applicable rules of accounting applied to the church nor had the church alleged that it had adopted such principles. Id. at 428, 430. Therefore, the Court was unable to exercise jurisdiction over the matter given that it involved “ecclesiastical judgment.” Id. at 428, 430. The Free Exercise clause of the First Amendment prevented the court from hearing the claim. The court of appeals concluded that the trial court was in error in refusing to dismiss the negligence claim. Id. at 430.

[¶15]  In Burgess v. Rock Creek Baptist Church, the plaintiff alleged that the church terminated her membership against her will. Plaintiff sued for injunctive and declaratory relief that she was a member in good standing of the church and for intentional infliction of emotional distress which allegedly resulted from the church’s terminating her membership. Burgess, 734 FSupp at 31. The court in Burgess determined that in the Rock Creek Baptist Church’s determining who is and who is not a member is a matter of ecclesiastical cognizance. Id at 33. “‘The mere expulsion from a religious society, with the exclusion from a religious community, is not a harm for which courts can grant a remedy.’” Id. (quoting Grunwald v. Bornfreund, 696 FSupp 838, 840-41 (E.D.N.Y. 1988)). In concluding that the court was prohibited from adjudicating this dispute as to the termination of plaintiff’s membership, the court stated that it would be required to delve into matters of church policy, administration, and governance. Id. at 34. The court stated that it would be unable to determine matters of termination of church membership even if the termination had been “a simple mistake or arbitrary.” Id. The court held that determining such matters would violate the Free Exercise Clause of the First Amendment. Id.

[¶16]  The court in Burgess held that the “cloak” of ecclesiastical protection extended to plaintiff’s theory of intentional infliction of emotional distress. Id. The court concluded that the church’s “subsequent actions are so inextricably linked that— regardless of the legal theories upon which the plaintiff relies— for the purposes of the First Amendment analysis, the substance of her lawsuit infringes upon matters of ecclesiastical cognizance.” Id. Once a court is required to delve into “matters of ecclesiastical cognizance” any matters “inextricably linked” will also be barred as to subject matter jurisdiction based upon the First Amendment. See id. The Burgess court refused to hear the plaintiff’s claim of intentional infliction of emotional distress because it was “inextricably linked” to plaintiff’s action relating to her termination of membership by the church. Id.

[¶17]  In Paul v. Watchtower Bible and Tract Soc. of New York, Inc., 819 F2d 875 (9th Cir. 1987), the court held that plaintiff was barred by the First Amendment from bringing her claims alleging common law torts of defamation, invasion of privacy, fraud, and outrageous conduct. Plaintiff alleged that the intentional conduct on the part of the church resulted in emotional distress, alienation of affections, and harm to her reputation. The court held that “imposition of tort damages on the Jehovah’s Witnesses for engaging in the religious practice of shunning would constitute a direct burden on religion.” Id. at 880. The court stated:

Permitting prosecution of a cause of action in tort, while not criminalizing the conduct at issue, would make shunning an “unlawful act.” (“[T]he very essence of a tort is that it is an unlawful act.”). Imposing tort liability for shunning on the Church or its members would in the long run have the same effect as prohibiting the practice and would compel the Church to abandon part of its religious teachings. Were we to permit recovery, “‘the pressure ... to forego that practice [would be] unmistakable.’” The Church and its members would risk substantial damages every time a former Church member was shunned. In sum, a state tort law prohibition against shunning would directly restrict the free exercise of the Jehovah’s Witnesses’ religious faith.

Id. at 881 (citations omitted). According to the Ninth Circuit Court of Appeals, “A religious organization has a defense of constitutional privilege to claims that it has caused intangible harms— in most, if not all, circumstances.” Id. at 883. The court in Paul held that permitting the plaintiff to recover in tort for the intangible harms alleged would restrict the churches free exercise of religion; therefore, the causes of action alleged by the plaintiff were barred. Id.

[¶18]  Berry has failed to cite to any persuasive authority convincing this Court that this suit should not be barred by the First Amendment. Berry relies on Nally v. Grace Community Church of the Valley, 204 Cal. Rptr. 303 (Cal. Ct. App. 1984) (unpublished). The court in that case held that the clergyman or church was not barred from the “liability for intentional infliction of emotional distress caused by the nature or content of counseling simply because the counseling may have a spiritual aspect.” Id. at 307. The court went on to state, “The free exercise clause of the First Amendment to the United States Constitution ‘embraces two concepts, — freedom to believe and freedom to act. The first is absolute but, in the nature of things, the second cannot be.’” Id. (citations omitted). The court held that counseling fell within the latter category. However, a church’s policy on excommunication of a member would fall into the former category of “freedom to believe” which is an absolute bar under the First Amendment. The Court concludes that Berry’s reliance on Nally is misplaced.

[¶19]  Plaintiff also encourages this Court to follow the conclusions reached by the court in Swann v. Pack, 527 S.W.2d 99 (Tenn. 1975). However, this case involves state action and its application to the First Amendment. A religious practice may be curtailed where “it involves a clear and present danger to the interests of society.” In this case, the religious practice at issue involved snake handling and because the state has the right to protect a person from injuring himself the court enjoined any party from “handling, displaying, or exhibiting dangerous and poisonous snakes.” Berry’s reliance on Swann is also misplaced based on the different application of the First Amendment in that case.

[¶20]  This Court holds that for it to consider the damages alleged by Berry in this case it would be required to delve into “matters of ecclesiastical cognizance.” Defendant sets forth several issues which would have to be addressed by this Court in order for the Court to resolve the matter before it. The defendant states that the Court would be required to resolve the following: “(1) whether there exists a church doctrine of ‘delivery to Satan;’ (2) whether such a doctrine was applied to Plaintiff in 1983; (3) whether this practice was ‘unjustified’ under the facts or church procedure; (4) whether the practice caused various injuries as alleged; and (5) whether Defendant could or should have acted to intervene to ‘reverse the curse’” When considering at least five of the issues which would need to be resolved by this Court, it is clear that the resolution would involve “matters of ecclesiastical cognizance.” Berry has alleged that all his problems are a result of his “delivery to Satan” which he now realizes occurred when Conklin read to him from 1 Corinthians 5:5 at the church’s excommunication ceremony. It has been a long-standing policy of the courts not to involve themselves in disputes involving the excommunication of members. The First Amendment bars involvement in such suits. To resolve the issues in this suit the Court would be required to consider whether the church’s policy of excommunication is unjust. Consideration of such an issue would require resolution of matters of ecclesiastical cognizance and resolution of such matters is barred by the First Amendment.

[¶21]  Due to his “delivery to Satan,” Berry alleges he has suffered loss of property, destruction of livestock, and legal problems occurring on satanic feast days. Berry also alleges negligence and/or willful misconduct on the part of Assembly of God. Berry claims that as a result of defendant’s action he has suffered intense mental anguish, emotional distress, loss of sleep, problems on the job, and problems in social relationships Following the persuasive reasoning set forth by the court in Burgess, this Court concludes that all claims alleged by the plaintiff are “inextricably linked” to plaintiff’s excommunication by the church and are therefore barred by the First Amendment. The Court would be unable to make a judgment as to damages for this plaintiff without making some judgment as to the actions by the church when it excommunicated the plaintiff. Analyzing the church’s policy on excommunication would invade matters of ecclesiastical cognizance; therefore, all claims of the plaintiff are barred based upon free exercise clause of the First Amendment.

[¶22]  Using the analysis set forth by the court in Paul, permitting this Court to hear Berry’s claim of negligence and possibly the tort of intentional infliction of emotional distress1 Given this Court’s conclusion, it does not need to reach an opinion as to whether or not Berry has stated a claim of intentional infliction of emotional distress.

{fn1} (considering the intangible damages which Berry has alleged) would place a direct burden on the Assembly of God’s practice of excommunication. See Paul, 819 F2d at 881. The church would be discouraged from performing the practice because of the potential tort claims which plaintiffs would be allowed to bring. This type of discouragement of religious practices would be a direct burden on the church’s right to free exercise of religion.

[¶23]  “‘The constitutional guarantee of the free exercise of religion requires that society tolerate the type of harms suffered by [the plaintiff] as a price well worth paying to safeguard the right of religious difference that all citizens enjoy.’” Burgess, 734 FSupp at 35 (citing Bible & Tract Soc’y, 819 F2d at 884). Regardless of the jurisdictional basis alleged by Berry, the constitutional bar to Berry’s suit prevents the Court from having subject matter jurisdiction over this matter. Even considering the facts most favorable to the non-moving party, defendant Assembly of God is entitled to judgment as a matter of law.2. Based upon the Court’s conclusion, it is not necessary for the Court to address the additional reasons set forth by the defendant for summary judgment.{fn2}



McLain v. Chater, 1997 DSD 5

MITCHELL MCLAIN,

Plaintiff,

v.

SHIRLEY SEARS CHATER,

Commissioner of Social Security,

Defendant.)

[1997 DSD 5]

United States District Court

District of South Dakota - Western Division

CR96-5059

MEMORANDUM OPINION AND ORDER

Filed Feb 27, 1997.

RICHARD H. BATTEY, Chief Judge

PROCEDURAL HISTORY

[¶1]   On July 17, 1996, plaintiff/claimant Mitchell McLain (McLain) filed a complaint seeking review of the decision denying social security benefits to McLain. On November 5, 1996, defendant Shirley Sears Chater (Commissioner) filed a motion for summary judgment on the ground that no genuine issue as to any material fact exists and that therefore Commissioner is entitled to summary judgment as a matter of law. On November 15, 1996, McLain responded to Commissioner’s motion and requested that the case be reversed and that McLain’s disability benefits be reinstated. The Court has jurisdiction pursuant to 42 USC § 405(g).

[¶2]  On April 10, 1994, McLain filed an application for Title II disability benefits under Title II of the Social Security Act (the Act), 42 USC §§ 401-33. On October 19, 1993, McLain filed an application for Supplemental Security Income (SSI) benefits under Title XVI, 42 USC §§ 1381-83. McLain alleges an onset date for his disability of December 17, 1992. Initially, his applications were denied. McLain next filed a Request for Reconsideration which was also denied.

[¶3]  McLain then requested a hearing before the Administrative Law Judge (ALJ). On April 4, 1995, ALJ James W. Olson held a hearing on this matter. The ALJ determined that McLain has not performed substantial gainful activity since his onset date. (TR 18). The ALJ also concluded that McLain suffered from a “degenerative disc disease of the lumbar spine with herniation at L4-5, causing some impingement on the left L5 nerve root, and a bulging disc at L3-4.” The ALJ concluded that McLain’s impairments are severe. However, the ALJ determined that the severe impairments which McLain suffers from did not rise to the level of the Listing of Impairments. See Appendix1 to Subpart P, 20 CFR Part 404, Listing 1.05C. Finally, the ALJ concluded that McLain possesses the ability to perform past work activity as a service station attendant and that he was not under a disability as defined in the Act. (TR 19-22). Given his conclusion that McLain can perform past work, the ALJ held that McLain is not entitled to disability benefits and SSI. (TR 23).

FACTS

[¶4]  Plaintiff Mitchell McLain injured his back in May of 1989. He continued to work until he left his job as chief of police in 1992. (TR 46). His date of birth is September 30, 1963 (age 33).

[¶5]  The ALJ heard testimony regarding McLain’s previous employment. McLain has worked as a tire mechanic and a service station attendant. (TR 39). While working these jobs his duties consisted of the usual type of varied duties related to his employment. (TR 39-40). He states that he is no longer able to perform these type of duties because of the pain he would incur while performing them. (TR 40). McLain had also been employed by the Air Force as a security specialist from February of 1984 to May of 1984. (TR 39, 131). He was in the area of guarding missiles which, among other things, required a lot of walking. (TR 40).

[¶6]  McLain has worked as a parking enforcement officer (July 1984 to July 1985), a deputy sheriff corrections officer (July 1985 to July 1986), a deputy sheriff patrol officer (September 1986 to May 1990), and the chief of police in Selby, South Dakota (May 1992 to December 1992). (TR 39, 131). As a corrections officer, McLain was responsible for the safety and security of the inmates in the facilities. (TR 40). He was responsible for checking the cells routinely, transporting prisoners, and booking incoming inmates. (TR 40, 41). On occasion, McLain was also required to restrain the prisoners. (TR 41). In 1986, McLain began working as a deputy sheriff patrol officer. In 1990, McLain left his job as a patrol officer to return to college. (TR 44). His injury did not prevent him from regularly attending his college classes. (TR 38).

[¶7]  In May of 1992, McLain started his job as chief of police in Selby, a small town in South Dakota. As the chief of a one-person police department, he performed all the duties usually performed by an officer in a small town department. (TR 42). This job required that McLain sit for approximately five hours a day. (TR 43). Since he was the only police officer in Selby, his duties as chief of police did not differ greatly from his responsibilities as patrol officer. He stated that it was a “lighter position” as compared to his work as a deputy sheriff patrol officer. (TR 44-45). He quit working as the chief of police because he felt that the pain prohibited him from performing his daily duties. (TR 45). He said he could not handle the constant sitting and standing which the job required. (TR 45).

[¶8]  According to McLain, he is unable to return to any of his previous career fields because he “wouldn’t be able to function properly or efficiently because of [his] pain.” (TR 44). He quit working in December of 1992 because he stated his pain had gotten worse in some areas. (TR 47). When he left his job, his left leg would bother him because periodically it would go numb. (TR 47). Since he left his job, his right leg has also started to bother him. (TR 47). Besides his right leg, his condition at the time of the hearing had not changed from his condition in December of 1992. (TR 47).

[¶9]  McLain testified that his treating physician, Dr. Jenter, has placed certain restrictions on him because of his back condition. (TR 48). Dr. Jenter had limited the weight that he is allowed to lift to ten pounds. (TR 48). McLain is also not to sit or stand too long. (TR 48). He testified that he is able to stand for one hour or one hour and a half before the pain increases. (TR 48). He testified that he could touch his knees and squat, but that he did not know if he could touch his toes from a standing position. (TR 68). He also told the ALJ that he is able to move his fingers fine but has difficulty pulling and pushing his arms. (TR 68-69).

[¶10]  McLain testified that he has “good and bad days.” On a bad day, he would not be able to stand for an hour. (TR 49). He stated that is difficult for him to bend more than once every half hour and that on a good day he can only walk one or two miles if he stops frequently. (TR 49). On a good day, he has to lie down three times for a half hour each time. (TR 50). On a bad day, he may spend as many as five hours lying down. (TR 50). McLain also has problems with his left leg “giving way” on him. (TR 52). He estimates that he has fallen down twenty-five times in the last year due to his leg. (TR 52). According to Dr. Jenter, McLain suffers from atrophy of his leg and a foot drop. (TR 56-57). McLain stated that sometimes he can sit for an hour or an hour and a half. (TR 67).

[¶11]  Since 1992, McLain has been employed as a football coach in Hill City, South Dakota. (TR 53). This job requires that he draw up and call the offensive plays. (TR 53). It was an hour a day out of his time and games on the weekends. (TR 54).

[¶12]  McLain’s hobby is artwork. He testified that an art piece which used to take him a day would now take him a month. (TR 55). McLain also testified that since 1992 his recreational activities have been decreased. (TR 55). However, McLain’s doctor encourages him to remain active. These recreational activities have prevented his condition from deteriorating. (TR 56).

[¶13]  McLain took a functional capacities assessment (FCA) with Tony Yric. The FCA concluded that McLain can sit 4 to 5 hours a day, 50 to 55 minutes at a time; stand 3 hours a day, 15 to 20 minutes at a time; and walk 3 to 4 hours a day. The FCA also stated that he can bend/stoop, squat, crawl, climb stairs, crouch, kneel, and balance at least occasionally. The test showed that he has no problem grasping with his hands and no problem moving his head or neck. According to the FCA, McLain can move his right foot continuously and his left frequently. McLain testified that following this assessment, it took him two to three days before the level of pain was returned to the level before he took the test. (TR 60-61).

[¶14]  McLain takes the prescription drug propoxyphene and over-the-counter Tylenol. (TR 64-65). The propoxyphene causes him to feel light-headed. (TR 64). However, he testified that how often he takes the propoxyphene varies and on average probably five times a month. (TR 65).

[¶15]  Dr. Jenter testified that McLain is not able to perform any level of gainful employment on a regular continuous basis. (Exhibit 35). McLain testified that sometimes his medication upsets his stomach. (TR 64-65). Dr. Jenter limited the amount that McLain should lift to ten pounds. He also testified that depending on the surface McLain can stand from one hour to one and a half hours. He stated that on a good day McLain can walk a mile or two stopping frequently to rest and that McLain can sit for 30 minutes to one hour and a half at a time. Dr. Jenter stated that sometimes McLain’s left leg gives out.

STANDARD OF REVIEW

[¶16]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994), cert. denied, US , 115 SCt 722, 130 LEd2d 627 (1995)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). See also Onstead v. Sullivan, 962 F2d 803 (8th Cir. 1992) (quoting Whitehouse v. Sullivan, 949 F2d 1005, 1007 (8th Cir. 1991)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991).

[¶17]  However, the Court’s role under section 405(g) is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))). The Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith v. Sullivan, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980). As long as the ALJ’s decision is supported by substantial evidence, then this Court cannot reverse the decision of the ALJ even if the Court would have decided it differently. Smith v. Shalala, 987 F2d at 1374.

DISCUSSION

[¶18]  A disability is defined as

inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

In determining when a disability has occurred in a case, the ALJ must follow five prescribed steps. See Evaluation of Disability Rule, 20 CFR § 404.1520 (1996). The steps are summarized as follows:

(1)  First, a determination is made whether claimant is currently engaged in substantial gainful activity; if so, he must be found not disabled.

(2) If claimant is not engaged in substantial gainful activity, the next question is whether he is suffering from a severe impairment, defined as one that significantly limits the ability to perform basic work-related functions. If a severe impairment is not found claimant must be found not disabled.

(3) If there is a severe impairment, and it is one listed in Appendix 1 to Subpart P, claimant is found disabled on the medical evidence alone. [ See Appendix 1 to Subpart P of Part 404, 20 CFR §§ 404.1501 et seq. (1996)].

(4) If the impairment is not listed in Appendix 1, the next inquiry is whether claimant can perform relevant past work. If he can, a finding of no disability is required.

(5) Finally, if claimant cannot perform relevant past work, the question then becomes whether he can nevertheless do other jobs that exist in the national economy, despite his having a severe impairment that prevents return to his previous work.

McCoy v. Schweiker, 683 F2d 1138, 1141-42 (8th Cir. 1982). See also 20 CFR § 404.1520; 1 Harvey L. McCormick, Social Security Claims and Procedures § 410, at 346 (4th ed. 1991).

[¶19]  McLain does not object to the conclusions reached by the ALJ as to steps one and two. However, McLain does object to the ALJ’s conclusion as to step three. McLain stated that the medical records “clearly” provide evidence that McLain meets or equals an impairment listed under 1.05C of Appendix 1 to Subpart P. McLain also objects to the ALJ’s conclusion that McLain’s testimony and the testimony of his wife are not fully credible. McLain argues that the ALJ’s conclusion is not supported by substantial evidence. He also urges that it was legal error for the ALJ not to adopt the opinion of his treating physician.

I.

[¶20]  The first argument that McLain makes as a reason for reversing the Commissioner’s decision is that the record fails to provide substantial evidence for the ALJ’s conclusion that the impairments suffered by McLain do not meet or equal any of the impairments listed in Appendix 1. McLain believes that his impairment equals the impairment listed at 20 CFR Part 404(p), App. 1, Listing 1.05(c). This listing reads as follows:

C. Other vertebrogenic disorders (e.g., herniated nucleus puplosus, spinal stenosis) with the following persisting for at least 3 months despite prescribed therapy and expected to last 12 months. With both 1 and 2:

  1. Pain, muscle spasm, and significant limitation of motion in the spine; and

  2. Appropriate radicular distribution of significant motor loss with muscle weakness and sensory and reflex loss.

Id. The Commissioner believes that McLain incorrectly argues that this section applies to McLain.

[¶21]  For a listing to apply to a claimant, the claimant’s impairments must be so severe that based upon medical evidence alone the claimant is presumed to be disabled. See 20 CFR §§ 404.1525(a), 416.925(a) (1996). Also, the claimant must show that all the medical requirements for the listing are met. In Sullivan v. Zebley, 493 US 521, 110 SCt 885, 107 LEd2d 967 (1990), the Court stated, “For a claimant to show that his impairment matches a listing, it must meet all of the specified medical criteria. An impairment that manifests only some of those criteria, no matter how severely, does not qualify.” Id. at 891.

[¶22]  The issue the Court must consider is whether there is substantial evidence that listing 1.05C was not met. The Commissioner argues that McLain did not meet all the requirements of the listing because McLain did not prove by medical evidence the necessary motor and sensory loss. The ALJ also relied on this point in reaching his conclusion that the listing did not apply. (TR 18). The ALJ stated:

The claimant has not had the motor and sensory loss that is required to meet Listing 1.05C. For example, when evaluated by Larry L. Teuber, M.D., in August 1993, the claimant [had] 5/5 muscle strength (Exhibit 25, p.2). Deep tendon reflexes were present and equal and the sensory examination was normal. (Exhibit 25, p.2).

(TR 18).

[¶23]  McLain urges that the testimony of Dr. Teuber’s 1993 consultation does not contradict Dr. Jenter’s findings from 1994 and 1995. According to McLain, Dr. Jenter’s testimony shows evidence of “bilateral positive straight leg raising (TR at 203), increasing problems and symptoms on Mr. McLain’s right side (TR 203), and dictation from 1995 which shows weakness and measured atrophy of Claimant’s left lower leg. (TR 207).” McLain’s Reply Brief at 6. Based upon these examples, McLain urges his medical records show documentation of “weakness and sensory loss and confirm that Claimant meets the listings under 1.05C, as a matter of law.” McLain’s Reply Brief at 6.

[¶24]  At this step, the burden is upon McLain to establish that all the requirements of the listing are established. The Court finds that McLain failed to meet his burden of proof in this case, and without proof to the contrary there is substantial evidence in the record that all the elements of the listing were not established.

[¶25]  McLain objects to the ALJ’s reasoning that the listing was not satisfied, in part, because the ALJ is relying on the opinion of McLain’s consulting physician and not the treating physician.

The treating physician has the best opportunity to observe and evaluate a claimant’s condition. This court has on repeated occasions emphasized that the treating physician’s evidence must be given great weight, with deference to the physician’s findings over an examining physician or consultant.

Morse v. Shalala, 16 F3d 865, 872 (8th Cir. 1994). “The report of a consulting physician who examined that claimant once does not constitute ‘substantial evidence’ upon the record as a whole, especially when contradicted by the evaluation of the claimant’s treating physician.” Hancock v. Secretary of the Dep’t of Health, Educ. & Welfare, 603 F2d 739, 740 (8th Cir. 1979).   The claimant relies on Robertson v. Sullivan, 925 F2d 1124 (8th Cir. 1991), which recognized that “it is well settled, for instance, that a fact-finder is not permitted to adopt the opinion of a consulting physician who examined claimant only once over the opinion of claimant’s treating physician.”

[¶26]  In Clark v. Chater, 82 F3d 202 (8th Cir. 1996), the court concluded that the opinion of a claimant’s treating physician may be discounted. Id. at 204. The court stated, “We conclude that the ALJ properly discounted the opinion of Clark’s treating physician, in that his opinion was not consistent with the objective evidence in the record ... .” Id. at 204. The Eighth Circuit has stated that it is within the authority of the ALJ to resolve conflicts among the opinions of treating and examining physicians. Cabrnoch v. Bowen, 881 F2d 561, 564 (8th Cir. 1989). In this case, the ALJ discounted the credibility of Dr. Jenter because in his deposition he admitted that his “opinion is largely based upon what the claimant has told him about his functioning, rather than actual observance of the claimant.” (TR 21; TR 230). In concluding that listing 1.05C is met the “physical examination findings must be determined on the basis of objective observations during the examination and not simply a report of the individual’s allegations, e.g., he says his leg is weak, numb, etc.” 20 CFR Pt. 404, Subpt. P, App. 1, 1.00B. The fact that the treating physician, Dr. Jenter, admitted that often he would take McLain at his word is one reason why plaintiff has not met his burden to satisfy the listing.

[¶27]  Listing 1.05C requires “significant motor loss with muscle weakness and sensory and reflex loss,” and as stated previously, the listing must be established only by medical evidence. However, evidence was presented that McLain’s sensory examination was normal. (TR 18; Exhibit 25).

[¶28]  In this case the record provides evidence from several consulting physicians that McLain’s sensory was normal. On May 28, 1994, Kevin D. Whittle, M.D., Chief Medical Officer, in his Disability Determination and Transmittal, after observing McLain, also concluded that McLain’s sensory was normal. (TR 100). On June 14, 1989, Dr. Lee Ahrlin, M.D., stated that McLain had “[n]o sensory or motor deficits present.” (TR 161). McLain argues that Dr. Teuber’s findings are from 1993 and that Dr. Jenter’s findings from 1994 and 1995 are more recent and therefore more reflective of McLain’s impairments. However, in May of 1994, Dr. Whittle found that McLain’s sensory was normal. In addition, Dr. Jenter makes no clear conclusions as to McLain’s sensory and reflex loss where the other doctors have specifically concluded that McLain’s sensory was normal. The conclusions of Dr. Jenter do not clarify for the Court that the motor loss of McLain is significant. As required by listing 1.05C, McLain has failed to meet his burden of sensory and reflex loss by failing to set forth sufficient medical evidence or conclusions. The Court is to examine the evidence which detracts from the ALJ’s decision, but the Court is not to reweigh the evidence. There is substantial evidence supporting the conclusion of the ALJ that the listing requirement is not met.

II.

[¶29]  McLain second reason for arguing that the ALJ’s conclusion is inaccurate is because of the ALJ’s credibility determination as to the amount of pain which McLain is experiencing. When assessing the credibility of McLain’s testimony the ALJ set forth and applied the standard established in Polaski v. Heckler, 751 F2d 943 (8th Cir. 1984). The ALJ noted that McLain is expected to experience pain with his impairment, but that the evidence does not support that his pain is severe enough to preclude him from all substantial gainful activity. Regarding this point, the Eighth Circuit has stated, “An ALJ may not disregard a claimant’s subjective complaints of pain solely because they are not fully supported by objective medical evidence, but may properly discount the subjective complaints if inconsistencies exist in the record as a whole.” Wilson v. Chater, 76 F3d 238 (8th Cir. 1996).

[¶30]  In this case, the ALJ relied in part on the fact that even though McLain’s doctor had prescribed for him a strong pain medication he rarely uses it and instead uses Tylenol. The ALJ considered that McLain hunts less frequently since his impairment, but he still hunts twice a week. The ALJ noted that he is able to sit and fish, play board games, and watch movies. The ALJ also concluded that McLain’s description of his functional capacities is similar to the findings made in the FCA in April of 1994 and accepted the assessment as describing the ability of McLain’s current residual functional capacity.

[¶31]  McLain relies on Jeffery v. Secretary of Health & Human Servs., 849 F2d 1129, 1132 (8th Cir. 1988) in objecting to the ALJ’s conclusion that the pain is not severe enough to prohibit all substantial gainful activity. Specifically, McLain relies on the case for the fact that he believes there is evidence in the record for his preference for Tylenol over his prescription drugs and that based upon Jeffrey such evidence may not be used to discredit pain. In Jeffrey, the claimant testified to her growing fear of addiction on the prescription drugs and that she did not believe the prescription drugs were appreciably more effective than the over-the-counter pain killers. Id. at 1133. However, the court in Jeffery recognized that “a claimant’s allegations of pain may be discredited by evidence that [the claimant] relies on only mild pain medication or takes stronger medication only occasionally. Id. (citing Williams v. Bowen, 790 F2d 713, 715 (8th Cir. 1986)).

[¶32]  The ALJ’s reliance on the fact that the majority of the time McLain takes more mild over-the-counter pain killers instead of his prescribed pain killers is not misplaced. The Eighth Circuit has held that “[a] claimant’s allegations of disabling pain may be discredited by evidence that he or she has received minimal medical treatment and/or has taken medications, other than aspirin, for pain only on an occasional basis.” See Williams, 790 F2d at 715; Weber v. Harris, 640 F2d 176, 178 (8th Cir. 1981). There is substantial evidence in the record that McLain took his prescribed medication less frequently than over-the-counter pain killers.

[¶33]  In addition, McLain’s reliance on Jeffery is misplaced. In Jeffery, the ALJ failed to specifically identify any evidence that would discredit claimant’s complaints of pain. Jeffery, 849 F2d at 1132. Also, in Jeffery, claimant specifically testified to the fact that she was concerned about becoming addicted to her prescription drugs. Id. at 1133. McLain did not testify as to his fear of addiction, and the ALJ specifically stated reasons for discrediting McLain’s level of pain.

[¶34]  When considering McLain’s credibility as to the pain he is incurring, McLain also objects to the ALJ’s reliance— when reaching his conclusion— on the fact that McLain still goes fishing, hunts twice a week, and sits to play board games and watch movies. The ALJ also heard testimony by McLain that he goes camping once a month with his family, he still goes hiking, and he assisted in coaching a football team. McLain relies on cases in which a claimant has performed some daily activities but was unable to engage in substantial gainful activity. See Jeffery, 849 F2d at 1132; Thomas v. Sullivan, 876 F2d 666 (8th Cir. 1989). Case law permits the ALJ to consider daily activities when evaluating a claimant’s subjective complaints of pain. “Although daily activities alone do not disprove disability, they are a factor to consider in evaluating subjective complaints of pain.” Wilson, 76 F3d 238 (citing Russell v. Sullivan, 950 F2d 542, 545 (8th Cir. 1991)). See also Conley v. Bowen, 781 F2d 143 (8th Cir. 1986) (stating that the ALJ may consider inconsistencies in the record when determining making credibility findings as to claimant’s pain).

[¶35]  McLain also objects to the ALJ’s credibility determination because according to McLain, the ALJ chose “to use the FCA [Functional Capacities Assessment] to ignore and reject Claimant’s claimed pain and limitations is in error.” McLain points out that both Dr. Jenter, a medical expert, and Dr. Meiners, a vocational expert, do not see an inconsistency between the FCA and the pain testified to by McLain. McLain emphasizes that the testimony of Dr. Jenter points to the fact that the FCA does not show whether McLain would be able to perform substantial gainful activity on a regular basis. (Jenter deposition at 74, 75). McLain also points out that Dr. Meiners, after reviewing the FCA, testified that McLain could not be returned to competitive employment with his limitations. (TR 333).

[¶36]  However, the ALJ heard the testimony of Mr. Vigil but he did not hear the testimony of Dr. Meiners. As long as there was substantial evidence for the ALJ to accept Mr. Vigil’s opinion, the ALJ did not err. After hearing all the testimony of McLain, Mr. Vigil testified that McLain could perform the past relevant work of a service station attendant. The Court must look to evidence which detracts from the conclusion, but if there is substantial evidence to support the conclusion it may not reweigh the evidence. Based upon the testimony of Mr. Vigil, there was substantial evidence for the ALJ’s finding of fact that McLain could perform past relevant work. See Cabrnoch v. Bowen, 881 F2d 561, 563 (8th Cir. 1989) (stating, “it is also a matter of law that the fact findings of the ALJ underlying the Secretary’s decision are conclusive if supported by substantial evidence.”).

[¶37]  In reviewing the ALJ’s opinion, the Court does not find that the ALJ used the FCA to ignore McLain’s claimed pain. As mentioned above, the Court looked to how often McLain was taking his prescribed medication and the fact that McLain was still able to perform some everyday activities. The Court also considered the medical evidence before it. Specifically, in reaching its conclusion as to whether McLain is able to perform “gainful employment,” the ALJ recognized the testimony of Dr. Jenter.

[¶38]  After reviewing the favorable testimony and the disfavorable testimony, this Court finds that there is substantial evidence in the record to support the ALJ’s decision of credibility given to McLain’s testimony of pain. As long as the ALJ’s decision is supported by substantial evidence, then this Court cannot reverse the decision of the ALJ even if the Court would have decided it differently. Smith, 987 F2d at 1374.

III.

[¶39]  McLain’s third reason that the decision of the ALJ should be reversed is based upon the ALJ’s conclusion “that claimant’s impairments do not prevent him from performing his past relevant work.” McLain relies on the Eighth Circuit’s decision in Ulrick v. Heckler, 780 F2d 1381 (8th Cir. 1985). He argues that the ALJ’s decision cannot be based upon substantial evidence because the hypothetical question which the ALJ posed to the vocational expert, Mr. Vigil, did not take into account the fact that McLain could only sit or stand for a short period of time. McLain claims that the ALJ erred because the hypothetical question did not consider that McLain has good and bad days. The Commissioner believes that this argument is meritless because the ALJ was not required to hear testimony of a vocational expert where a claimant does not meet the burden of establishing the inability to perform past work. The Commissioner relies on case law which states that all limitations are not required to be included in a hypothetical question if the ALJ determines that such limitations were not credible. See Onstad v. Shalala, 999 F2d 1232, 1234 (8th Cir. 1993); Cruse v. Bowen, 867 F2d 1183, 1187 (8th Cir. 1989). McLain’s main objection is that the ALJ failed to set out for the vocational expert “claimant’s limitations regarding his good days and bad days, his frequent need to lay down for significant periods of time, and the fact that his left leg will ‘give out.’”

[¶40]  The vocational expert was present during McLain’s testimony at the hearing. (TR 76). At the hearing the ALJ presented the following question to the vocational expert,

Assume the same age, education, and work history, this time with these limits: Can sit for a half an hour to one hour, I think, can stand up to an hour, sometimes less, depends — This will vary, I’d say a half hour to an hour on both of those. It just depends on the day he’s having. That’s at one time. Can walk between 50 and 200 yards, depending on the day. His lifting is restricted to 10 pounds. He’s unable to walk on rough surface for any length of time, could bend over and touch his knees, but not his toes. Can do that maybe once an hour. Unable to squat and get back up easily, climb perhaps a flight of stairs at one time, but not repetitively. Can move— can do push and pull movements. I note in the record that his— probably his left arm has been in effect for only three months, bearing in mind the 12— month rule. He is able to manipulate his hand bilaterally... . [W]ould there be any job that exists in the national economy that an individual with those limits could perform?

(TR 81-82). The ALJ later asked if any of the jobs which the vocational expert believed that McLain could perform allowed McLain the opportunity to lie down. (TR 84). Given the combination of these questions, the ALJ covered the areas which McLain was concerned were not addressed except for the fact that McLain’s leg would give out on him. However, this factor was addressed by McLain’s attorney at the hearing. (TR 89).

[¶41]  In presenting the previous questions to the vocational expert, the ALJ excluded from the vocational expert’s consideration his opinion as to whether McLain could perform past work. (TR 82). As discussed above, the ALJ concluded that the testimony of McLain was not entirely credible and McLain could perform past work of a service station attendant and that such employment was available in the national economy. It was not necessary for the ALJ to consider the hypothetical questions which were posed to the expert given that the ALJ concluded that McLain was able to perform past relevant work. Gaddis v. Chater, 76 F3d 893, 896 (8th Cir. 1996) (holding that if a claimant is able to perform past relevant work then the services of a vocational expert are not necessary). Therefore, even if the ALJ erred in failing to pose all McLain’s impairments to the vocational expert, McLain’s objection is meritless given that the conclusion reached by the ALJ was not based on this hypothetical question.

IV.

[¶42]  McLain’s fourth reason for urging this Court to reverse the decision of the ALJ is that the entire record does not support the finding that McLain is able to perform gainful employment within the national economy. McLain basically reiterates the reasons set forth above for his conclusion that the record lacks substantial evidence in concluding that he is able to return to his previous employment as a station attendant. The Court disagrees.

[¶43]  The ALJ in part relied on the conclusions of the FCA and the vocational expert in concluding that McLain is able to perform past relevant work. Given that the treating physician did not perform a FCA, it was not error for the ALJ to rely on the one performed by Work Analysis Systems, Inc. Also, the testimony of McLain and his treating physician was similar to the conclusions reached in the FCA. In addition, in this case the ALJ is permitted but not required to look to the opinion of the vocational expert to determine if McLain could return to any of his past employment.

[¶44]  The ALJ is allowed to balance the testimony of the vocational expert’s interpretations of the FCA against the testimony of the treating physician. The testimony of a medical doctor is not to include vocational testimony. See Smallwood v. Chater, 65 F3d 87 (8th Cir. 1995) (stating, “The treating physicians ... gave opinions as to whether the claimant could find work or be gainfully employed... . This type of conclusion is outside the medical province ... .”). The evidence failed to establish that Dr. Jenter had the expertise to testify as a vocational expert. After hearing the testimony of McLain in this case, the vocational expert testified that given McLain’s situation he should be able to perform his past relevant work of service station attendant. (TR 80). In addition, there is substantial evidence in the record for the ALJ not to accept McLain’s credibility as far as the severity of his pain. The record showed that McLain still went hunting, fishing, hiking, and camping although not as often as he did before the injury. Also, even though he had been prescribed stronger prescription drugs, the majority of the time he took over-the-counter pain killers. McLain failed to meet his burden that he was unable to perform his prior work as a service station attendant. This Court concludes that based upon the record as a whole there is substantial evidence to conclude that McLain could perform past work as a service station attendant.

CONCLUSION

[¶45]  After reviewing the record, this Court finds that there is substantial evidence supporting the decision of the ALJ.

Accordingly, it is hereby

ORDERED that the decision of the ALJ is affirmed and McLain is not determined to be disabled under the Act.

IT IS FURTHER ORDERED that the summary judgment of defendant is granted (Docket #13) and the plaintiff’s request for reversal (Docket #11) is denied.



United States v. Red Elk, 1997 DSD 6

UNITED STATES OF AMERICA,

Plaintiff,

v.

RICHARD RED ELK,

Defendant.

[1997 DSD 6]

United States District Court

District of South Dakota - Central Division

CR. 96-30031

REPORT AND RECOMMENDATION FOR DISPOSITION

OF DEFENDANT’S MOTION TO DISMISS

FOR PROSECUTORIAL MISCONDUCT BEFORE GRAND JURY

Filed Jan 21, 1997

Mark A. Moreno, Magistrate Judge

[¶1]  Defendant, Richard Red Elk, has filed a Motion to Dismiss for Prosecutorial Misconduct Before Grand Jury and Memorandum of Law in support thereof, Docket Nos. 51, 52. Plaintiff, United States of America, has filed a written Objection to the Motion, Docket No. 56. The Motion was thereafter forwarded to this Court for handling pursuant to the District Court’s1. The Honorable John B. Jones, Senior United States District Judge, presiding.{fn1} earlier Order of Referral. Docket No. 39. Because defendant’s Motion is a dispositive one, the Court is only authorized to decide the same on a report and recommendation basis. In accordance with 28 USC § 636(b)(1), the Court does now make and propose the following Report and Recommendation for disposition of defendant’s Motion.

PROCEDURAL HISTORY

[¶2]  Defendant is charged with the murder of A.B., a twenty-month-old male child, in violation of 18 USC §§ 1111 and 1153. Docket Nos. 1, 2. The indictment charges that the killing was committed on or about November 2, 1992 in Eagle Butte, South Dakota on the Cheyenne River Reservation, and was done with malice aforethought and by the use of force that caused A.B. to suffer a fatal head trauma. Id. After being arraigned on the murder charge, defendant filed a Motion to Dismiss Based on Prosecutorial Misconduct That Occurred Before the Grand Jury. Docket No. 51. Defendant’s Motion was heard, along with various other Motions filed by him, in an evidentiary hearing held on December 5, 1996. Docket Nos. 75, 76, 78, 79.

DISCUSSION

I.

[¶3]  Defendant claims in his Motion that the actions and conduct of plaintiff’s counsel in conjunction with the grand jury proceedings constituted prosecutorial misconduct. He requests that the indictment be dismissed based on violations of his constitutional rights and/or pursuant to the supervisory powers of the District Court. In support of his request for dismissal, he alleges that prosecutors:

1.  Commented on the evidence;

2.  Called his ten-year-old son as a witness against him without benefit of family, counsel or a guardian ad litem, and in violation of the parent-child and family privileges.

3.  Threatened, intimidated and harassed witnesses related or thought to be sympathetic to him;

4.  Impermissibly, repeatedly and falsely told the grand jury that his wife was lying about A.B.;

5.  Misled the grand jury or otherwise engaged in fundamentally unfair tactics before it; and

6.  Compromised the independence of the grand jury.

II.

[¶4]  An indictment may be dismissed for prosecutorial misconduct only upon a showing of “flagrant error” that significantly infringes on the ability of the grand jury to exercise independent judgment and actually prejudices the defendant. United States v. Larrazolo, 869 F2d 1354, 1357 (9th Cir. 1988); Bank of Nova Scotia v. United States, 487 US 250, 255-60 (1988). Federal courts draw their power to dismiss indictments from two sources, namely constitutional error and their inherent supervisory powers. United States v. Isgro, 974 F2d 1091, 1094-99 (9th Cir. 1992), cert. denied, 507 US 985 (1993); United States v. DeRosa, 783 F2d 1401, 1404 (9th Cir.), cert. denied, 477 US 908 (1986).

[¶5]  “[A] court may dismiss an indictment if it perceives constitutional error that interferes with the grand jury’s independence and the integrity of the grand jury proceeding.” Isgro, 974 F2d at 1094. To warrant a dismissal on this ground, the prosecutorial misconduct “must significantly infringe upon the grand jury’s ability to render an independent judgment.” Larrazolo, 869 F2d at 1357 (citing DeRosa, 783 F2d at 1404)). The relevant inquiry thus focuses on the impact of the alleged misconduct on the grand jury’s impartiality, not on prosecutorial culpability. United States v. Sears, Roebuck & Co., Inc., 719 F2d 1386, 1392 (9th Cir. 1983), cert. denied, 465 US 1079 (1984); DeRosa, 783 F2d at 1405. Constitutional error is found “where the structural protections of the grand jury have been so compromised as to render the proceedings fundamentally unfair, allowing the presumption of prejudice” to the defendant. Bank of Nova Scotia, 487 US at 257 (citing Rose v. Clark, 478 US 570, 577-78 (1986);2. The Supreme Court has on a number of occasions held that deep-rooted irregularities in grand jury composition could affect the deliberative process and create a structurally defective body such that indictments could be dismissed without a showing of prejudice. See e.g., Vasquez v. Hillery, 474 US 254 (1986) (racial discrimination in selection of grand jurors compelled dismissal of indictment); Rose v. Mitchell, 443 US 545 (1979) (same); Ballard v. United States, 324 US 187 (1946) (exclusion of women from grand jury required dismissal). The Court, however, made clear in Bank of Nova Scotia, 487 US at 256-57 that these “structural defect” cases are not isolated exceptions to an overall rule, but instead are part of a discreet line of cases with a coherent message. Rather than require the defendant to make a difficult if not impossible showing of how subtle, inhehow biases and stereotypes from a racially or gender discriminatory jury can affect the indictment process to his/her detriment, the court simply created an irrebutable presumption of prejudice. Id. at 257 (“The nature of the violation allow[s] a presumption that the defendant was prejudiced, and any inquiry into harmless error would have required unguided speculation”); cf., United States v. Lamantia, 59 F3d 705, 708 (7th Cir. 1995); cert. denied, 116 SCt 711 (1996).{fn2} Isgro, 974 F2d at 1094. A constitutional violation may also be found if the defendant can show a history of prosecutorial misconduct that is so systematic and pervasive and that is affects the fundamental fairness of the proceeding or if the independence of the grand jury is substantially infringed. Bank of Nova Scotia, 487 US at 259; Isgro, 974 F2d at 1094.

[¶6]  A court may also dismiss an indictment under its own supervisory powers “because of misconduct before the grand jury, at least where [the] misconduct amounts to a violation of one of those ‘few, clear rules which were carefully drafted and approved by [the Supreme] Court and by Congress to ensure the integrity of the grand jury’s functions."’ United States v. Williams, 504 US 36, 46 (1992) (quoting United States v. Mechanik, 475 US 74 (1986) (O'Connor, J. concurring in judgment)). Courts, however, have repeatedly cautioned that such power is limited and must be used sparingly. See United States v. Santana, 6 F3d 1, 10 (lst Cir. 1993) (referring to such power as a “potent elixir that should not be casually dispensed”). Indeed, the Supreme Court has semaphored the limitations of such power in several of its recent decisions. See Williams, 504 US at 50 (“any power federal courts may have to fashion, on their own initiative, rules of grand jury procedure is a very limited one, not remotely comparable to the power they maintain over their own proceedings”); Bank of Nova Scotia, 487 US at 254 (federal court may not dismiss an indictment for errors in grand jury proceedings unless such errors prejudice the defendant and may not invoke its supervisory power to circumvent the harmless-error inquiry prescribed by FRCrP 52(a)); United States v. Hasting, 461 US 499 (1983) (a court may not invoke its supervisory power to reverse a conviction in order to castigate the prosecution for misconduct that did not prejudice the defendant); United States v. Payner, 447 US 727 (1980) (“the supervisory power does not authorize a federal court to suppress otherwise admissible evidence on the ground that it was seized unlawfully from a third party not before the court”); see also, Santana, 6 F3d at 9-11. Before dismissing an indictment pursuant to its supervisory power, a court must first find that the defendant was actually prejudiced by the misconduct alleged. Absent such prejudice - that is, absent proof that the misconduct “substantially influenced the grand jury’s decision to indict or proof that “there is ‘grave doubt’ that the decision to indict was free from the substantial influence of [the misconduct]” dismissal is not warranted. Bank of Nova Scotia, 487 US at 256. Even if the requisite showing of misconduct and prejudice has been made, nonetheless, a court must “tailorE ] relief appropriate [to] the circumstances.” United States v. Morrison, 449 US 361, 365 (1981). As the court observed in Bank of Nova Scotia:

Errors of the kind alleged in these cases can be remedied by means other than dismissal. For example, a knowing violation of [FRCrP 6] may be punished as contempt of court. In addition, the court may direct a prosecutor to show cause why he should not be disciplined and request the bar of the Department of Justice to initiate disciplinary proceedings against him. The court may also chastise the prosecutor in a published opinion. Such remedies allow the court to focus on the culpable individual rather than granting a windfall to the unprejudiced defendant.

487 US at 263 (citation omitted).

III.

[¶7]  At the outset, defendant claims that the prosecutors made impermissible comments about the evidence to the grand jury. He first complains about statements made by one of the prosecutors, during the early stages of the grand jury. After telling the jury that A.B. died “... from head injuries of the type being swung into a wall or hit by a bat on these two areas of his head ...”, the prosecutor said, “The only explanation that I can come up with is that [defendant] hurt this child at some time ... he’s the main suspect ... .” GrJ. Tr. (6-30-93) at 19, 21.3. These statements were made during the course of the prosecutor’s examination of defendant’s girlfriend at the time, Patricia Red Fox, in an apparent effort to obtain testimony from Red Fox that implicated defendant in A.B.’s death.{fn3} He next complains about the prosecutors informing the grand jury that it should not be “surprised” if witnesses related or sympathetic to defendant had “memory” problems and of the eventuality of being presented with the case and asked to return an indictment.4. The statements in question are as follows:

  [The prosecutor]: Don’t be surprised. I’m afraid that our first witnesses will all have terrible memories. But let me explain, that’s not all bad. Because when a witness comes in and says, I can’t remember, I don’t remember a thing, sometimes that’s fine, because then they can’t later on show up as a defense witness and say, Oh, yeah, I remember so-and-so confessed to me about that. Because they are trying to undermine the prosecution’s case when it actually gets there.

  So I don’t necessarily mind if a witness is brought in here and says, I can’t remember, I swear I can’t remember. Because then their credibility is undermined when they later show up and all of a sudden miraculously remember something that helps the defendant. ...

  But I do want them in here to either find out what they know or what they don’t know. Because one way or another, this case is going to be presented to you eventually for an indictment.

  ...

  [Prosecutor]: I think I will bring her back in and just ask her the question what is her recollection of how [A.B.] died. I’m sure she can’t remember but will bring her in and ask her that question.

GrJ. Tr. (10-18-95) at 16-18.{fn4}

[¶8]  Finally, defendant complains about a statement made by the same prosecutor concerning various post-mortem photographs of A.B. that were shown to the grand jury.5. After the testimony of one of the witnesses, some of the grand jurors and the prosecutor engaged in the following colloquy:

  Juror: The pictures did bother her. I could tell.

  [The prosecutor]: That’s what they are there for.

  Juror: Boy, you're ornery.

  Juror: No, she isn’t ornery enough.

GrJ. Tr. (10-18-95) at 42-43.{fn5}

[¶9]  The prosecutor often “serves as the ‘guiding arm of the grand jury’ and is responsible for [the] orderly and intelligible presentation of [the] case”. United States v. Singer, 660 F2d 1295, 1303 (8th Cir. 1981) (quoting United States v. International Paper Co., 457 FSupp 571, 576 (SD Tex. 1978), cert. denied, 454 US 1156 (1982).

The purpose of the grand jury requires that it remain free, within constitutional and statutory limits, to operate “independently of either prosecuting attorney of judge.” Nevertheless, a modern grand jury would be much less effective without the assistance of the prosecutor’s office and the investigative resources it commands. The prosecutor ordinarily brings matters to the attention of the grand jury and gathers the evidence required for the jury’s consideration. Although the grand jury itself may decide to investigate a matter or seek certain evidence, it depends largely on the prosecutor’s office to require the evidence or witnesses it requires. The prosecutor also advises the lay jury on the applicable law.

United States v. Sells Engineering, Inc., 463 US 418, 430 (1983) (citation and footnote omitted).

[¶10]  The prosecutor’s initial comments were made in the context of providing general background and investigative information to members of the grand jury, including the crime he (the prosecutor) believed had been committed and who committed it. Although the prosecutor did offer his own explanation for how A.B. was hurt, he told the grand jury that defendant was only a “suspect” and did not express his personal belief as to defendant’s guilt. See Sears, 719 F2d at 1388-94. There is certainly nothing iniquitous about the prosecutor advising the grand jury in general terms of the nature of an investigation and who the target of the investigation is. See United States v. Cederquist, 641 F2d 1347, 1353 (9th Cir. 1981) (grand jury aware that the prosecutor believes that an indictment is warranted and the fact that the prosecutor conveys such an impression to jurors does not require reversal).

[¶11]  Furthermore, the comments now being attacked were made to the first grand jury empaneled to hear evidence concerning the homicide investigation, not the grand jury that ultimately returned an indictment against defendant. Portions of the testimony heard by the first grand jury were read to the second grand jury. In addition, transcripts of all prior testimony were made available to the second grand jury but none of the grand jurors requested any information from the prior proceedings beyond what was read to them. The assailed comments were not read to the grand jury that indicted defendant. It is therefore unlikely that these comments had much, if any influence on the grand jury’s decision to indict defendant. See United States v. Carr, 764 F2d 496, 498-99 (8th Cir. 1985) (no prejudice where grand jury before which an FBI agent was improperly characterized as “an agent of the grand jury” did not hand down the indictment against defendant) cert. denied, 475 US 1010 (1986).

[¶12]  The prognosticative comments concerning “memory” problems of potential witnesses can be disposed of in short order. These comments were made in the midst of “strategy” discussions between the prosecutor and grand jury members and appear to be an attempt by the prosecutor to explain not only why certain witnesses were being called and had not been asked to testify before but also to give grand jurors an idea of what to expect from the witnesses. Significantly, the prosecutor explicitly stated that the purpose in calling these witnesses was “to [ ] find out what they know or what they don’t know” and added that recollection difficulties among witnesses is “not all bad” and that she (the prosecutor) did not necessarily mind if a witness, appearing before the grand jury, said that he/she could not remember. GrJ. Tr. (10-18-95) at 17. This Court sees nothing sinister about the prosecutor’s remarks but even if the remarks can be viewed as a comment about the credibility of the witnesses, the same did not constitute misconduct that can support a dismissal of the indictment. See United States v. Pabian, 704 F2d 1533, 1539 (11th Cir. 1983).

[¶13]  Nor did the prosecutor’s remark concerning the eventual presentment of the case for indictment invade the province of the grand jury and its independent deliberations and cause defendant prejudice sufficient to warrant a dismissal. See United States v. Montgomery, 990 F2d 266, 270-71 (7th Cir. 1993) (prosecutor’s use of the expression “we're indicting” in response to grand jury’s request for a list of names did not rise to the level of misconduct, compromise the integrity of the process or affect the substantial rights of the defendant). Moreover, to the extent that the statement can be construed as an indication from the prosecutor that an indictment was warranted, this impression, if in fact the same was conveyed to the grand jury, does not require dismissal of the indictment. Larrazolo, 869 F2d at 1360-61 (citing Cederquist, 641 F2d at 1353).

[¶14]  Similarly, the post-mortem photographs of A.B. (Which were shown to the grand jury) and the prosecutor’s remarks concerning same, even when viewed in combination, were not sufficiently inflammatory or flagrant to support a claim that absent the introduction of the photographs and the allegedly improper remarks, the indictment would not have been returned. See United States v. Edmonson, 962 F2d 1535, 1539 (lOth Cir. 1992) (allegedly inflammatory and prejudicial statements and improper photographs held to not constitute misconduct or error of the magnitude required for dismissal). Moreover, defendant does not contend that any of the witnesses altered their testimony or refused to testify because of the photographs. See United States v. Risken, 788 F2d 1361, 1370-71 (8th Cir.), rejecting defendant’s contention that the prosecutor’s threat to prosecute a witness for perjury so intimidated a witness that he refused to testify) cert. denied, 479 US 923, 1986. This, coupled with the lack of any reason showing of actual prejudice vitiates any misconduct assertions relating to the photographs. See United States v. McKie, 831 F2d 819, 821 (8th Cir. 1987).

IV.

[¶15]  Defendant also argues that prosecutors, by calling his ten-year-old son, P.R.E., as a witness before the grand jury, violated the “parent-child/family privilege” and caused the child psychological trauma. In response, plaintiff maintains that the child was a possible witness to the alleged murder and that the interests of justice in calling a potential eyewitness in a murder investigation outweigh any constitutional right to family integrity advanced by defendant.

[¶16]  As a threshold matter, any claim of prosecutorial misconduct, based on a violation of the “parent-child/family” privilege must fail because there is no such privilege which defendant is entitled to assert under these circumstances. In re Erato, 2 F3d 11, 16 (2d Cir. 1993); In re Grand Jury Proceedings of John Doe v. United States, 842 F2d 244, 246-48 (lOth Cir.), cert. denied, 488 US 894 (1988); United States v. Davies, 768 F2d 893, 893-900 (7th Cir.), cert. denied, 474 US 1008 (1985).

[¶17]  Yet even assuming, arguendo, that such a privilege does exist, defendant has no standing to assert the privilege because he was not the person subpoenaed to testify before the grand jury. See Payner, 447 US at 731-36; Trammel v. United States, 445 US 40, 51-53 (1980); see also, United States v. Leisure, 844 F2d 1347, 1359 (8th Cir.), cert. denied, 488 US 932 (1988).

[¶18]  Defendant cites In re Agosto, 553 FSupp 1298 (D.Nev. 1983) for the proposition that the parent-child/family privilege arises from the penumbras of the Constitution and that a child cannot be compelled to testify against his father. In Agosto, the district court quashed a grand jury subpoena which would have required a child to give testimony for use in a contemplated indictment against the child’s father. Because the court quashed the subpoena prior to the child having to testify, the defendant’s standing to assert the privilege never became an issue. More importantly, however, Agosto has never been followed by the Eighth Circuit6. Nor does it appear likely, in view of its prior precedent, that the Eighth Circuit would follow Agosto if asked to. See In re O'Brien, 728 F2d 1172, 1174 (8th Cir. 1984) (rejecting witness’ argument that compelled testimony before the grand jury would violate his First Amendment right to freedom of association by “compromising his social and family relationships”).{fn6} and has been rejected by virtually every other federal court that has been called upon to recognize and apply a parent-child/family privilege. See In re Erato, 2 F3d at 16; In re John Doe, 841 F2d at 246-48; Davies, 768 F2d at 896-900; Port v. Heard, 764 F2d 423, 428-30 (5th Cir. 1985); United States v. Ishmail, 756 F2d 1253, 1257-58 (6th Cir. 1985); In re Grand Jury Subpoena of Santarelli, 740 F2d 816, 817 (llth Cir. 1984); United States v. (Under Seal); 714 F2d 347, 349, n.4 (4th Cir. 1983); In re Matthews, 714 F2d 223, 224 (2d Cir. 1983); United States v. Jones, 683 F2d 817, 818-19 (4th Cir. 1982); United States v. Penn, 647 F2d 876, 885 (9th Cir.) (en banc), cert. denied, 449 US 903, (1980); In re Grand jury Proceedings of Starr, 647 F2d 511, 512-13 & n.4 (5th Cir. 1981); see also, United States v. Duran, 884 FSupp 537, 541 (D.D.C. 1995); United States v. Lavasseur, 699 FSupp 995, 1006 (D.Mass. 1988), aff'd, 867 F2d 36 (1st Cir. 1989);7. In addition, several states have expressly rejected the parent-child/family privilege. See e.g., In re Inquest Proceedings, 676 A.2d 790 (VT. 1996); State v. Good, 308 S.C. 313, 417 S.E.2d 643 (S.C.App. 1992); State v. Maxon, 110 Wash. 2d 564, 756 P.2d 1297 (1988); State v. Willoughby, 532 A.2d 1040 (Me. 1987); People v. Dixon, 161 Mich. App. 388, 411 NW2d 760 (1987); People v. Sanders, 99 Ill. 2d 262, 457 N.E.2d 1241 (1983); Three Juveniles v. Commonwealth, 390 Mass. 357, 455 N.E.2d 1203 (1983), cert. Denied, 465 US 1068 (1984); Cissna v. State, 170 Ind. App. 437, 352 N.E.2d 793 (1976).{fn7} but see, In re Grand Jury Proceedings, Unemancipated Minor, No. CY-96-1454A, 1996 WL 739256 at **3-10 (E.D. Wash. Dec. 17, 1996); In Re Greenberg, 11 Fed. R. Evid. Serv. 579 (D.Conn. 1982).8. Greenberg, like Agosto, has not been followed by any federal appellate court. See Unemanci- pated Minor Child, 1996 WL 739256 at ** 3-10: In re John Doe, 842 F2d at 247.{fn8} This Court agrees with the “great weight of authority” and finds that there is no compelling basis, legal or otherwise, for acknowledging a parent-child/family privilege under the circumstances present.

[¶19]  In any event, assuming, without conceding, that a parent-child/family privilege does exist and that defendant has standing to assert it, the privilege cannot and should not be applied in this case. In Trammel, the Supreme Court granted certiorari to consider whether an accused could invoke the privilege against adverse spousal testimony so as to exclude the voluntary testimony of his wife. 445 US at 41-42. The Court observed that the common law had long recognized a privilege protecting communications between husband and wife, priest and penitent, attorney and client, and physician and patient. 445 US at 4451. Even so, the Court observed that Congress, in the enactment of Fed. R. Evid. 501, granted federal courts the authority to “continue the evolutionary development of testimonial privileges in federal criminal trials [and federal grand jury proceedings] ... with the flexibility to develop rules of privilege on a case-by-case basis.” 445 US at 47. The Court, however, emphasized the facts that:

Testimonial exclusionary rules and privileges contravene the fundamental principle that “the public ... has a right to every man’s evidence.” As such, they must be construed and accepted “only to the very limited extent that permitting a refusal to testify or excluding relevant evidence has a public good transcending the normally predominant principle of utilizing all rational means for ascertaining truth.”

445 US at 50-51). (Citations omitted). Trammel makes clear that the search for truth and society’s quest to administer justice creates a strong presumption against testimonial privileges because they result in the suppression of competent evidence.

[¶20]  Confidentiality is the essential element of any privilege, and the importance thereof must be weighed against the “need for production of relevant evidence in a criminal proceeding [which] is specific and central to the fair adjudication of a particular criminal case in the administration of justice. Without access to specific facts, a criminal prosecution may be totally frustrated.” United States v. Nixon, 418 US 683, 713 (1974).

[¶21]  After carefully balancing the interests of the respective parties in light of relevant precedent, this Court believes that any parent-child/family privilege available to defendant is outweighed by plaintiff’s interests in investigating crimes and enforcing the criminal laws of the United States. See Branzburg v. Hayes, 408 US 665, 686-709 (1972); In re John Doe, 842 F2d at 245-48; Port, 764 F2d at 428-33.

[¶22]  Alternatively, this Court believes that the policy considerations underlying the Eighth Circuit’s decision in United States v. Allery, 526 F2d 1362 (8th Cir. 1975) apply with equal force here. In Allery, defendant was convicted of attempting to rape his twelve-year-old daughter. The Eighth Circuit held that the “anti-marital facts” privilege9. This privilege prohibits one spouse from testifying against one another during the length of the marriage. The “marital communications” privilege, by contrast, bars testimony concerning statements privately communicated between spouses.{fn9} is subject to an exception for offenses committed against a spouse and/or a child/stepchild. 526 F2d at 1366-67.

We recognize that the general policy behind the husband-wife privilege of fostering family peace retains vitality today as it did when it was first created. But, we note that a serious crime against a child is an offense against that family harmony and to society as well.

526 F2d at 1366. See also, United States v. White, 974 F2d 1135, 1137-38 (9th Cir. 1992) (citing Allery and holding that the “marital communications” privilege should not apply to a crime committed against a stepchild living in the home).

[¶23]  The fact that A.B. was a foster child as opposed to a child of either defendant or Red Fox is, in this Court’s view, a distinction without a difference. Allowing a parent to prevent his own child from giving eyewitness testimony that incriminates the parent in the death of another child residing in the home is not only inconsistent with any recognized privilege but also impedes the search for and the discovery of the truth and the doing of justice. Because the crime allegedly committed against A.B. was also an offense against defendant’s entire family and society as a whole, any privileged testimony was admissible.

[¶24.] For these reasons, the prosecutor did not abuse the grand jury process by subpoenaing P.R.E. before the grand jury and inquiring about the circumstances surround A.B.’s death.

V.

[¶25]  Defendant further asserts that various witnesses thought to be sympathetic to him, including P.R.E., were threatened, intimidated and harassed by prosecutors in front of the grand jury. The transcript of P.R.E.’s testimony reveals that he was gently questioned for a brief period of time and was given a break to be with his parents. GrJ. Tr. (2-11-93) at 48-87, 8992. During his testimony, P.R.E. disclosed that earlier in the day, defendant told him that he (defendant) “might be in trouble”. Id. At 82-83. Although P.R.E. testified before the grand jury on his own, his parents were in the immediate vicinity of the meeting room and thus able to provide him comfort and support if need be. Id. At 92. The prosecutor was kind and patient with P.R.E. and did not intimidate the child. Id. At 4887, 89-92.

[¶26.] Defendant contends that P.R.E. suffered “psychological trauma” as a result of his experience before the grand jury. The transcript, however, does not indicate that he was “traumatized” during his short time with the grand jury. More importantly, whether or not P.R.E.’s grand jury appearance caused him mental harm has little, if any, bearing absent some kind of showing that members of the grand jury were aware of this and influenced by it in their decision-making process. Inasmuch as defendant has failed to establish that P.R.E.’s testimony and alleged injuries influenced the grand jury’s decision to indict or unfairly affected its independent judgment, his misconduct assertions must fail. See Bank of Nova Scotia, 487 US at 256-62; United States v. Pino, 708 F2d 523, 529-31 (lOth Cir. 1983); see also, McKie, 831 F2d at 821.

[¶27]  In addition to his assertions relating to P.R.E., defendant likewise contends that one of the prosecutors intimidated certain witnesses by advising them of their rights and the consequences of testifying falsely. See GrJ. Tr. (10-18-95) at 9lo, 23-24, 55-57; GrJ. Tr. (10-19-95) at 4-6, 64-66. Defendant maintains that the prosecutor, by and through her advisements, “implicitly” threatened these witnesses with criminal prosecution and perjury charges.

[¶28]  “It is not improper per se for a ... prosecuting attorney to advise prospective witnesses of the penalties for testifying falsely. But warnings concerning the dangers of perjury cannot be emphasized to the point where they threaten and intimidate the witness into refusing to testify.” Risken, 788 F2d at 1370 (quoting United States v. Blackwell, 694 F2d 1325, 1334 (D.C. Cir. 1982)).

[¶29]  The prosecutor’s statements in the instant case do not approximate the kind of governmental misconduct held unconstitutional in Webb v. Texas, 409 US 95, 98 (1972) (per curiam) in which the trial court gratuitously and at great length admonished the defendant’s only witness not to lie and warned him of the dire consequences of perjury, or in United States v. Smith, 478 F2d 976, 979 (D.C. Cir. 1973), in which the prosecutor threatened to prosecute the prospective witness for past crimes if he took the stand and testified in a pending trial. Rather, this Court is convinced that the prosecutor’s statements amounted to a constitutionally permissible “warning” of the dangers of committing perjury. Risken, 788 F2d at 1371; see also, United States v. Holloway, 778 F2d 653, 657 (llth Cir. 1985) (prosecutor may inform witness that he would be subject to prosecution for lying to grand jury), cert. denied, 476 US 1158 (1986). All of the witnesses were able to testify and did so even after the perjury explanation was given to them. No witness was threatened with retaliatory prosecution if he/she refused to testify. The prosecutor’s remarks were limited to warning the witnesses about the serious consequences of testifying falsely and answering any questions they had about what perjury was. See e.g., GrJ. Tr. (10-19-95) at 4-6. The advisements given appear to be substantively the same or at least similar to the ones upheld in Risken. 778 F2d at 1370-71. [530.] While prosecutors should exercise considerable restraint when advising witnesses of the potential dangers of committing perjury, the prosecutor here stayed well within acceptable limits in her dealings with witnesses believed to be “on defendant’s side”. Risken, 788 F2d at 1370-71; Blackwell, 694 F2d at 133436; see also, Holloway, 778 F2d at 655-69.

VI.

[¶31]  Defendant next contends that prosecutors falsely accused his “wife”, Red Fox,10. Although defendant and Red Fox had five children together, resided under the same roof and may have been considered husband and wife in the “Indian way”, they did not marry until April, 1996, the same month defendant was indicted on the murder charge.{fn10} of lying to the grand jury. Id. at 59. The “accusatory” statements defendant refers to were made during the prosecutors’ examination of Red Fox.11. Defendant points to two instances where this occurred. First, after Red Fox testified that she could not really remember why she took A.B. to the hospital the night of November 2, 1992, one of the prosecutors retorted:

I don’t think there’s anyone in this room that believes that you can’t remember what you saw that made you think you should take him to the hospital. So tell the grand jury the truth about what you saw that made you think you should take him to the hospital... . GrJ. Tr. (10-19-95) at 35.

Later, when Red Fox could not remember how defendant disciplined A.B., the other prosecutor pressed harder:

But it’s fairly significant, in my opinion, that all of those children had expressed recollection of how [defendant] disciplined [A.B.]. I find it hard to believe that if the children noticed how [defendant] disciplined him that you would fail to notice.

So I’m going to ask you again to think a little bit harder and talk about how [defendant] Would discipline [A.B.].

Id. At 59.{fn11} It is apparent from the grand jury transcript that Red Fox was uncooperative at times and conveniently could not recall certain important events. Just as any other attorney would do when examining a hostile witness, prosecutors challenged Red Fox and her memory lapses, not in an effort to “insinuate” to the grand jury that she was lying, but rather in an attempt to flush out the truth and find out what really happened on the night of A.B.’s death. Prosecutors aggressively tried to solicit candid responses from Red fox about her knowledge of what transpired on the night in question but did not do so in such a flagrant or abusive manner that would dictate judicial intervention and corrective action. Sears, 719 F2d at 1393-94; Pabian, 704 F2d at 1539-40; see also, United States v. Rodriguez, 777 FSupp 297, 298 (SD N.Y. 1991) (prosecutor’s question to grand jury witness concerning whether he knew what a “cock and bull story” was was better left unasked but not too prejudicial as to warrant dismissal of the indictment); United States v. Ruiz, 702 FSupp 1066, 1072-73 (SD N.Y. 1989) (statements to first grand jury implying the prosecutor’s disbelief of defendant’s testimony did not constitute prosecutorial misconduct mandating dismissal of the indictment), aff'd, 894 F2d 501 (2d Cir. 1990).

[¶32]  The fact that the grand jury had been earlier furnished with Red Fox’s testimony and was thus aware of what she saw, did and knew of that fateful day, not only reinforces this conclusion but also rebuts any claim on the part of defendant and of actual prejudice. Id.; see also, Bank of Nova Scotia, 487 US at 254-63. So too does Red Fox’s handwritten log for the time period of September 23, 1992 through November 2, 1992 which the grand jury obtained from her in conjunction with her later testimony. See GrJ. Tr. (10-19-95) at 75-86 & Ex. 3.

[¶33]  Defendant bases his misconduct contention on United States v. Samango, 607 F2d 877 (9th Cir. 1979). In Samango, the prosecutor gave the grand jury lengthy transcripts of testimony given before previous grand juries and did not warn it of a key witness’ doubtful credibility. 607 F2d at 881-83. The Ninth Circuit found that the transcript of the defendant’s testimony was “an impressive repertory of insults and insinuations” and “contained much testimony by the prosecutor in the form of questions which were usually denied and definitely conveyed the prosecutor’s belief that [the defendant] was guilty and evasive.” 607 F2d at 883. The appeals court held that the “cumulative effect” of the prosecutor’s conduct “operated to the defendants’ prejudice by producing a biased grand jury” and affirmed the district court’s dismissal of the indictment. 607 F2d at 884-85.

[¶34]  The facts here are a far cry from those in Samango. In short, Samango is factually distinguishable and therefore inapposite.

VII.

[¶35]  Ever persistent, defendant argues that prosecutors misled the grand jury and failed to correct the false impression they created concerning his guilt. According to defendant, prosecutors elicited testimony that showed he and Red Fox borrowed money and attempted to hire an attorney shortly after the November 2, 1992 incident (thereby intimating that he must be A.B.’s killer) but offered no evidence to dispel this impression or explain his actions or motivations for doing so.

[¶36] The grand jury, however, need only hear the prosecution’s side of an investigation and need not be presented with exculpatory evidence in the possession of the prosecutor. Williams, 504 US at 51-52. A suspect or defendant has no right to have evidence favorable to him or her presented to a grand jury, just as he/she has no right to testify him/herself before such a body. Id. At 51; see also, Isgro, 974 F2d at 1096 (“in fairly expansive language, Williams clearly rejects the idea that there exists a right to such ‘fair’ or ‘objective’ grand jury deliberations”).

[¶37] Nonetheless, a prosecutor may not deliberately mislead a grand jury or instill false impressions to it in an effort to obtain an indictment. See DeRosa, 783 F2d at 1404-07. Yet, “absent some evidence of gross purposeful deception by the prosecutor, an indictment legally valid on its face will not be overturned because it is possible that some of the evidence presented to the grand jury may have permitted an erroneous adverse inference... .” United States v. Levine, 700 F2d 1176, 1179 (8th Cir. 1983) (quoting United States v. Cady, 567 F2d 771, 776 (8th Cir. 1977), cert. denied, 435 US 944 (1978)). Defendant does not claim that the indictment is invalid on its face. Nor has he met his burden and overcome the strong presumption of regularity afforded to grand jury proceedings or shown that the grand jury was, in fact, misled or deceived by the intentional conduct of the prosecutors or that he suffered actual prejudice therefrom. McKie, 831 F2d at 821; Kouba, 822 F2d at 773-74; United States v. Hintzman, 806 F2d 840, 843 (8th Cir. 1986); Levine, 700 F2d at 1178-80; United States v. Johnson, 767 F2d 1259, 1275 (8th Cir. 1985); see also, DeRosa, 783 F2d at 1404-07; Pino, 708 F2d at 529-31.

VIII.

[¶38] Finally, defendant claims that the independence of the grand jury was compromised and that dismissal of the indictment is mandated. This Court has carefully scrutinized the record and, particular, the grand jury transcripts and believes that the cumulative effect of the assignment of errors and indiscretions did not operate to defendant’s prejudice by producing a biased grand jury. In other words, the prosecutorial misconduct alleged was not a substantial encroachment on the grand jury’s ability to exercise its independent judgment. Edmonson, 962 F2d at 1539; Larrazolo, 869 F2d at 1357-61; DeRosa, 783 F2d at 140407; Sears, 719 F2d at 1391-94; Pino, 708 F2d at 529-31; see also, Bank of Nova Scotia, 487 US at 254-63; Isgro, 974 F2d at 1095-99.

IX.

[¶39]  In summation, this Court finds that the misconduct asserted was not sufficiently egregious to abrogate defendant’s constitutional rights12. Although some courts have analyzed the constitutional component of prosecutorial misconduct claims under the Due Process Clause of the Fifth and Fourteenth Amendments, see Samango, 607 F2d at 881 and United States v. Basurto, 497 F2d 781, 785 (9th Cir. 1974), in light of applicable precedent and the Constitution itself, it appears that the right to unbiased treatment by a grand jury is really one grounded in the Grand Jury Clause of the Fifth Amendment. Because the grand jury’s determination is a preliminary one, and because the entire panoply of constitutional protections are available to the defendant at trial, courts have not been inclined to extend due process rights to grand jury proceedings. See e.g., Calandra, 414 US at 349 (“Because the grand jury does not finally adjudicate guilt or innocence, it has traditionally been allowed to pursue its investigative and accusatorial functions unimpeded by the evidentiary and procedural restrictions applicable to a criminal trial”); Silverthorne v. United States, 400 F2d 627, 639 (9th Cir. 1968), cert. denied, 400 US 1022 (1971) (“If a grand jury is prejudiced by outside sources when in fact there is sufficient evidence to indict, the greatest safeguard to the liberty of the accused is the petit jury and the rules governing its determination of a defendant’s guilt or innocence”). Thus, as already alluded to herein, the constitutional grounds for dismissal of an indictment are limited. Indeed, “[a]n accused’s only cognizable interest in grand jury proceedings, therefore - the only interest that courts can vindicate by dismissing indictments on constitutional grounds - is to have a legally constituted grand jury make and form an independent evaluation of the evidence to determine if there is probable cause to believe [him/her] guilty of a crime. Sears, 719 F2d at 1391, n.7 (citing Cederquist, 641 F2d at 1352).{fn12} and support a dismissal of the indictment. The Court likewise finds that even when added together, the instances of alleged misconduct do not raise a substantial question, much less a grave doubt, as to whether they had a substantial effect on the grand jury’s decision to indict defendant on the murder charge. Inasmuch as defendant has failed to show the existence of either constitutional or prejudicial errors that warrant dismissal of the indictment, his Motion must be denied.

CONCLUSION AND RECOMMENDATION

[¶40]  Based on the foregoing and in accordance with 28 USC § 636(b)(1), this Court concludes that prosecutors did not circumvent the grand jury’s autonomy by using flagrant or overreaching conduct that requires the indictment be dismissed because of constitutional errors or pursuant to a court’s supervisory powers. Accordingly, the Court recommends that defendant’s Motion to Dismiss For Prosecutorial Misconduct Before Grand Jury, Docket No. 51, be denied.



United States v. Biesman, 1997 DSD 7

UNITED STATES OF AMERICA,

Plaintiff,

v.

BRYON BIESMAN,

Defendant.

[1997 DSD 7]

United States District Court

District of South Dakota - Western Division

CR96-50074

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT’S

MOTION TO SUPPRESS EVIDENCE

Filed Feb, 1997.

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On September 19, 1996, defendant was indicted for conspiracy to distribute a controlled substance, a violation of 21 USC §§ 841(a)(1) and 846. Defendant filed a motion to suppress evidence consisting of a propane torch and triple beam scale observed during a protective sweep of defendant’s residence wherein he was arrested pursuant to a valid arrest warrant. The motion was referred to Magistrate Judge Marshall P. Young who held a suppression hearing concerning the motion on January 2, 1997.

[¶2]  Magistrate Judge Young found that there was an insufficient basis to justify the protective sweep of defendant’s basement and recommended that the triple beam scale and propane torch be suppressed. See Docket #28. He further noted that in the event this Court determines that the protective sweep was justified, it was not a full search of the premises and only extended to a cursory inspection of those places where a person might be found. Id. Finally, Magistrate Judge Young reviewed the affidavit for the search warrant disregarding any reference to the scale or propane torch observed during the suppressed search and concluded that the search warrant was based on sufficient probable cause. Id.

STANDARD OF REVIEW

[¶3]  The Eighth Circuit Court of Appeals has set forth the following procedure for a district court to undertake when reviewing a magistrate judge’s findings and recommendations.

Once a proper objection is made to a magistrate judge’s finding, the district court must review that finding de novo. Taylor v. Farrier, 910 F2d 518, 521 (8th Cir. 1990); 28 USC § 636(b)(1). “In conducting [de novo] review, the district court must, at a minimum, listen to a tape recording or read a transcript of the evidentiary hearing.” Branch v. Martin, 886 F2d 1043, 1046 (8th Cir. 1989).

Jones v. Pillow, 47 F3d 251, 252 (8th Cir. 1995). Upon review of the suppression hearing transcript and consistent with the following discussion, the Court accepts Magistrate Judge Young’s finding, albeit a close call, that there was an insufficient basis to justify a protective sweep under the facts and circumstances of this case. However, the Court concludes that the torch and scale should not be excluded based on application of the inevitable discovery doctrine.

FACTS

[¶4]  Defendant was indicted for conspiracy to distribute a controlled substance on September 19, 1996. The indictment was sealed and an arrest warrant was issued. On September 27, 1996, at approximately 1 p.m., six law enforcement officers went to defendant’s residence to arrest him and serve the warrant. The six officers were Special Agents Robert Hanson and Kenneth Etchison of the Drug Enforcement Administration, Deputy United States Marshal Doug Ludovissie, Special Agent John Buszko of the Division of Criminal Investigation, Deputy Sheriff Lynn McLane of the Pennington County Sheriff’s Department, and Detective McCabe of the Rapid City Police Department (T.T. 19). The agents had a long history of intelligence information dating back to 1994 regarding defendant’s involvement with the manufacture and sale of methamphetamine (T.T. 13-17). Deputy McLane testified that defendant was implicated during numerous informant debriefings and two controlled purchases of methamphetamine were conducted at defendant’s residence in September of 1995 and August of 1996 (T.T. 13-17, 27). Deputy McLane and Agent Hanson further testified that defendant owned several automatic weapons and that methamphetamine affects personalities making users more dangerous particularly when they are around weapons (T.T. 15, 18, 61).

[¶5]  Approximately one hour prior to the officers’ entry into defendant’s residence, Deputy McLane surveyed the residence which included license plate checks on the vehicles around the residence (T.T. 25, 28). She determined that the automobiles at the residence belonged to defendant and Karen Jones, his girlfriend of seven years who jointly occupied the residence (T.T. 25). Also prior to executing defendant’s arrest warrant, several officers unsuccessfully attempted to execute another arrest warrant on Joseph Norman (T.T. 35, 40, 43, 64-65). Because Mr. Norman was not at his residence the inference could be drawn that he was at defendant’s residence given the fact that he was known to associate with defendant (T.T. 40). However, no vehicle registered to Mr. Norman was found at defendant’s residence, there was no specific instruction by any of the officers to look for Mr. Norman at defendant’s residence, and the officers did not ask Karen Jones or the defendant about Mr. Norman’s whereabouts. Id.

[¶6]  At approximately 1 p.m., Deputy McLane and Agent Etchison went around to the back of the home in order to insure that no one left or entered the residence (T.T. 20, 31). Hanson, Ludovissie, Buszko, and McCabe knocked on the front door and announced their presence to Karen Jones (T.T. 30-31). She informed the officers that defendant was sleeping in the back bedroom and requested they keep their voices down so that they would not wake up the nephew who was asleep in the living room (T.T. 10, 51). Agents Hanson and Buszko both testified that Agent Hanson and Marshal Ludovissie followed Jones into the back bedroom with their firearms drawn whereupon they found the defendant in bed (T.T. 39, 51, 53). Karen Jones testified that none of the officers unholstered their weapons (T.T. 6). Defendant was informed there was a warrant for his arrest, and the officers assisted him in getting dressed (T.T. 51-54).

[¶7]  Meanwhile, Agent Buszko and Detective McCabe did a visual sweep of the living room and kitchen areas for officer safety and to confirm that a child was in fact sleeping in the living room area (T.T. 31). Agent Buszko testified that approximately 15 to 30 seconds after their initial entry into the residence, he accompanied Detective McCabe down a set of stairs into the basement to ensure that no other individuals were in the house for purposes of officer safety (T.T. 31-32). This testimony is consistent with Deputy McLane’s testimony that upon her entry into the residence approximately two to three minutes after the initial entry, Agent Buszko and Detective McCabe had already returned from the basement area and defendant was being escorted out of the residence (T.T. 20-21). Once again Karen Jones contradicted the officers’ testimony by asserting that the officers did not enter the basement until after defendant was led out of the residence (T.T. 7).

[¶8]  In any event, Agent Buszko testified that both officers had their guns drawn and yelled “[p]olice, police, arrest warrant” when they entered the basement (T.T. 32, 44). They went in what appeared to be a bedroom wherein they observed in plain view a propane torch on a desk and a triple beam scale on a cabinet above the desk (T.T. 33). The officers did not open any cabinets or drawers, but simply looked in places where a person could have been hiding. Id. They came back upstairs as the defendant was coming out of the bedroom, announced the area was clear, and that no one was in the search area (T.T. 33-34). The officers secured the residence for approximately two and one-half hours while the search affidavit was being prepared (T.T. 41).

[¶9]  Agent Etchison drafted the affidavit for the search warrant which was issued by this Court. The affidavit contains extensive information obtained from six different informants regarding defendant’s use and distribution of methamphetamine from his residence. See Affidavit for Search Warrant at 2-6. The affiant further set forth that all six informants provided extensive information on drug trafficking in and around Rapid City, South Dakota, as well as in outlying states and that information has been confirmed either through other sources of intelligence or by their cooperating actions. Id. at 2-6, 8. The affidavit also includes the controlled methamphetamine purchase conducted at defendant’s residence on August 7, 1996. Id. at 7. The affidavit states that a grand jury indicted defendant on September 19, 1996, for conspiracy to distribute methamphetamine, and that he was arrested on September 19, 1996. Id. Finally, the affidavit does make reference to the triple beam scale and torch found in the basement of the residence. Id. at 8.

DISCUSSION

[¶10]  Defendant argues that the protective sweep of the entire house was invalid under the facts and circumstances confronting the officers and that there were no articulable circumstances that the officers were in a dangerous position based on evidence that: (1) the officers’ guns were holstered; (2) there was no yelling by police; (3) there were no dangerous persons within the house; and (4) the vehicle check indicated that only vehicles owned by defendant and Karen Jones were outside the residence (T.T. 64-65). Defendant further contends that the inevitable discovery doctrine should not apply under the facts of this case (T.T. 65-66).

[¶11]  The government argues that the protective sweep was lawful because the facts establish that the officers had specific, articulable facts upon which to believe that other persons may be present posing a danger to the officers, and the scope of the protective search was reasonable given the layout of the house. See Government’s Objections to Findings and Recommendations at 1-2 (Docket #31). The government further contends that application of the inevitable discovery doctrine is warranted based on defendant’s concession that there was sufficient probable cause for the issuance of the search warrant and Magistrate Judge Young’s finding that “there is ample probable cause to allow the issuance of a search warrant, absent any reference to the scale or propane torch found pursuant to the suppressed search.” Id. at 2-3 (citing Docket #28 at 7-8); (T.T. 62-63, 67).

[¶12]  A.  PROTECTIVE SWEEP

[¶13]  In Maryland v. Buie, 494 US 325, 110 SCt 1093, 108 LEd2d 276 (1990), the Supreme Court articulated an exception to the traditional warrant requirement for law enforcement effectuating an in-home arrest, permitting them to conduct a “protective sweep” of the premises to ensure officers’ safety. 110 SCt at 1098-1100. The Buie court addressed two types of “protective sweeps.” Id. at 1098-1099. Under the first less pervasive type of search, officers conducting a search incident to a lawful arrest may, “as a precautionary matter and without probable cause or reasonable suspicion, look in closets and other spaces immediately adjoining the place of arrest from which an attack could be immediately launched.” Id. at 1098. See also United States v. Hawkins, 59 F3d 723, 727 (8th Cir. 1995); United States v. Horne, 4 F3d 579, 586 (8th Cir. 1993) (permitting a protective sweep when defendant and three others in house had already been handcuffed at the time the sweep was made).

[¶14]  The second more pervasive search which is at issue in this case involves a sweep extending “only to a cursory inspection of those spaces where a person may be found” and lasting “no longer than is necessary to dispel the reasonable suspicion of danger and in any event no longer than it takes to complete the arrest and depart the premises.” Buie, 110 SCt at 1099. Officers may conduct such a protective sweep when they have “articulable facts which, taken together with the rational inferences from those facts, would warrant a reasonably prudent officer in believing that the area to be swept harbors an individual posing a danger to those on the arrest scene.” 110 SCt at 1098. See also United States v. Blackshiers, 52 F3d 331, 1995 WL 238835 at *1 (8th Cir. 1995) (permitting a protective sweep of a basement in which voices where heard and the arrestee informed officers that there was a shotgun in the basement).

[¶15]  The first issue to be resolved is whether articulable facts existed which, taken together with the rational inferences from those facts, would warrant a reasonably prudent officer in believing that defendant’s basement harbored an individual posing a danger to those on the arrest scene. Magistrate Judge Young found that such articulable facts were not present. Based on the following discussion, this Court agrees. In this case, the officers possessed a valid warrant for defendant’s arrest; therefore, they had the authority to enter defendant’s residence and search anywhere in the house that defendant might be found. See Payton v. New York, 445 US 573, 100 SCt 1371, 63 LEd2d 639 (1980). Upon knocking on defendant’s door, officers were informed by Karen Jones that defendant was sleeping in the back bedroom and were requested to keep their voices down so that they would not wake up the nephew who was asleep in the living room. Agent Hanson and Marshal Ludovissie followed Jones into the back bedroom with their firearms drawn whereupon they found defendant in bed. Defendant was informed there was a warrant for his arrest and they assisted him in getting dressed. There is no evidence that defendant resisted in any fashion.

[¶16]  To be sure, Agent Buszko and Detective McCabe were justified in conducting a visual sweep of the living room and kitchen areas for officer safety and to confirm that a child was in fact sleeping in the living room area. It is true that Karen Jones initially informed the officers that defendant was sleeping in a back bedroom; however, it would indeed be a dangerous policy for law enforcement to take every assertion or statement made to them at face value. Courts have consistently recognized that precautions taken by law enforcement in furtherance of their safety should not be routinely second-guessed. See Greiner v. City of Champlin, 816 FSupp 528, 541 (D. Minn. 1993) (citing United States v. Hensley, 469 US 221, 235, 105 SCt 675, 683, 83 LEd2d 604 (1985); United States v. Bruton, 647 F2d 818, 822 (8th Cir.), cert. denied, 454 US 868, 102 SCt 333, 70 LEd2d 170 (1981)).

[¶17]  However, Agent Buszko and Detective McCabe went beyond permissible boundaries violating defendant’s Constitutional privacy rights by entering defendant’s basement under the circumstances presented them. Agent Buszko testified that approximately 15 to 30 seconds after their initial entry into the residence, he accompanied Detective McCabe down a set of stairs into the basement to ensure that no other individuals were in the house for purposes of officer safety.1. This testimony is consistent with Deputy McLane’s testimony that upon her entry into the residence approximately two to three minutes after the initial entry, Agent Buszko and Detective McCabe had already returned from the basement area and defendant was being escorted out of the residence. This discredits Karen Jones testimony that the officers did not enter the basement until after defendant was led out of the residence. {fn1} Rather than electing to “freeze” the basement in order to prevent anyone from emerging and surprising the officers, and wait for the other officers to follow Karen Jones into the back bedroom to determine whether defendant was in fact sleeping, the officers chose to yell “[p]olice, police, arrest warrant” and enter the basement with their guns drawn. See Buie, 110 SCt at 1095 (officer announced that he would “freeze” the basement so that no one could come up and surprise the officers).

[¶18]  At the evidentiary hearing, the officers failed to articulate any specific basis for believing that the basement harbored any individual posing a threat to them. See United States v. Akrawi, 920 F2d 418, 420 (6th Cir. 1990) (holding unconstitutional a sweep of the second floor of a house after arrest occurred on first floor where officers could point to “no specific basis” for believing anyone posed a threat from the second floor). There was testimony presented at the evidentiary hearing regarding the unsuccessful attempt to execute another arrest warrant on Joseph Norman and that he was known to associate with defendant. However, no vehicle registered to Mr. Norman was found at defendant’s residence, there was no specific instruction by any of the officers to look for Mr. Norman at defendant’s residence, and the officers did not ask Karen Jones or the defendant about Mr. Norman’s whereabouts.

[¶19]  While officers did have information concerning defendant’s possession of several automatic weapons, they encountered no resistance upon entering the house, did not search or pat down Karen Jones, and had no difficulty in arresting defendant. Id. See generally United States v. Colbert, 76 F3d 773, 775 (6th Cir. 1996). They heard no noises or voices indicating that anyone might have been in hiding in the basement. Akrawi, 920 F2d at 419-20; Buie, 110 SCt at 1095; United States v. Sherry, 906 FSupp 1311, 1317 (D. Neb. 1995). Furthermore, the basement was not immediately adjoining the area in which defendant was arrested. See United States v. Lauter, 57 F3d 212, 216-17 (2d Cir. 1995) (permitting protective sweep of room immediately adjoining the area in which defendant was arrested). Based on the foregoing, this Court holds that there were no articulable facts which, taken together with the rational inferences from those facts, would warrant a reasonably prudent officer in believing that defendant’s basement harbored an individual posing a danger to those on the arrest scene to justify the sweep search of the basement. Therefore, the Court must determine whether the inevitable discovery doctrine should apply under the facts of this case.

[¶20]  B. INEVITABLE DISCOVERY DOCTRINE

[¶21]  The government contends that the propane torch and triple beam scale discovered during the sweep search fall under the inevitable discovery exception2. The Court notes that the government has argued that the torch and scale should not be suppressed based on the inevitable discovery rule approved in Nix v. Williams, 467 US 431, 104 SCt 2501, 81 LEd 2d 377 (1984), as opposed to the independent source doctrine announced in Silverthorne Lumber Co. v. United States, 251 US 385, 40 SCt 182, 64 LEd 319 (1920) and further elaborated on in Segura v. United States, 468 US 796, 104 SCt 3380, 82 LEd 2d 599 (1984) and Murray v. United States, 487 US 533, 108 SCt 2529, 101 LEd 2d 472 (1988). As stated by the Seventh Circuit,

While the inevitable discovery and independent source doctrines are closely related, they are not the same. The inevitable discovery doctrine applies where evidence is not actually discovered by lawful means, but inevitably would have been. Its focus is on what would have happened if the illegal search had not aborted the lawful method of discovery. The independent source doctrine, however, applies when the evidence actually has been discovered by lawful means. Its focus is on what actually happened--was the discovery tainted by the illegal search?

United States v. Markling, 7 F3d 1309, 1318 n.1 (7th Cir. 1993) (citations omitted).

{fn2} to the exclusionary rule. As stated by Judge Wollman, “[t]he inevitable discovery exception to the exclusionary rule articulated in Nix v. Williams, 467 US 431, 440-50, 104 SCt 2501, 2507-12, 81 LEd2d 377 (1984), allows the government to show by a preponderance of the evidence that the evidence seized would have been discovered in any event by lawful means. Id. at 444, 104 SCt at 2509.” United States v. Halls, 40 F3d 275, 276 (8th Cir. 1994). See generally United States v. Vance, 53 F3d 220, 221-22 (8th Cir. 1995). The Court finds that the government has shown by a preponderance of the evidence that the torch and scale would have been discovered in any event during the lawful search pursuant to the search warrant.

[¶22]  The government directs the Court’s attention to defendant’s concession that there was sufficient probable cause for the issuance of the search warrant and Magistrate Judge Young’s finding that “there is ample probable cause to allow the issuance of a search warrant, absent any reference to the scale or propane torch found pursuant to the suppressed search.” See Government’s Objections to Findings and Recommendations at 2-3 (Docket #31) (citing Docket #28 at 7-8). See also T.T. 62-63, 67. Reviewing Agent Etchison’s affidavit for the search warrant under the Franks-based approach of excluding the tainted evidence observed in the basement, the Court finds that the untainted information considered alone, overwhelmingly establishes probable cause. See Franks v. Delaware, 438 US 154, 171-72, 98 SCt 2674, 2684, 57 LEd2d 667 (1978); United States v. Estrada, 45 F3d 1215, 1218-20 (8th Cir. 1995) (finding under independent source doctrine analysis that the untainted information contained in the affidavit for search warrant established probable cause); United States v. Markling, 7 F3d 1309, 1316-17 (7th Cir. 1993) (elaborate discussion of the Franks-based approach); United States v. Whitehorn, 829 F2d 1225, 1231-32 (2d Cir. 1987) (stating that the “ultimate inquiry ... is not whether the underlying affidavit contained allegations based on illegally obtained evidence, but whether, putting aside all tainted allegations, the independent and lawful information stated in the affidavit suffices to show probable cause.”)

[¶23]  The affidavit contains an extensive summary of defendant’s drug activities dating back to 1994 and a wealth of detail from six informants who had seen methamphetamine inside defendant’s residence, purchased methamphetamine inside the residence, and in other ways were knowledgeable about defendant’s illegal drug activities. See Estrada, 45 F3d at 1218. The preponderance of the evidence shows that had a search warrant been sought based on these facts, it would have been granted and the evidence in question discovered. See Sherry, 906 FSupp at 1321. Excluding the evidence “would impermissibly place the prosecution ‘in a worse position simply because of some earlier police error or misconduct.’” Halls, 40 F3d at 277 (quoting Nix, 467 US at 443, 104 SCt at 2508). Therefore, the inevitable discovery doctrine is applicable and the torch and scale will not be suppressed.

CONCLUSION

[¶24]  Based upon the above discussion, defendant’s motion to suppress must be denied. Consistent with the Magistrate Judge’s findings and recommendations, this Court holds that there were no articulable facts which, taken together with the rational inferences from those facts, would warrant a reasonably prudent officer in believing that defendant’s basement harbored an individual posing a danger to those on the arrest scene to justify the sweep search of the basement. However, upon reviewing the affidavit for the search warrant under the Franks-based approach of excluding the tainted evidence observed in the basement, the Court finds that the untainted information considered alone overwhelmingly establishes probable cause. The Court further finds that the search pursuant to the search warrant would have resulted in the discovery of the propane torch and triple beam scale in the basement even if law enforcement officials had not already been alerted to their existence. Accordingly, it is hereby

[¶25]  ORDERED that defendant’s motion to suppress (Docket #20) is denied.



Athey v. Farmers Ins. Grp., 1997 DSD 8

DANIEL ATHEY,

Plaintiff,

v.

FARMERS INSURANCE GROUP,

Defendant.

[1997 DSD 8]

United States District Court

District of South Dakota - Southern Division

CIV. 96-4238

MEMORANDUM DECISION AND ORDER

MARSHALL, Magistrate Judge.

[¶1]  Plaintiff’s motion to compel discovery (Doc. 23) and defendant’s motion for protective order (Doc. 33) came before the court on February 27, 1997, for hearing. Plaintiff appeared by his counsel, James A. Hertz of Christopherson, Bailin & Anderson, while defendant appeared through its counsel, James E. Moore of Woods, Fuller, Shultz & Smith, P.C. The court has reviewed the various motions and the briefs filed in support of those motions, listened to the argument of counsel, and reviewed the entire file herein. Based upon that review, and good cause appearing therefor, the court will grant plaintiff’s motion to compel discovery (Doc. 23) and deny defendant’s motion for a protective order (Doc. 33) for the following reasons.

FACTUAL BACKGROUND

[¶2]  The undisputed facts of the case are that on or about December 3, 1993, the plaintiff, Daniel Athey, was involved in an motor vehicle accident with Robert F. Hajek at the intersection of Elmwood Avenue and Oak Street in Sioux Falls, South Dakota, in which plaintiff sustained injuries. At the time of that accident, the plaintiff was covered by a valid automobile insurance policy issued by defendant, Farmers Insurance Exchange, which policy included, among other coverages, underinsured motorist coverage for bodily injury or death with coverage limits of $100,000 per person and $300,000 per accident.

[¶3]  The plaintiff alleges in his complaint that at the time of the collision, Mr. Hajek was operating an “underinsured motor vehicle” within the meaning of his policy of insurance with the defendant; Mr. Hajek’s applicable coverage limits were $25,000. In its answer, the defendant admitted that it consented to the $25,000 settlement of plaintiff’s tort claims against Mr. Hajek’s insurer and waived its right to subrogation. The plaintiff claims he is entitled to the amount of money that will reasonably and fairly compensate him for all elements of loss, not to exceed the policy limit of $100,000, less the $25,000 coverage limits paid by Mr. Hajek’s insurance carrier.

[¶4]  In his complaint, plaintiff has pled both claims for breach of contract and bad faith failure to pay insurance claims. The defendant alleges that a claim for underinsured motorist benefits must be decided before a bad faith claim arises; thus, the defendant asserts that the bad faith action is at best premature because no decision has been made with regard to plaintiff’s underinsured motorist claim. Whether the claim has been denied appears to be a fact question which will not prevent discovery in this case.

DISCUSSION

[¶5]  Defendant’s objections to plaintiff’s discovery requests fall into three broad categories. Each category will be discussed separately.

[¶6]  1.  Relevance.

[¶7]  Defendant objected to Interrogatory No. 2 and Document Request Nos. 1 through 4 and 6 on the basis that the requests were beyond the scope of Rule 26(b) or beyond the scope of discovery. As such, the court will consider the objections to be one based upon relevancy.   The spirit of the Federal Rules, as well as the letter of those Rules, look to the free discovery of a wide range of information, some of which may prove to be inadmissible at trial. All of the matters sought by the plaintiff in these discovery requests seek relevant information or are requests that are reasonably calculated to lead to the discovery of relevant information. Accordingly, defendant’s objection on the basis that the requests are beyond the scope of discovery or beyond the scope of Rule 26(b) is overruled.

[¶8]  2.  Work product.

[¶9]  Defendant has asserted a work product objection in response to Interrogatory No. 2 and Document Request Nos. 1 and 7. The essence of defendant’s claim is that its investigation of this claim was done in preparation for litigation. However, most cases hold that insurer investigations are presumptively in the ordinary course of business and not in anticipation of trial. Henry Enterprises, Inc. v. Smith, 255 Kan. 615, 592 P.2d 915, 920 (1979). The rationale underlying such decisions is that Rule 26(b)(3) does not protect insurers, such as the defendant, from discovery simply because insurers always deal with potential trial claims. See, e.g. State Farm Fire & Casualty Co. v. Perrigan, 102 F.R.D. 235, 238-39 (W.D. Va. 1984).

[¶10]  Perhaps the most instructive case cited by either party on application of the work product doctrine to the investigative reports of insurance companies is APL Corp. v. Aetna Casualty and Surety Co., 91 F.R.D. 10 (D.C. Md. 1980). In that case, the District Court granted plaintiff’s motion to compel noting:

The courts have repeatedly recognized that, while litigation often results from an insurance company’s denial of a claim, it cannot be said that any document prepared by an insurance company after such a claim has arisen is prepared in anticipation of litigation within the meaning of Rule 26(b)(3). “[T]he nature of the insurance business is such that an insurance company must investigate a claim prior to determining whether to pay its insured.”

91 F.R.D. at 17, quoting Westhemeco, Ltd. v. New Hampshire Inns Co., (1979, SD NY.) 82 F.R.D. 702. If a different rule were applied, few, if any, documents prepared by an insurer would ever be discoverable as all could be said to have been prepared in anticipation of litigation any time after a claim has arisen. Such a result is logically absurd. APL Corp. v. Aetna Casualty and Surety Co., 91 F.R.D. at 18. Thus, defendant’s claim of work product privilege is overruled.

[¶11]  Defendant also claims that the discovery sought is protected by the attorney/client privilege. The existence of an attorney/client privilege presupposes confidential communications between a lawyer and his or her clients. Gray v. Dicknell, 86 F3d 1472, 1482 (8th Cir. 1996). In this case, the defendant has not identified any communications between its lawyer and any of the defendant’s employees to which the attorney/client privilege could apply. Because of that inability, defendant’s assertions that the matters contained in its claims file are covered by the attorney/client privilege is hereby overruled.

[¶12]  3.  Unduly burdensome or overbroad.

[¶13]  Defendant claims that it would be unduly burdensome for it to produce the complaints it has received concerning its claims policies. Specifically, defendant notes that Farmers received over 400 liability claims in the State of South Dakota in 1996. However, the affidavit Farmers offered in support of this claim belies the burdensome nature of plaintiff’s request. For example, the Affidavit of Terry L. Magee shows that Farmers maintains a state by state log pertaining to complaints that insured have made. Farmers need only identify the claim from that log and refer to the file to discover the disposition of that claim. Such a procedure is not unduly burdensome.

[¶14]  Generally, parties may obtain discovery regarding any unprivileged matter so long as it “appears reasonably calculated to lead to the discovery of admissible evidence.” F.R.Civ.P. 26(b)(1). Courts have construed this rule broadly “to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 US 340, 351, 98 SCt 2380, 2389, 57 LEd 2d 253 (1978). Here Plaintiffs’ discovery directly relates to its bad faith claim and thus appears relevant. Accordingly, the onus is on the party objecting to discovery to state the grounds for the objection “with specificity.” F.R.Civ.P. 33(b)(4). Mere recitation of the familiar litany that an interrogatory or a request for production is “overly broad, burdensome, oppressive and irrelevant will not suffice.” Josephs v. Harris Corp., 677 F2d 985, 992 (3d Cir. 1982); Mead Corp. v. Riverwood Nat. Resources Corp., 145 F.R.D. 512, 515 (D.Minn. 1992).

[¶15]  Here the defendants have merely stated that plaintiff’s request is “burdensome.” While the request covers a number of years, defendants have provided the court with no estimate of how many documents may be responsive to plaintiff’s request or how much time would be required to prepare a response. Thus, the court has no way to determine if the request is in fact “burdensome.” Moreover, from defendants’ response the court cannot determine whether there is any information at all that is responsive to plaintiff’s request. Defendants have failed to show that the plaintiff’s request is burdensome.

CONCLUSION

[¶16]  Based on the foregoing discussion, it is hereby

[¶17]  ORDERED that plaintiff’s motion to compel (Doc.23) is granted, and it is further

[¶18]  ORDERED that defendant’s motion for a protective order (Doc. 33) is denied.

[¶19]  The plaintiff’s request for costs and fees pursuant to Rule 37(a)(4) is hereby denied.



U.S. ex rel Steele v. Turn Key Gaming, 1997 DSD 9

UNITED STATES ex rel. JOHN YELLOW BIRD STEELE,

Plaintiff,

v.

TURN KEY GAMING, INC.

and WAYNE BARBER,

Defendants.

[1997 DSD 9]

United States District Court

District of South Dakota - Western Division

CIV. 96-5113

MEMORANDUM OPINION

and

ORDER GRANTING MOTION TO DISMISS

Filed March 18, 1997.

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On December 18, 1996, plaintiff filed this action as a qui tam1. Qui tam is an abbreviation for the Latin phrase “qui tam pro domino rege quam pro se imposo sequitur.” The phrase literally means “who sues on behalf of the king as well as for himself.” Black’s Law Dictionary 1251 (6th ed. 1990). See also Bass Anglers Sportman’s Soc’y v. United States Plywood-Champion Papers, Inc., 324 FSupp 302, 305 (SD Tex. 1971). {fn1} proceeding pursuant to 25 USC § 81. Plaintiff is an enrolled member of the Oglala Sioux Tribe (“Tribe”). Although plaintiff is the president of the Tribe, the action is brought by plaintiff individually and on relation of the United States. The Tribe is not a party to these proceedings.

[¶2]  Plaintiff alleges that defendants entered into two agreements dated January 19, 1995, in which defendant Turn Key Gaming, Inc. (“Turn Key”) agreed to provide management services for the casino known as the Prairie Wind Casino located on the Pine Ridge Indian Reservation. One agreement provided that Turn Key would rent to the tribe certain facilities and equipment to be utilized by the tribe in the conduct of its Class III gaming operation. (Complaint, Exhibit A.) The second agreement was an employment agreement for the Prairie Wind Casino in which the defendant Wayne Barber (“Barber”) was to become the employee of the Oglala Sioux Tribe in the operation and management of the casino. (Complaint, Exhibit B.)

[¶3]  The essence of plaintiff’s qui tam action is that Turn Key and Barber, in violation of 25 USC § 81, unlawfully received money from the Tribe pursuant to the agreements which had never been approved by the Secretary of Interior and Commissioner of Indian Affairs. Plaintiff seeks a recovery of $1.4 million paid under the rental agreement and in excess of $50,000 obtained by Barber under the employment agreement.

[¶4]  Plaintiff invokes the Court’s federal question jurisdiction under 28 USC § 1331.

DISCUSSION

[¶5]  A.  Qui Tam Actions

[¶6]  25 USC § 81 provides as follows:

§ 81.Contracts with Indian tribes or Indians

No agreement shall be made by any person with any tribe of Indians, or individual Indians not citizens of the United States, for the payment or delivery of any money or other thing of value, in present or in prospective, or for the granting or procuring any privilege to him, or any other person in consideration of services for said Indians relative to their lands, or to any claims growing out of, or in reference to, annuities, installments, or other moneys, claims, demands, or thing, under law or treaties with the United States, or official acts of any officers thereof, or in any way connected with or due from the United States, unless such contract or agreement be executed and approved as follows:

First. Such agreement shall be in writing, and a duplicate of it delivered to each party.

Second. It shall bear the approval of the Secretary of the Interior and the Commissioner of Indian Affairs indorsed upon it.

Third. It shall contain the names of all parties in interest, their residence and occupation; and if made with a tribe, by their tribal authorities, the scope of authority and the reason for exercising that authority, shall be given specifically.

Fourth. It shall state the time when and place where made, the particular purpose for which made, the special thing or things to be done under it, and, if for the collection of money, the basis of the claim, the source from which it is to be collected, the disposition to be made of it when collected, the amount or rate per centum of the fee in all cases; and if any contingent matter or condition constitutes a part of the contract or agreement, it shall be specifically set forth.

Fifth. It shall have a fixed limited time to run, which shall be distinctly stated.

All contracts or agreements made in violation of this section shall be null and void, and all money or other thing of value paid to any person by any Indian or tribe, or any one else, for or on his or their behalf, on account of such services, in excess of the amount approved by the Commissioner and Secretary for such services, may be recovered by suit in the name of the United States in any court of the United States, regardless of the amount in controversy; and one-half thereof shall be paid to the person suing for the same, and the other half shall be paid into the Treasury for the use of the Indian or tribe by or for whom it was so paid.

[¶7]  According to the plain words of the statute, all contracts made in violation of the statute are null and void and all money or other thing of value paid by any tribe may be recovered by a suit in the name of the United States in any court of the United States regardless of the amount in controversy; and one-half thereof shall be paid to the person and the other half shall be paid into the treasury of the United States in trust for the use of the Indian tribe for whom it was so paid. Thus, plaintiff Steele seeks payment to him individually of one-half of the amount paid by the Tribe, the other one-half to be paid to the United States. As stated, plaintiff Steele is not pursuing this action in his official capacity as president of the Oglala Sioux Tribe, but seeks a personal judgment to which he would be entitled one-half as an Indian person under section 81. Additionally, he seeks prejudgment interest, attorney’s fees, accounting fees, and other appropriate and reasonable expenses to which he may be entitled.

[¶8]  A qui tam action has been referred to as a “bounty hunter’s” statute.2. This statute also provides a remedy for violations of the Indian Gaming Regulatory Act. United States ex rel. Mosay v. Buffalo Bros. Management, Inc., 20 F3d 739 (7th Cir. 1994).{fn2} United States ex rel. Mosay v. Buffalo Bros. Management, Inc., 20 F3d 739 (7th Cir. 1994). Plaintiff Steele is the “bounty hunter.” The statute was originally enacted on May 21, 1872, ch. 117, 17 Stat. 136, now codified as 25 USC § 81. This section constitutes an independent grant of jurisdiction to the federal courts over the subject matter of the statute. The first qui tam statute appeared in the late 14th century in England and the Supreme Court has noted that qui tam has been around “ever since the foundation of our government.” See United States ex rel. Yellowtail v. Little Horn State Bank, 828 FSupp 780, 783 n.3 (D. Mont. 1992) (citing Marvin v. Trout, 199 US 212, 225, 26 SCt 31, 34, 50 LEd 157 (1905)).

DEFENDANTS’ MOTION TO DISMISS

[¶9]  In addressing a motion to dismiss, a court must take all facts alleged in plaintiff’s complaint as true and construe all allegations and reasonable inferences arising therefrom in the light most favorable to plaintiff. Palmer v. Tracor, Inc., 856 F2d 1131 (8th Cir. 1988). A motion to dismiss can be granted only if it appears beyond doubt that plaintiff can prove no set of facts which would entitle plaintiff to relief. Id. at 187; Conley v. Gibson, 355 US 41, 45-46, 78 SCt 99, 102, 2 LEd2d 80 (1957).3. The Court understands that it does have discretion to convert a motion to dismiss to a motion for summary judgment under Federal Rule of Civil Procedure 56, but declines to do so in view of the fact that granting the motion to dismiss is appropriate under these circumstances.{fn3} The Court assumes for the purpose of resolving the motion to dismiss that the two agreements of January 19, 1995, were not approved by the Secretary of the Interior or the Commissioner of Indian Affairs. The Court notes that appended on the bottom of each agreement is the statement, “Approved pursuant to 25 USC 81 and other applicable federal statutes on the 26th day of January, 1995, by Delbert Brewer, Superintendent, Bureau of Indian Affairs, Pine Ridge Agency, Pine Ridge, South Dakota.” For the purpose of deciding the motion the Court assumes, as it must, that the approval was not in compliance with the statute.

[¶10]  In support of defendants’ motion to dismiss, defendants allege that (1) the Oglala Sioux Tribe is an indispensable party which has not been joined, requiring dismissal of the case; (2) Steele lacks standing to bring a qui tam action; and (3) the January 19, 1995, agreements do not relate to “Indian lands,” thereby requiring the necessary section 81 approval.4. The Court is not unmindful of other grounds urged in support of motion to dismiss, namely (4) the Tribe and its president are impermissibly splitting their causes of action; (5) defendants’ counterclaim should survive the Conley v. Gibson test, and (6) even though the agreements were not required to be approved by the Bureau of Indian Affairs, both agreements were in fact approved by Brewer’s endorsement. In view of this Court’s ruling, it is unnecessary to discuss these alleged grounds for relief.{fn4}

LACK OF STANDING

[¶11]  Defendants invite the Court to hold that plaintiff lacks standing to pursue this action. The Court declines the invitation. The Court notes some cases have been dismissed for lack of standing. One such case is In re United States ex rel. Hall, 825 FSupp 1422 (D. Minn. 1993),5. See also United States ex rel. Yellowtail v. Little Horn State Bank, 828 FSupp 780 (D. Mont. 1992), aff’d on other grounds, 15 F3d 1095 (9th Cir. 1994).{fn5} a qui tam action brought by members of an Indian tribe against non-Indians merchants and vendors challenging validity under federal law of contracts entered into by tribes in the course of establishing and operating tribal gaming enterprises. In applying the Supreme Court’s holding in Warth v. Seldin, 422 US 490, 498, 95 SCt 2197, 2205, 45 LEd2d 343 (1975), the district court dismissed all of the actions brought in that multiparty litigation for lack of standing. As an alternate ground for dismissal, the court held that the Indian tribes were indispensable parties under Federal Rule of Civil Procedure 19. The court held that the tribes could not involuntarily be joined due to the tribes’ sovereign immunity since the Indian tribes were parties to the agreements under consideration, the court held that the tribes were therefore indispensable. The action was then dismissed.

INDISPENSABLE PARTIES

[¶12]  In an unpublished per curiam opinion, the Eighth Circuit affirmed the dismissal in Hall for failure to join indispensable parties. The opinion stated as follows:

The tribes cannot be joined involuntarily because they are entitled to sovereign immunity, and there is no indication that the immunity would be waived. We agree with the District Court that the tribes are necessary parties within the meaning of Fed. R. Civ. P. 19(a)(2)(i). They are parties to the challenged contracts, and their interest in the validity of the contracts would be directly affected by a judgment declaring the contracts void and unlawful, which is the relief sought by the plaintiffs. Under Fed. R. Civ. P. 19(b), the question then becomes “whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” For the reasons given in the above opinion of the District Court, we agree with the Court that the Indian tribes are indispensable in the sense that word is used in Rule 19. It is simply inconceivable to us that a suit claiming that a contract is invalid should be allowed to proceed in the absence of all parties to the contract.

This ground — failure to join indispensable parties — is adequate to dispose of the entire case, and we affirm on that basis. It is thus not necessary for us to reach the issues of standing and of the merits that the parties have briefed. The judgment is affirmed, substantially for the reasons given in that portion of the District Court’s opinion that deals with Rule 19. See 8th Cir. R. 47(B).

[¶13]  The opinion of the Minnesota district court and the unpublished opinion in affirmance are the end of the story. See also United States ex rel. Hall v. Tribal Dev. Corp., 100 F3d 476 (7th Cir. 1996), which dismissed the 42 qui tam actions originally brought in the United States District Court for the District of Minnesota. United States ex rel. Hall v. Tribal Dev. Corp., 49 F3d 1208 (7th Cir. 1995); In re United States ex rel. Hall, 825 FSupp 1422 (D. Minn. 1993), aff’d, 27 F3d 572 (8th Cir. 1994), cert. denied, US , 115 SCt 1112, 130 LEd2d 1076 (1995).

[¶14]  The Court notes in plaintiff’s memorandum brief that plaintiff would invite this Court to discount the Eighth Circuit per curiam opinion as one not to be relied upon as precedent. The affirmance was pursuant to Eighth Circuit Rule 47(B). This Court also declines this invitation. Rule 47(B) is a rule often applied by the appellate court for the enforcement of a lower court’s decision without opinion. The rule provides:

A judgment or order appealed may be affirmed or enforced without opinion if the court determines an opinion would have no precedential value and any of the following circumstances disposes of the matter submitted to the court for decision:

(1)  a judgment of the district court is based on findings of fact that are not clearly erroneous.

(2)  ...

(3)  ...

(4)  No error of law appears.

Indeed, the appellate court from time to time does quote from its own unpublished opinions.6. For example, the Court of Appeals has cited an unpublished opinion in Jones v. Mabry, 723 F2d 590, 595-96 (8th Cir. 1993). {fn6} The fact that Hall was affirmed in an unpublished opinion in no way detracts from Hall’s precedential value. The affirmance enhances Hall’s precedential authority.

[¶15]  Plaintiff simply misperceives the effect of an unpublished opinion on Hall and invites the Court to adopt the ruling of Arrow v. Gamblers Supply, Inc., 55 F3d 407 (8th Cir. 1995). This is the third invitation which this Court declines. Arrow was not a case ruling on whether the Yankton Sioux Tribe was an indispensable party. That case was one where the tribe’s motion was treated as a request to intervene pursuant to Federal Rule of Civil Procedure 24. See Part 2, head note 1. In that case United States District Judge John Jones, District of South Dakota, denied intervention because of the tribe’s failure to act in a timely fashion, so the court in its discretion refused intervention. The facts in Arrow differ materially from the present case. In Arrow, the tribe made a belated Rule 19 motion for joinder. The district court barred the motion on the basis of laches.

[¶16]  The Tribe has not joined this action. While the Court can only speculate as to why the Tribe did not join in this case and thereby waive its sovereign immunity, there are many independent reasons why it might not wish to do so. Perhaps the Tribe was not offered the opportunity to join. In addition to simply not wishing to involve the Tribe in this litigation, the tribal council may have believed that to associate itself in a qui tam action may jeopardize its future ability to involve itself with other persons, both Indian and non-Indian in the management and operation of gambling casinos within the reservation. The Minnesota district court in Hall, 825 FSupp at 1429, referred to such a reason as follows:

In a larger sense, the precedent set by rescission of transactions freely entered by the tribes would likely be extremely prejudicial to the tribes’ long term interest in Indian gaming and the revenue it provides. The plaintiffs essentially seek rescission of the contracts and disgorgement of money paid for goods and services rendered pursuant to those contracts. The message such a judgment would send to outside vendors would be that transactions with Indian gaming enterprises are subject to cancellation at any time and without regard to whether the contracts were freely and fairly negotiated, the extent to which the parties have performed their duties under the contracts or the settled expectations and reliance of the parties. Very few merchants would be willing to transact business with Indian casinos under such risky conditions. This might well signal the end of Indian gaming in the Upper Midwest. Regardless of whether such a judgment would otherwise constitute the correct application of the law, it would undeniably be prejudicial to the interests of the Indian tribes.

Finally, the Tribe may simply conclude that the concept of sovereign immunity which the Tribe enjoys is much too important of a concept to waive for the purpose of this qui tam action.

[¶17]  In the application of Rule 19 of the Federal Rules of Civil Procedure, there is a two-part inquiry which the Court must consider. Rule 19(a) refers to persons to be joined if feasible and Rule 19(b) provides for a determination as to whether “in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” The factors to be considered by the Court include: First, to what extent a judgment rendered in the person’s absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person’s absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

[¶18]  In considering the first factor, the Court points out that this case has only been filed for a short duration (December 18, 1996). Discovery has barely begun. As stated by the appellate court in United States ex rel. Hall, “it is simply inconceivable ... that a suit claiming that a contract is invalid should be allowed to proceed in the absence of all the parties to the contract.” Nos. 93-2903MN, 93-3089MN, slip op. at 4 (8th Cir. 1994). Additionally, the precedent-setting conduct of the Tribe in rescinding transactions freely entered into by the Tribe would likely be extremely prejudicial to the Tribe’s long-term interest in Indian gaming and the revenue it provides. Tribal gaming operations are relatively new in this state7. In 1986 the South Dakota Constitution was amended to authorize a state lottery or video games of chance. See S.D. Const. art. III, § 25. On March 1, 1989, South Dakota enacted a statutory scheme authorizing video lottery games which became effective July 1, 1989. See 1989 S.D. Sess. L. Ch. 368 (codified as amended at S.D.C.L. ch.. 42-7A, including S.D.C.L. §§ 42-7A-1, -3, -4, -89, -13 through -16, -36 through -50). {fn7} and if they are to become successful, it would be important that the tribes not rescind otherwise valid contracts which have as their mission the fostering of successful gambling operations on the state’s Indian reservations.

[¶19]  In addressing the second factor outlined in Rule 19(b), the prejudice to the Tribe cannot be lessened. If the contracts violate 25 USC § 81, they are void. If not, they fully comply with the law and are valid. See In re United States ex rel. Hall, 825 FSupp at 1431. The Court believes that both the third and fourth factors pale in importance to the first and second factors, and thereby the Court determines that since joinder is not feasible by reason of the very important concept of tribal sovereignty, the case must be dismissed.

CONCLUSION

[¶20]  Based upon the finding by this Court that the Oglala Sioux Tribe is an indispensable party and the equitable principles enunciated in Rule 19, do not favor a continuation of the action independent of the Tribe as an important party to the January 19, 1995, agreements, the Court dismisses the action by judgment entered herewith. The matter of the application of the federal rule of standing must await further discussion in another case at another time. It is

[¶21]  ORDERED that defendants’ motion to dismiss plaintiff’s complaint is granted.

[¶22]  IT IS FURTHER ORDERED that plaintiff’s motion to dismiss defendants’ counterclaim is denied as moot.

[¶23]  IT IS FURTHER ORDERED that defendants’ motion to consolidate with Civ. 96-5084 is denied as moot.



Pummel v. Lutheran Hospital & Homes, Inc., 1997 DSD 10

DAVID PUMMEL,

KELLIE PUMMEL, individually; and DAVID PUMMEL and KELLIE PUMMEL,

as Guardians Ad Litem for DEREK S. PUMMEL, a Minor,

Plaintiffs,

v.

LUTHERAN HOSPITALS AND HOMES SOCIETY OF AMERICA,

d/b/a BELLE FOURCHE HEALTH CARE CENTER

Defendant.

[1997 DSD 10]

United States District Court

District of South Dakota - Western Division

CIV. 95-5076

MEMORANDUM OPINION AND ORDER

GRANTING DEFENDANT’S PARTIAL MOTION FOR SUMMARY JUDGMENT



RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On November 2, 1995, plaintiffs David and Kellie Pummel [hereinafter “parents”] commenced this diversity action individually and on behalf of their minor son Derek Pummel. They allege that Derek was permanently injured by negligent treatment he received from defendant hospital. They further allege a cause of action in their own right for emotional distress and loss of consortium. See Complaint at ¶¶XVI-XX (Count III) and ¶XXIII (Count IV). On February 18, 1997, defendant filed a partial motion for summary judgment as to counts III and IV of plaintiffs’ complaint asserting that the parents’ claims for emotional distress and loss of consortium are legally non-cognizable under South Dakota law. See Docket #18.

[¶2]  The Court has jurisdiction pursuant to 28 USC § 1332.

FACTS

[¶3]  A.  DEREK PUMMEL

[¶4]  Derek Pummel was born on November 7, 1993, at defendant hospital. See Defendant’s Statement of Material Facts at ¶1 [hereinafter “DSMF at ¶ ”]. Following birth and treatment for complications not at issue in this action, Derek was placed in an isolette with a chemical warming pad. Id. at ¶2. While in the isolette Derek was severely burned on his shoulder, neck, and back of the head. Id. at ¶3. Defendant accepts legal liability for Derek’s burns. Id. at ¶4.

[¶5]  B.  DAVID AND KELLIE PUMMEL

[¶6]  Approximately one-half hour after being placed in the heated isolette, Derek began crying and screaming. See Plaintiffs’ Statement of Material Facts at ¶6 [hereinafter “PSMF at ¶ __ ”] (citing Affidavit of David Pummel at ¶3). Kellie could hear her son screaming from a nearby room in the hospital where she had been taken after delivery. See Affidavit of Kellie Pummel at ¶3. Both parents questioned defendant hospital personnel as to what was causing their newborn child to scream, but no action was taken by defendant hospital. See PSMF at ¶7 (citing Affidavit of David Pummel, ¶¶3-4) (citing Affidavit of Kellie Pummel at ¶3; Deposition of Kellie Pummel; Deposition of David Pummel).

[¶7]   When Derek was finally lifted from the isolette by a nurse, David immediately saw blisters and redness to his son’s neck, back, shoulders, and arm. Id. at ¶10. He exclaimed “he’s been burned!” Id. (citing Affidavit of David Pummel at ¶6). Plaintiffs further allege that the nurse ignored David’s concern and the injury to his newborn child when she placed Derek on a metal scale on his back without further care. Id. at ¶11 (citing Affidavit of David Pummel at ¶7) David then went to his wife’s room and informed her that their son had been burned. Id. at ¶13 (citing Affidavit of David Pummel at ¶10; Affidavit of Kellie Pummel at ¶6).

[¶8]  In his affidavit, David sets forth that he felt extreme shock fright, anxiety, worry, and rage, and could feel his heart pounding during the time he observed his son scream and discovered that he had been burned. & PSMF at ¶14 (citing Affidavit of David Pummel at ¶¶6-9). Kellie’s affidavit sets forth that she felt panic, terror, concern, extreme shock fright, anxiety, and, worry, and could feel her heart pounding during this same time period. Id. (citing Affidavit of Kellie Pumrnel at m 4-8). When Derek was taken to Rapid City Regional Hospital, Kellie broke down emotionally. Id. at ¶15 (citing Affidavit of Kellie Pummel at ¶7; Affidavit of David Pummel ¶11). In her own words, Kellie explains that she “went nuts and became furious.” Id. at ¶17 (citing Affidavit of Kellie Pummel at ¶10). Both parents were shocked, felt sick nearly vomited, and nearly fainted. Id. at ¶16 (citing Affidavit of Kellie Pummel at ¶9; Affidavit of David Pummel at ¶12).

[¶9]  During Derek’s stay approximately one week at Rapid City Regional Hospital the parents witnessed their newborn son undergo skin debridements which made them physically ill. Id. at ¶18 (citing Affidavit of Kellie Pummel at ¶11; Affidavit of David Pummel ¶13). When Derek was released home the parents attempted the skin debridement process. Id. at ¶19. This caused David to become physically sick and Kellie to cry and seek assistance from defendant hospital. Id. (citing Affidavit of David Pummel at ¶14; Affidavit of Kellie Pummel ¶13). Moreover, for the next 30 days David became physically sick, stressed, and depressed upon seeing his son’s burns. Id. at ¶20 (citing Affidavit of David Pummel at ¶15). Kellie was unable to bond with her newborn baby. Id. at ¶21 (citing Affidavit of Kellie Pummel at ¶15-16). She became depressed which resulted in medication and treatment for emotional problems. Id.

SUMMARY JUDGMENT STANDARD

[¶10]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶11]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶12]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). To survive summary judgment there must be evidence that “reasonably tends to prove” plaintiffs’ theory; defendant meets the burden under Fed. R. Civ. P. 56(c) when it is conclusively shown that the facts upon which the nonmoving party relied to support the allegations were not susceptible of the interpretation which was sought to give them; only reasonable inferences can be drawn from the evidence in favor of the nonmoving party. Id. (citations omitted).

[¶13]  Finally, should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Electric Co-op, Inc., 838 F2d 268 (8th Cir. 1988) laid such thoughts to rest. He stated that, “a trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.” Id. at 273. The trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing defendant’s partial motion for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson). Under this trilogy, it is incumbent upon plaintiffs as the nonmoving party, based upon the showing set forth by defendant, to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991).

DISCUSSION

[¶14]  South Dakota law governs the substantive issues in this diversity case. B.B. v. Continental Ins. Co., 8 F3d 1288, 1291 (8th Cir. 1993). Because plaintiffs concede that Knowles v. United States, 1996 SD , 544 NW2d 183 [hereinafter “Knowles III, 544 NW2d at ”], forecloses a parental loss of consortium claim for injuries to a minor child as a separate cause of action, defendant is entitled to partial summary judgment as to that claim. See Docket #21. Based on the following discussion, the Court further holds that South Dakota law does not recognize a parent’s claim for negligent infliction of emotional distress for injuries brought about by witnessing injury to a minor child when the parent neither suffers any direct physical injury or impact nor is placed in actual fear for personal safety from a defendant’s negligent act or conduct.

[¶15]  A.  BYSTANDER RULES FOR DEFINING LIABILITY

[¶16]  Clearly, South Dakota law recognizes a claim of negligent infliction of emotional distress. Wright v. Coca Cola Bottling Co., 414 NW2d 608 (SD 1987); Nelson v. WEB Water Dev. Ass’n, Inc., 507 NW2d 691 (SD 1993). At issue in this matter are the limitations South Dakota law places on the class of plaintiffs that may recover for emotional injuries and on the injuries that may be compensable.1. The injury the parents are alleging “is mental or emotional harm (such as fright or anxiety) that is not directly brought about by a physical injury, but that may manifest itself in physical symptoms.” Consolidated Rail Corp. v. Gottshall, 512 US 532, 114 SCt 2396, 2405, 129 LEd 2d 427 (1994).{fn1} Whether these limitations are phrased in terms of proximate causation and reasonably foreseeable injuries or in terms of the duty to avoid inflicting emotional harm owed by a defendant to a certain class of plaintiffs is merely academic as these formulations are functionally equivalent. See generally Consolidated Rail Corp. v. Gottshall, 512 US 532, 114 SCt 2396, 2406, 129 LEd2d 427 (1994).

[¶17]  A brief discussion of the three major limiting tests for evaluating claims alleging negligent infliction of emotional distress provides the Court with a slate upon which to review established South Dakota precedent on this issue. These major limiting tests are as follows: (1) the “physical impact” test; (2) the “zone of danger” test; and (3) “relative bystander” or “foreseeability” test. Id. at 2406-07; Gnirk v. Ford Motor Co., 572 FSupp 1201, 1202 n.3 (DSD 1983).2. See generally Melanie L. Carpenter, Peterson v. Sioux Valley Hospital: Reckless Infliction of Emotional Distress, 38 S.D. L. Rev. 359, 371 (1993).{fn2} The “physical impact” test is the most restrictive in that it requires the third person/bystander to have suffered a direct physical injury or impact from the tortfeasor. Id. at 2406. The “zone of danger” test requires the third person/bystander to have either sustained a direct physical impact as a result of defendant’s negligent conduct or to have had an actual fear for his or her personal safety in order to recover. Id. Finally, the “relative bystander” or “foreseeability” test which is the most accepted and least restrictive limiting test permits a third person/bystander to recover if the tortfeasor could reasonably foresee the emotional distress. Id. at 2407.3. The “relative bystander” or “foreseeable” test was first enunciated in Dillon v. Legg, 68 Cal. 2d 728, 69 Cal. Rptr. 72, 441 P.2d 912 (1968). The Dillon court offered three factors to be considered as bearing on the question of reasonable foreseeability:

(1) Whether plaintiff was located near the scene of the accident as contrasted with one who was a distance away from it. (2) Whether the shock resulted from a direct emotional impact upon plaintiff from the sensory and contemporaneous observance of the accident, as contrasted with learning of the accident from others after its occurrence. (3) Whether plaintiff and the victim were closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship. Id., at 740-741, 69 Cal. Rptr., at 80, 441 P.2d, at 920.

Consolidated Rail, 114 SCt at 2407. {fn3}

[¶18]  A review of the facts as previously set forth and all reasonable inferences from those facts in a light most favorable to plaintiffs, demonstrates that plaintiffs may only prevail on their emotional distress claim under the “relative bystander” or “foreseeability” test because they suffered no direct physical injury or impact from the negligent use of the isolette nor was there actual fear for their personal safety from the isolette. As demonstrated below, their emotional distress claims must be dismissed because South Dakota does not adhere to the “relative bystander” or “foreseeability” test.

[¶19]  B.  SOUTH DAKOTA PRECEDENT

[¶20]  In Gnirk v. Ford Motor Co., 572 FSupp 1201 (DSD 1983), Judge Porter in effect predicted that the South Dakota Supreme Court would recognize the “relative bystander” or “foreseeability” test. Based on South Dakota precedent existing at that time, Judge Porter determined that South Dakota’s highest court would permit a bystander mother to recover for emotional distress inflicted upon her while witnessing the death of her child. Id. 1203-05.4. Judge Porter concluded that “a genuine issue of fact exists concerning whether the event in which her son lost his life inflicted great depression, insomnia, and permanent psychological injury upon plaintiff [mother], which injury proximately caused bodily injury to plaintiff.” Gnirk, 572 FSupp at 1205.{fn4} Plaintiffs’ reliance on a subsequent line of South Dakota cases to support Gnirk’s prediction is misplaced.

[¶21]  The decision of Wright v. Coca Cola Bottling Co., 414 NW2d 608 (SD 1987), involved a plaintiff who had received a direct physical injury upon drinking from a soft drink containing a decomposed mouse. Id. at 608. It did not involve the third person/bystander situation which is presently before the Court. The case of Nelson v. WEB Water Dev. Ass’n, Inc., 507 NW2d 691 (SD 1993), is also distinguishable based on the fact that it also did not involve a third person/bystander. Id. at 693. Nelson’s theory regarding emotional distress arose from termination of his employment, as opposed to indirect physical injury resulting from witnessing the injury to a loved one. Id.

[¶22]  Despite plaintiffs’ attempts to distinguish the case of Knowles v. United States, 544 NW2d 183 (SD 1996), the Court finds the recent South Dakota decision to be factually and legally on point. A brief historical prospective of that decision aids in discerning the limitations South Dakota law places upon a claim for negligent infliction of emotional distress. On March 2, 1992, William and Jane Knowles commenced a medical malpractice action individually and on behalf of their minor son Kris who received severe permanent brain damage by negligent treatment he received at the Ellsworth Air Force Base Hospital. Knowles v. United States, 829 FSupp 1147, 1150 (DSD 1993) [hereinafter “Knowles I, 829 FSupp at ”].5. Jurisdiction was premised under the Federal Tort Claims Act Federal Tort Claims Act (FTCA), 28 USC § 1346(b).{fn5} The parents asserted a cause of action in their own right for emotional distress and loss of consortium which this Court dismissed. Id. at 1152, 1157. Defendant United States admitted liability and this Court entered judgment for one million dollars based on application of the damage cap contained in the 1986 amended version of SDCL § 21-3-11. Id. at 1157.CG Times Regular(  2 CG Times[  1 XXXH[hereinafter “Knowles II, 29 F3d at ”]. The third question which is of importance in this case was as follows: “(3) Does South Dakota law recognize emotional distress or loss of consortium for injuries to a minor child as a separate cause of action?” Id. at 1266. The South Dakota Supreme Court accepted and explicitly held that “we do not recognize a parent’s emotional distress or loss of consortium for injuries to a minor child.” Knowles III, 544 NW2d at 193 (emphasis added).6. However, the South Dakota court went on to state that it does “recognize a parent’s right to assert claims for loss of the child’s services and for medical and other consequential damages incurred in caring for the child.” Knowles III, 544 NW2d at 193. S.D.C.L. § 25-7-6.1 obligates parents to pay “for the necessary maintenance, education and support of the child.” The Eighth Circuit “read[s] this language to include medical expenses.” Knowles II, 29 F3d at 1264 n.4. Based on the South Dakota Supreme Court’s answers to the certified questions, the Eighth Circuit Court of Appeals remanded the case for trial on the issue of whether any medical service specialist was negligent because the revived 1985 statutory cap does not cover medical service specialists. Knowles v. United States, 91 F3d 1147, 1151 (8th Cir. 1996) [hereinafter “Knowles IV, 91 F3d at ”].{fn6}

[¶24]  The Court does not accept plaintiffs’ invitation to factually distinguish Knowles III from their case. The Knowles III court under similar facts and circumstances foreclosed bystander parents’ emotional distress claims resulting from the witnessing of serious injuries to a newborn child at the hands of a negligent hospital. As set forth by the Eighth Circuit opinion certifying the question to South Dakota’s highest court, 15-day-old Kris Knowles was released to his parents from the defendant hospital with an abnormally low temperature. Knowles II, 29 F3d at 1263. Kris was then taken to a pediatric clinic for a blood test at which time his mother expressed concern about his temperature and coloring. Id. He was immediately readmitted to the defendant hospital for hypothermia treatment. Id. He developed hypoglycemia and suffered respiratory arrest, which in turn caused severe, irreversible brain damage. Id. To be sure, these series of events were devastating to his parents. However, the Knowles’s emotional distress claims were dismissed because South Dakota does not recognize a parent’s emotional distress for injuries to a minor child. For this same reason, the parents’ claims for emotional distress must be dismissed in this case.

CONCLUSION

[¶25]  After reviewing the arguments presented by all parties and after reviewing the facts and inferences that may be derived therefrom in a light most favorable to plaintiffs as the nonmoving party, this Court finds that no genuine issues of material fact exist and defendant is entitled to judgment as a matter of law as to the parents’ emotional distress and loss of consortium claims. Accordingly, it is hereby

[¶26]  ORDERED that defendant’s partial motion for summary judgment (Docket #18) is granted.

July, 1997.

RICHARD H. BATTEY, CHIEF JUDGE



Karr v. Callahan, 1997 DSD 11

WILLIAM R. KARR,

Plaintiff,

v.

JOHN J. CALLAHAN,1. Effective March 1, 1997, President Clinton appointed John J. Callahan to serve as Acting Commissioner of Social Security to succeed Shirley S. Chater. Pursuant to Fed. R. Civ. P. 25(d)(1), John J. Callahan is substituted for Shirley S. Chater as the defendant in this action. See also 42 USC § 405(g). Effective March 1, 1997, President Clinton appointed John J. Callahan to serve as Acting Commissioner of Social Security to succeed Shirley S. Chater. Pursuant to Fed. R. Civ. P. 25(d)(1), John J. Callahan is substituted for Shirley S. Chater as the defendant in this action. See also 42 USC § 405(g). {fn1}

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 11]

United States District Court

District of South Dakota - Western Division

CIV. 96-5054

MEMORANDUM OPINION AND ORDER

Filed March, 1997

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Pending are the claimant’s (Karr’s) and the defendant’s (Commissioner’s) cross-motions for summary judgment. Karr protectively filed an application for Title II disability insurance benefits2. Under Title II of the Social Security Act, a claimant is considered disabled “if he is unable to engage in any substantial activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.” 42 USC § 1382c(a)(3)(A). {fn2} and Title XVI supplemental security income on February 3, 1994, alleging disability as of February 1, 1994 (A.R. 77-79; 80-82). After being denied through the reconsideration level, he timely requested a hearing which was held before an Administrative Law Judge (ALJ) on April 21, 1995 (A.R. 19-28). At the hearing, Karr was not represented by counsel (A.R. 19). Karr, his wife Deanna, and vocational expert Arthur E. Smith provided testimony at the hearing (A.R. 37-75).

[¶2]  On May 25, 1995, the ALJ issued his decision denying the claims (A.R. 19-27). The ALJ determined that Karr was not disabled because he retained the residual functional capacity to perform at least a full range of sedentary3. “Sedentary work involves lifting no more than 10 pounds at a time and occasionally lifting or carrying articles like docket files, ledgers, and small tools.” See 20 CFR §§ 404.1567(a), 416.967(a) (1996).{fn3} and a limited range of light4. “Light work involves lifting no more than 20 pounds at a time with frequent lifting or carrying of objects weighing up to 10 pounds.” See 20 CFR §§ 404.1567(b), 416.967(b) (1996).{fn4} work, a significant number of which exist in the regional and national economy (A.R. 26 (Findings 7, 12)). On May 17, 1996, the Appeals Council declined review of the ALJ’s determination (A.R. 7-8). On July 26, 1996, the Appeals Council vacated its prior decision in order to consider additional evidence, and again denied review, making it the Commissioner’s final decision (A.R. 4-5). See 20 CFR § 416.1481 (1996). On June 9, 1996, Karr commenced this action to review the Commissioner’s final decision denying his claims. See Docket #3.

[¶3]  This Court has jurisdiction under 42 USC § 405(g) and 42 USC § 1383(c)(3).

FACTS

[¶4]  Karr was born in 1949 and has a high school education (A.R. 19, 77). He served in the United States Marine Corps from 1966-70 which included a one-year tour in Vietnam (A.R. 174-75). From 1978 to 1993, Karr held 46 different jobs in a dozen states (A.R. 126-35). He has worked as a construction laborer, restaurant manager, store clerk, cook, maintenance worker, and ranch hand (A.R. 19). Karr alleged his disabling condition was arthritis in his knees, stomach problems, and mild depression (A.R. 142). He did not allege alcohol dependence or medical illness related to alcoholism. Id.

[¶5]  A.  MEDICAL/PSYCHOLOGICAL EVIDENCE

[¶6]  In December of 1993, Karr was admitted to a veteran’s hospital for alcohol detoxification (A.R. 167). His physical examination and diagnostic tests revealed bilateral degenerative changes in his knees and an irritated small intestine without ulceration (A.R. 168). Detoxification and treatment of his medical complaints were successful and he was discharged (A.R. 167). A few weeks later he returned to the hospital because of stomach pain and was prescribed medication for possible gastritis (A.R. 181-82).

[¶7]  In June of 1994, Karr was examined by an orthopedic surgeon, Don K. Gilchrist, M.D. (A.R. 191). Dr. Gilchrist noted that Karr had incurred ligament damage to the right knee when he was thrown from a truck that ran over a land mine while he was in the service in 1969. Id. Dr. Gilchrist also noted that Karr walked without a limp, and there was no instability in either knee. Id. X-rays revealed bilateral osteoarthritis of the knees; however, Dr. Gilchrist opined that bilateral knee replacements were not warranted. Id. Karr informed Dr. Gilchrist that standing in the same position for over ten minutes increased his pain, but he could walk virtually an unlimited distance before experiencing much pain. Id. Dr. Gilchrist concluded that Karr was capable of a sedentary job which would permit him to frequently change his bodily positions. Id.

[¶8]  In April of 1994, Dr. Jan F. Onik, D.O., performed a consultative examination on Karr (A.R. 183-89). Dr. Onik noted that Karr had some degenerative changes in his knees, but the range of motion was essentially normal (A.R. 184). Dr. Onik found Karr’s overall mental status to be normal. Id.5. Dr. Onik determined that Karr was “mildly depressed” and had a mild memory impairment, but was oriented with no thinking disturbance (A.R. 184, 187).{fn5}

[¶9]  B.  ALJ DECISION

[¶10]  At the onset of the administrative hearing the following exchange occurred between the ALJ and Karr--ALJ: “[I]t’s my understanding you wish to continue the hearing without the services of an attorney. Is that right, sir?” Karr: “That’s right.” See (A.R. 39-40). Based on this exchange, the ALJ concluded in his written decision that Karr voluntarily waived his right to counsel (A.R. 19).

[¶11]  In evaluating Karr’s claim, the ALJ applied the five-step sequence specified in 20 CFR §§ 404.1520 (Title II), 416.920 (Title XVI) (AR. 19-27).6. The determination of whether a claimant is entitled to Title II disability insurance benefits or Title XVI supplemental security income benefits must be made according to the following five-step sequential evaluation. See 20 CFR § 404.1520 (Title II); 20 CFR § 416.920 (Title XVI). Step One: The ALJ must determine if the claimant is engaged in “substantial gainful activity.” If so, the claimant cannot be found disabled. Step Two: If the claimant is not engaged in substantial gainful activity, the ALJ must determine if the claimant suffers from a “severe impairment.” Step Three: If the claimant does have a severe impairment, the ALJ must next determine if this impairment meets or equals an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. If the claimant has a listed impairment, then the claimant must be found to be disabled. Step Four: If the claimant does not have a listed impairment, the ALJ must determine whether the claimant can return to his or her past relevant work. If the claimant can return to past relevant work, he or she is not entitled to benefits. Step Five: If the claimant cannot return to past relevant work, then the burden shifts to the Commissioner to demonstrate that the claimant can do some other work which exists in substantial numbers in the national economy. If the Commissioner does not carry this burden, the claimant must be found to be disabled. {fn6} The ALJ first determined that Karr has not engaged in substantial gainful activity since 1993 (A.R. 22; A.R. 25 (Finding 2)). In step two of the sequential evaluation, he determined that Karr has a “severe impairment.” After a review of the medical and other evidence, he found that Karr has a history of alcoholism, mild anxiety, arthritis of the knees, and gastritis Id. However, the ALJ concluded in step three of the sequential evaluation that although Karr’s impairments may be considered to be “severe,” they are not impairments which meet or equal an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. Id.

[¶12]  In step four of the sequential evaluation, the ALJ determined that based on the medical evidence and testimony, Karr would be unable to return to his past relevant work as a cook, construction laborer, ranch hand, or maintenance worker because of the exertional requirements involved in these occupations (A.R. 24; A.R. 26 (Finding 6)). Therefore, under step five of the sequential evaluation, the ALJ acknowledged that the Commissioner had the burden of proving that a significant number of jobs existed in the national economy which Karr could still perform considering his combined medically determinable impairments, functional limitations, age, education, and past work experience (A.R. 24).

[¶13]  The ALJ made a determination that Karr’s allegations about his condition and limitations were not credible based in part on the inconsistency of his statements to Dr. Gilchrist and his hearing testimony regarding his ability to walk before experiencing pain (A.R. 22, A.R. 25 (Finding 4)). The ALJ also noted that the record as a whole did not support a conclusion that Karr’s symptoms were of such intensity as to preclude all substantial gainful activity (A.R. 22-23). The ALJ concluded that Karr has the residual functional capacity to perform the physical exertional and nonexertional requirements of a full range of sedentary and a limited range of light work with the following limitations: (1) no lifting and carrying more than 20 pounds occasionally and 10 pounds frequently; (2) no standing or walking longer than one-half hour at one time or totally in an eight-hour work day; (3) no repetitive operation of foot controls; (4) no ladder climbing; (5) occasional stair climbing and balancing; (6) occasional to never kneeling, crouching, or crawling; (7) avoidance of even moderate exposure to cold, wetness, humidity, and vibration; and (8) no exposure to hazardous machinery (A.R. 24; A.R. 25 (Finding 5)).

[¶14]  Based in part on the testimony of Arthur E. Smith, a vocational expert, the ALJ found Karr to have some transferable work skills and that jobs exist in significant numbers in the national and regional economy which Karr is capable of performing (A.R. 26 (Findings 10, 12)).7. In his assessment, the ALJ took into account the fact that Karr was 45 years old and had a high school education (A.R. 26 (Findings 8-9)).{fn7} Specifically, such occupations as identified by the vocational expert include telemarketer, order clerk, cab dispatcher, check cashier, amusement cashier, and bench assembler of which 30,000 jobs exist in Missouri and 1,500,000 nationally (A.R. 25; A.R. 26 (Finding 12)). Therefore, the ALJ concluded Karr cannot be found disabled as defined by the Social Security Act (A.R. 26 (Finding 13)) (citing 20 CFR §§ 404.1520(f) and 416.920(f)).

STANDARD OF REVIEW

[¶15]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991). However, the Court’s role is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))).

[¶16]  In addition to reviewing the Commissioner’s decision to determine if it is supported by substantial evidence in the record as a whole, the Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980).

DISCUSSION

[¶17]  In his motion for summary judgment, Karr seeks reversal of the ALJ’s decision based on the following grounds: (1) the waiver of counsel at the administrative hearing was invalid; (2) failure of the ALJ to develop the record; (3) failure of the ALJ to adequately perform step 3 of the sequential evaluation; (4) failure of the ALJ to consider in combination all of his impairments based on the ALJ’s determination that claimant’s affective disorder had no effect; and (5) the Commissioner failed to carry his burden of proof at step five of the sequential evaluation when the vocational expert’s (VE) testimony was based on the ALJ’s inadequate hypothetical question

[¶18]  A.  WAIVER OF COUNSEL

[¶19]  Karr contends that his waiver of counsel was invalid; thus, he was deprived of a full and fair hearing. The record indicates that on March 21, 1995, Karr was sent a notice of hearing which set forth that:

You May Choose To Have A Person Represent You

If you want to have a representative, please get one right away. You should show this notice to anyone you may appoint. You or that person should also call this office to give us his or her name, address, and telephone number.

See (A.R. 33). Based on this notice which Karr admits he received and the exchange between Karr and the ALJ at the beginning of the hearing wherein Karr indicated his desire to proceed without counsel, the Court finds that he was adequately advised of his right to employ counsel and intelligently waived this right. See Wingert v. Bowen, 894 F2d 296, 298 (8th Cir. 1990).

[¶20]  B.   FAILURE TO ADEQUATELY DEVELOP THE RECORD

[¶21]  It is well established that the ALJ has a duty to fully and fairly develop the record. Boyd v. Sullivan, 960 F2d 733, 736 (8th Cir. 1992) (quoting Warner v. Heckler, 722 F2d 428, 431 (8th Cir. 1983)). Karr argues that the ALJ’s failure to further develop the record as to Karr’s alcohol problems and his failure to request additional medical records after the hearing requires remand. The Court disagrees.

[¶22]  The record reveals that Karr did not allege alcohol dependence or medical illness related to alcoholism in his disability report (A.R. 142). Even so, there was evidence of Karr’s prior alcohol problems introduced at the hearing. Such evidence included his admission into a veteran’s hospital for alcohol detoxification in December of 1993. He successfully completed the detoxification program and was discharged. Karr testified at the hearing that although he drank socially, alcohol was no longer a problem for him (A.R. 57). There was sufficient evidence of record which demonstrated that Karr had the ability to control his use of alcohol and that his use of alcohol socially did not significantly affect his ability to work. See Lubinski v. Sullivan, 952 F2d 214, 216 (8th Cir. 1991). Therefore, the ALJ did not err by failing to further develop the record regarding alcohol abuse.

[¶23]   Karr’s contention that the ALJ erred by failing to request additional medical records after the hearing also lacks merit.8. Karr submitted medical records dated May 1995 through November 1995 to the Appeals Council for review (A.R. 210-437). Upon review of this new evidence, as well as other medical records, the Appeals Council concluded that the additional evidence did not provide a basis for changing the ALJ’s decision (A.R. 4).{fn8} Karr cites the following statement made by the ALJ at the end of the hearing to support his position:

[S]ometimes when I review a case, I decide I need some additional evidence, in which case I might follow-up with the Veteran’s Administration Hospital or maybe get you examined again by somebody else. If new evidence comes in to the record, do you want me to send you copies so you can make comments or objections about it? Or do you want to waive your right to review any additional medical evidence that comes in?

See (A.R. 74) (emphasis added). Clearly, this language does not commit or otherwise bind the ALJ particularly in light of the medical and other evidence contained in the record which was before the ALJ. Such evidence included the following: (1) Karr’s testimony that he was not under the care of a physician and that he had not obtained medical treatment for nearly one year prior to the hearing (A.R. 54, 59-60). See Box v. Shalala, 52 F3d 168, 171 (8th Cir. 1995); (2) Dr. Gilchrist’s assessment of June 1994 wherein he determined that Karr walked without a limp, there was no instability in either knee, bilateral knee replacements were not warranted, and that Karr was capable of a sedentary job which would permit him to frequently change his bodily positions. See Smallwood v. Chater, 65 F3d 87, 89 (8th Cir. 1995); (3) Dr. Onik’s finding that Karr’s overall mental status was normal. See Williams v. Sullivan, 960 F2d 86, 89 (8th Cir. 1992); and (4) Statements by Karr regarding his ability to engage in full and varied daily activities. See Shannon, 54 F3d at 487; Clark v. Shalala, 28 F3d 828, 831 (8th Cir. 1994).

[¶24]  C.  STEP 3 OF THE SEQUENTIAL EVALUATION

[¶25]  Karr next asserts that the ALJ failed to adequately discuss the evidence and his rationale for determining that Karr was not disabled, as well as the relevant listing impairment. He contends that the relevant listing is section 1.03, which provides in relevant part,

Arthritis of a major weight-bearing joint (due to any cause):

With history of persistent joint pain and stiffness with signs of marked limitation of motion or abnormal motion of the affected joint on current physical examination. With:

A.  Gross anatomical deformity of hip or knee (e.g, subluxation, contracture, bony or fibrous ankylosis, instability) supported by X-ray evidence of either significant joint space narrowing or significant bony destruction and markedly limiting ability to walk and stand... .

20 CFR Part 404, Subpt. P, App. 1, § 1.03.

[¶26]  To be sure, even if a claimant’s individual impairments do not meet or equal a listing, the law requires the ALJ to “consider the combined effect of all [the claimant’s] impairments” in determining whether the claimant is disabled. See 20 CFR §§ 404.1523 and 416.923. The record indicates that the ALJ did not ignore the issue but specifically found that “[t]he claimant has a history of gastritis, arthritis, alcoholism, and mild/depression. However, he does not have an impairment or combination of impairments of such severity as to meet or equal any section of the Listings of Impairments.” See generally Berry v. Schweiker, 675 F2d 464, 468 (2d Cir. 1982) (holding that the absence of an express rationale regarding claimed listed impairments is not necessary when the evidence before the ALJ indicates that his conclusion was supported by substantial evidence); Waite v. Bowen, 819 F2d 1356, 1359 (7th Cir. 1987); Murphy v. Secretary of Health & Human Services, 872 FSupp 1153, 1157 (E.D.N.Y. 1994) .

[¶27]  Moreover, Karr failed to present medical or other evidence demonstrating that he meets the criteria of Listing § 1.03. See Comstock v. Chater, 91 F3d 1143, 1146 (8th Cir. 1996) (evidence supported ALJ’s finding that a claimant’s back problems did not equal a listed impairment). Orthopedic surgeon, Don K. Gilchrist, M.D., noted in his June 1994 assessment that Karr walked without a limp and there was no instability in either knee. While X-rays did reveal bilateral osteoarthritis of the knees, Dr. Gilchrist opined that bilateral knee replacements were not warranted. In addition, Karr informed Dr. Gilchrist that standing in the same position for over ten minutes increased his pain, but he could walk virtually an unlimited distance before experiencing much pain. Therefore, the Court finds that the ALJ properly addressed the listing impairment issue and the record indicates that his conclusion was supported by substantial evidence.

[¶28]  C.  AFFECTIVE DISORDER

[¶29]  Karr challenges the ALJ’s finding that depression and anxiety did not significantly impact Karr’s ability to work.9. Appended to the ALJ’s decision is the psychiatric review technique form (PRTF) wherein the ALJ determined that Karr was not affected by an affective disorder (A.R. 28-31).{fn9} The record indicates that Karr had not received frequent psychological or psychiatric help. See Williams v. Sullivan, 960 F2d 86, 89 (8th Cir. 1992). Moreover, Dr. Onik, who performed a consultative examination on Karr, opined that Karr’s overall mental status was normal. The ALJ’s finding is supported by substantial evidence.

[¶30]  E.  VOCATIONAL EXPERT (VE)

[¶31]  Karr asserts that the Commissioner failed to carry his burden of proof at step five of the sequential evaluation because the VE’s testimony was based on the ALJ’s inadequate hypothetical question which did not include his depression. The Court disagrees. The ALJ’s hypothetical question accurately reflected all Karr’s pain and impairments which the ALJ found credible. Roe v. Chater, 92 F3d 672, 675 (8th Cir. 1996) (the hypothetical question need only include those impairments that the ALJ finds are substantially supported by the record as a whole); Totz v. Sullivan, 961 F2d 727, 730 (8th Cir. 1992); Penn v. Sullivan, 896 F2d 313, 317 (8th Cir. 1990). Karr has not shown that the ALJ failed to accurately describe his conditions.

[¶32]  The VE listened to all the testimony at the administrative hearing, including Karr’s allegations about his condition and pain, in order to aid in his assessment of Karr’s ability to perform jobs which exist in significant numbers in the regional and national economies (A.R. 67). See generally Jenkins v. Bowen, 861 F2d 1083, 1086-87 (8th Cir. 1988) (noting the significance of the fact that the VE sat in on the entire hearing and listened to all the testimony). In posing the hypothetical question to the VE, the ALJ told the VE to assume that the hypothetical person had Karr’s background, work experience, and transferrable skills and to consider the limitations testified to at the hearing (A.R. 67-73). Such limitations included: (1) no lifting and carrying more than 20 pounds occasionally and 10 pounds frequently; (2) no standing or walking longer than one-half hour at one time or totally in an eight-hour work day; (3) no repetitive operation of foot controls; (4) no ladder climbing; (5) occasional stair climbing and balancing; (6) occasional to never kneeling, crouching, or crawling; (7) avoidance of even moderate exposure to cold, wetness, humidity, and vibration; and (8) no exposure to hazardous machinery. Id. Because the hypothetical question reflected an accurate account of Karr’s limitations, the ALJ was entitled to consider the opinion of the VE as reliable evidence of the existence of other work Karr could perform. See Onstad v. Shalala, 999 F2d 1232, 1234 (8th Cir. 1993).

CONCLUSION

[¶33]  The Commissioner’s decision that Karr is not disabled because he has the residual functional capacity to perform the physical exertional and nonexertional requirements of a full range of sedentary and a limited range of light work of which a substantial number exist in the national and regional economies is supported by substantial evidence in the record as a whole. Accordingly, it is hereby

[¶34]  ORDERED that Karr’s motion for summary judgment (Docket #8) is denied.

[¶35]  IT IS FURTHER ORDERED that the Commissioner’s motion for summary judgment (Docket #10) is granted. The Commissioner shall have judgment against Karr.



Innovative Home Health v. P.T.-O.T. Associates, 1997 DSD 12

INNOVATIVE HOME HEALTH CARE, INC.,

a South Dakota corporation; DENNIS MEIER; and GWEN HOUGDAHL,

Plaintiffs,

v.

P.T.-O.T. ASSOCIATES OF THE BLACK HILLS,

a general partnership; AT HOME QUALITY HEALTH CARE CO.,

a South Dakota corporation; KARL KIRSCH; and SUSAN REDDEN,

Defendants.

[1997 DSD 12]

United States District Court

District of South Dakota - Western Division

CIV. 96-5030

MEMORANDUM OPINION AND ORDER

GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Filed Apr 11, 1997.

RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On March 22, 1996, plaintiffs filed this action against defendants alleging a violation of the Sherman Act (15 USC §§ 1 and 2) and the Clayton Act (15 USC §§ 15 and 26). In addition, plaintiffs seek to invoke this Court’s supplemental jurisdiction pursuant to 28 USC § 1367(a) for claims for breach of contract in regard to a settlement agreement and intentional interference with contract and business expectancy. Defendants Karl Kirsch (hereinafter “Kirsch”) and Susan Redden (hereinafter “Redden”) filed counterclaims against plaintiffs Dennis Meier (hereinafter “Meier”) and Gwen Hougdahl (hereinafter “Hougdahl”) alleging breach of contract of the Settlement Agreement. Kirsch and Redden are also seeking indemnification from Meier and Hougdahl based on the terms of the Settlement Agreement. On December 4, 1996, plaintiffs amended their complaint dismissing their section 2 Sherman Act claim.

[¶2]  On December 16, 1996, defendants filed their Fed. R. Civ. P. 56 motion for summary judgment against plaintiffs’ claims and in favor of defendants’ counterclaims. All responses and replies have been filed. This Court has jurisdiction pursuant to 28 USC § 1331 and 28 USC § 1367(a). The Court grants summary judgment to defendants in total.

STATEMENT OF FACTS

[¶3]  A.  PARTIES

[¶4]  Plaintiff Innovative Home Health Care, Inc. ( hereinafter “IHHC”) is a home health care agency in Rapid City, South Dakota.1. See Defendants’ Statement of Material Facts at ¶¶ 1, 8 (hereinafter “DSMF at ¶ ”) (citing Plaintiffs’ Amended Complaint at ¶¶ I, II; DSMF, Exh.2 at p. 8. (Meier Deposition)).{fn1} Plaintiffs Meier and Hougdahl are shareholders and officers of IHHC.2. Id. at ¶¶ 2, 3 (citing Plaintiffs’ Amended Complaint at ¶¶ I, VI).{fn2} Defendant At Home Quality Health Care Co. (hereinafter “At Home”) is a home health care agency in Rapid City, South Dakota.3. Id. at ¶¶ 6, 9 (citing DSMF, Exh. 1 (IHHC Articles of Incorporation)). {fn3} Defendant Redden is the sole stockholder and director of At Home.4. Id. at ¶ 7 (citing DSMF, Exh. 1). {fn4} At Home directly competes with IHHC in the home health care industry.5. Plaintiffs’ Amended Complaint at ¶ VII.{fn5}

[¶5]  Defendant, P.T.-O.T. Associates of the Black Hills (hereinafter “P.T.-O.T.”) is a South Dakota general partnership engaging in the business of providing physical and occupation therapy in Rapid City, South Dakota.6. DSMF at ¶ 4 (citing Answer of P.T.-O.T. and Kirsch at ¶ 6 (Docket #6)). See also Plaintiffs’ Amended Complaint at ¶ VIII. {fn6} P.T.-O.T. provides physical and occupation therapy directly to its own patients and under contract on behalf of home health agencies, long-term care facilities, and other similar entities.7. Plaintiffs’ Amended Complaint at ¶ VIII.{fn7} Defendant Kirsch is a managing general partner in P.T.-O.T.8. DSMF at ¶ 5. See also Plaintiffs’ Amended Complaint at ¶ VIII.{fn8} Plaintiffs assert that because P.T.-O.T. is one of only two contract physical and occupational therapy providers that serve home health agencies in Pennington County, South Dakota, it has substantial power to influence or control the home health care market in the county.9. Plaintiffs’ Amended Complaint at ¶ X. {fn9} Plaintiffs further contend that P.T.-O.T. also services a significant measure of the demand for contract physical and occupational therapy by long-term care facilities, which is a significant source of business for home health care in the county, placing it in a position to influence discharge planning for patients leaving long-term care facilities.10. Id. at ¶ XI.{fn10}

[¶6]  B.  ALLEGATIONS

[¶7]  In Count I of their complaint, plaintiffs allege that defendants as co-conspirators engaged in a combination and conspiracy to unreasonably restrain trade. The conspiratorial conduct is alleged as follows: (1) denial of “essential facilities;”11. Id. at ¶ IX.{fn11} (2) refusal to deal;12. Id. at ¶¶ XIII and XVI(a).{fn12} (3) use of market power of P.T.-O.T. to eliminate patient referrals to IHHC;13. Id. at ¶ XVI(b).{fn13} (3) interference with and appropriation of established patient/provider relationships;14. Id. at ¶ XVI(c).{fn14} (4) appropriation of a marketing opportunity that belonged to IHHC;15. Id. at ¶ XVI(d).{fn15} (5) employment of “cappers” or “steerers” to divert existing patients of IHHC to P.T.-O.T., At Home, or other home health care providers to which P.T.-O.T. provided contract therapy services;16. Id. at ¶ XVI(e).{fn16} (6) the attempted inducement of former key employees to resign and join At Home;17. Id. at ¶ XVI(f).{fn17} (7) the publication of false and disparaging statements regarding the viability of and quality of care offered by IHHC;18. Id. at ¶ XVI(g).{fn18} and (8) the filing of a “sham” lawsuit in state court by P.T.-O.T. against Hougdahl alleging breach of a covenant not to compete by Hougdahl.19. Id. at ¶ XVII.{fn19} Plaintiffs further contend that the underlying effect and purpose of these practices were as follows: (1) to manipulate or control the quality, output, or price of home health care services in Pennington County; (2) to artificially increase defendants’ market power; and (3) to arbitrarily restrain IHHC from access to the home health care market.20. Id. at ¶ XVIII.{fn20}

[¶8]  Count II of Plaintiffs’ Amended Complaint sets forth a claim for breach of contract regarding the prior Settlement Agreement. Specifically, plaintiffs allege that Kirsch and Redden have committed the following acts in violation of the terms of their Settlement Agreement: (1) kept, used, or disclosed confidential and proprietary information belonging to IHHC; (2) solicited the existing patients who were customers of IHHC; (3) appropriated a marketing opportunity belonging to IHHC; (4) disparaged IHHC by publishing or causing to be published false and malicious statements concerning its continued viability; and (5) unlawfully and intentionally disrupted or interfered with IHHC’s business.21. Id. at ¶ XXVI(a)-(e).{fn21} In regard to plaintiffs’ breach of contract claim, defendants Kirsch and Redden filed counterclaims against plaintiffs Meier and Hougdahl alleging breach of contract of the Settlement Agreement.22. Defendants Kirsch and Redden seek to invoke this Court’s supplemental jurisdiction pursuant to 28 USC § 1367(a) for their claims of breach of contract set forth in their counterclaims.{fn22} Defendants Kirsch and Redden allege in Count I of their counterclaims that plaintiffs Meier and Hougdahl are in default under the terms of the Settlement Agreement, promissory notes, and personal guarantees owing each defendant $23,333.33 plus 10.5 percent interest accruing from September 22, 1995.23. See Counterclaim of Defendant Kirsch at ¶¶ 2-4 (Docket # 6); Counterclaim of Defendant Redden at ¶¶ II-V (Docket # 5).{fn23} Count II of the counterclaims alleges that by the terms of the prior Settlement Agreement defendants Kirsch and Redden are entitled to indemnification or contribution from plaintiffs for any and all liability, as well as reasonable attorney’s fees based on a duty to defend theory.24. See Counterclaim of Defendant Kirsch at ¶¶ 5-7; Counterclaim of Defendant Redden at ¶¶ VI-VII.{fn24}

[¶9]  Count III of Plaintiffs’ Amended Complaint sets forth a claim for intentional interference with contract and business expectancy with regard to IHHC’s patients, with physicians, with referral sources, and with other businesses through the acts forming the basis for their breach of contract claim enumerated in Count II.

[¶10]  C.  BACKGROUND

[¶11]  Prior to September 22, 1995, Meier, Hougdahl, Kirsch, and Redden were shareholders in IHHC.25. DSMF at ¶ 10 (citing DSMF, Exh. 3 at p. 23 (Meier Deposition)). {fn25} On July 25, 1995, Meier and Hougdahl made an attempt to dissolve IHHC by initiating a dissolution action in state court which was ultimately resolved by a Settlement Agreement.26. Id. at ¶ 11 (citing DSMF, Exh. 4 (Settlement Agreement)). {fn26} Under the terms of the Settlement Agreement, Meier, Hougdahl, and IHHC purchased the interests of Kirsch and Redden in IHHC.27. Id. at ¶ 12 (citing DSMF, Exh. 4 at pp. 2-3). {fn27} Meier, Hougdahl, and IHHC were to pay an amount of $73,333.33 to both Kirsch and Redden.28. DSMF, Exh. 4 at p. 2. {fn28} Payments in the amount of $50,000 were made to both Kirsch and Redden at the time of the Settlement Agreement.29. Id. {fn29} At issue in this case is the remaining balance in the amount of $23,333.33 plus interest at the annual rate of 10.5 percent which was to be paid to both Kirsch and Redden on March 22, 1996.30. DSMF at ¶¶ 13-14 (citing DSMF, Exh. 4 at p. 2.). {fn30} Meier and Hougdahl executed promissory notes and personal guarantees for said amount.31. Id. at ¶ 13 (citing DSMF, Exh. 5-6). {fn31} This action was brought on or about the due date of the promissory notes; hence, the due date of the notes has passed and no payments have been made on said notes.32. Id. at ¶ 15 (citing DSMF at Exh. 7 (Meier Deposition, pp. 202-203; Hougdahl Deposition, p. 62)).{fn32}

[¶12]  On September 1, 1994, P.T.-O.T. entered into a contract with IHHC for a one-year period wherein P.T.-O.T. agreed to provide occupational therapy services to IHHC.33. Id. at ¶ 17 (citing DSMF, Exh. 9 (Occupational Therapy Contract)). {fn33} P.T.- O.T. also entered into a contract with IHHC for a one-year period for the provision of physical therapy services on October 1, 1994.34. Id. at ¶ 16 (citing DSMF, Exh. 8 (Physical Therapy Contract)).{fn34} After settlement of the IHHC dissolution action, neither the physical therapy contract nor the occupational therapy contract were extended and both expired of their own force on October 1, 1995 and September 1, 1995, respectively.35. Id. at ¶ 18 (citing DSMF, Exh. 8-9). {fn35} P.T.- O.T. wrote two letters to IHHC dated September 22 and September 29, 1995, indicating that P.T.-O.T. would no longer provide either physical or occupational therapy services to IHHC as of October 1, 1995.36. Id. at ¶ 19 (citing DSMF, Exh. 10-11). {fn36}

[¶13]  At a P.T.-O.T. staff meeting held on September 28, 1995, Kirsch informed the employees/therapists of P.T.-O.T. of the termination of the physical and occupational therapy services with IHHC, specifically instructing “the therapists to inform their patients of the termination but in no way to solicit them to any other home health care business.”37. Id. at ¶ 20 (citing DSMF, Exh. 12 (P.T.-O.T. Staff Meeting Minutes (September 28, 1995))).{fn37} After the termination of the services contracts, IHHC was able to provide physical therapy and occupational therapy services to its patients on very short notice, but with some hardships.38. Id. at ¶ 22 (citing DSMF, Exh. 14 (Meier Deposition, pp. 132-133; Hougdahl Deposition pp. 66-68; 155-156)). See also Plaintiffs’ Statement of Material Facts at ¶ 22 (hereinafter “PSMF at ”) (citing PSMF, Exh. 73 at pp. 13-18, 118; Exh. 54). {fn38} On October 2, 1995, P.T.-O.T. entered into a contract with At Home to provide physical, occupational, and speech therapy services.39. DSMF at ¶ 21 (citing DSMF, Exh. 13).{fn39}

[¶14]  Plaintiffs have named three experts in this case: (1) John Mitchell, CPA/CFP, a damages expert; (2) Andrew Beedle, a liability expert; and (3) Michael J. Myers, assistant law professor, also a liability expert.40. Id. at ¶ 23 (citing Plaintiffs’ Amended Designation of Expert Witnesses (Docket # 83)). {fn40} Plaintiffs contend that the health care market fixes no concern upon price; thus, they have not alleged that defendants engaged in price fixing.41. Id. at ¶ 24 (citing DSMF, Exh. 15 (Meier Deposition, p. 260; Hougdahl Deposition, pp. 134, 140; Beedle Deposition, pp. 92-94)). See also PSMF at ¶ 24 (citing PSMF at Exh. 51). {fn41} In his deposition, Meier testified that he is not privy to information concerning the market percentage of patients that P.T.-O.T. influenced regarding therapy services, and he doesn’t believe that information is available from anyone.42. DSMF at ¶ 25 (citing DSMF, Exh. 16 (Meier Deposition, pp. 88-89, 143-144)).{fn42} In addition, Meier is not privy to any information as to what percent of the market any of the home health care companies had at any given time, nor what percent of therapy services would have been provided by P.T.-O.T. to any home health care agency.43. Id. {fn43} Although Plaintiffs’ Amended Complaint alleges that the relevant geographic market is Pennington County, plaintiff Meier testified in his deposition that the geographic market is five counties in the Black Hills which included Pennington, Meade, Lawrence, Custer, and Fall River counties.44. Id. at ¶ 26 (citing Plaintiffs’ Amended Complaint at ¶ XVIII; DSMF, Exh. 17 (Meier Deposition, p. 147)).{fn44}

[¶15]  Plaintiffs’ conspiracy to restrain trade theory consists mainly of the following: (1) the timing of P.T.-O.T.’s termination of its physical therapy and occupational therapy services contracts with IHHC in connection with the timing of the incorporation of At Home and the formation of the P.T.-O.T./At Home service contracts;45. Id. at ¶ 41 (citing DSMF, Exh. 13 (P.T.-O.T./At Home Services Agreement); DSMF, Exh. 31 (Meier Deposition, pp. 362-377)). {fn45} (2) certain P.T.-O.T. interoffice staff meeting minutes including the September 28, 1995, meeting in which Kirsch informed the employees/therapists of P.T.-O.T. of the termination of the physical and occupational therapy services with IHHC;46. Id. at ¶ 43 (citing DSMF, Exh. 12; Exh. 31 (Meier Deposition, p. 372)).{fn46} (3) affidavits of Avis Tellinghusen, Bob Melvin, Meier, and Hougdahl;47. See Plaintiffs’ Memorandum in Opposition to Summary Judgment at 9 (citing PSMF, Exh. 53 (Affidavit of Avis Tellinghuisen); Exh. 55 (Affidavit of Bob Melvin); Exh. 56 Affidavit of Meier); and Exh. 57 (Affidavit of Hougdahl)). {fn47} (4) deposition excerpts from Redden and Kirsch;48. Id. (citing PSMF, Exh. 69 (Redden Deposition); Exh. 70 (Kirsch Deposition)).{fn48} and (5) At Home employee set- up forms for DeAnn Myers and Trisha Kirsch.49. Id. (citing PSMF, Exh. 61 (At Home Employee Form)).{fn49} Plaintiff Meier also testified in his deposition regarding plaintiffs’ refusal to deal claim that P.T.-O.T. conspired with At Home to have P.T.-O.T. refuse to deal with IHHC.50. DSMF at ¶ 28 (citing DSMF, Exh. 19 (Meier Deposition, pp. 345-350)). {fn50} He specifically set forth that the alleged refusal to deal did not: (1) increase the cost of home health care in the counties that IHHC serves; (2) decrease the overall revenues that the home health care agencies in those counties produced; (3) result in a decrease in the demand for home health care services overall in the counties in question; (4) decrease patients’ access to home health care overall within the counties in question; or (5) result in inadequate care for any patients in the home health care area.51. Id. {fn51}

[¶16]  In addition, plaintiffs Meier and Hougdahl have indicated that IHHC’s patients do not have any greater expense because of the fact that IHHC employees now provide physical therapy and occupational therapy services instead of those services being provided by a contractor such as P.T.-O.T.52. Id. at ¶ 29 (citing DSMF, Exh. 20 (Meier Deposition, pp. 52-53; Hougdahl Deposition pp. 115-116)). {fn52} IHHC’s patients do not discern the difference between physical and occupational therapy services provided by a contract provider or by an employee.53. Id. {fn53} Meier also testified that due to defendants’ actions at least 10 to 20 patient referrals were lost.54. Id. at ¶ 45 (citing DSMF, Exh. 34 (Meier Deposition, p. 257)).{fn54} However, the record also indicates that plaintiffs are unaware of any lesser number of referrals or even the overall number of referrals to other home health agencies during the time period of the alleged wrongdoing.55. Id. at ¶ 30 (citing DSMF, Exh. 21 (Meier Deposition, pp. 243-44)). {fn55} In addition, the number of home health care patients that IHHC had increased from 80 to 85 patients in July of 1995, to 92 or 93 patients in September of 1996.56. Id. at ¶ 39 (citing DSMF, Exh. 29 (Meier Deposition, p. 32)).{fn56} Plaintiffs also allege that Kirsch used or disclosed confidential or proprietary information belonging to IHHC which included referral list information and a manual.57. Id. at ¶ 56 (citing DSMF, Exh. 46 (Meier Deposition, pp. 214, 407, 409-410)). {fn57} Hougdahl further claims that she saw employees who are now employed by At Home removing materials from IHHC late one night.58. PSMF at ¶ 56 (citing PSMF, Exh. 69 (Susan Redden Deposition, pp. 157-59)).

See also DSMF, Exh. 57 at ¶¶ 3-4 (Affidavit of DeAnn Myers); DSMF, Exh. 58 at ¶¶ 2-3 (Affidavit of Gayle Effenberger).{fn58}

[¶17]  While plaintiffs suggested their experts would provide support for their argument that the referral pattern evidences an interference by defendants, their experts have no opinions concerning statistical evidence relative to the alleged impact on IHHC’s referrals.59. DSMF at ¶ 47 (citing DSMF, Exh. 36 (Myers Deposition, p. 26; Beedle Deposition, p. 22; and Mitchell Deposition p. 57)). {fn59} In support of plaintiffs’ allegations that defendants steered or solicited patients of IHHC, Hougdahl in her deposition identified the following four patients who left IHHC: Susie Munson, Tom Greene, Phillip Love, and Alice Suchta.60. Id. at ¶ 48 (citing DSMF, Exh. 37 (Hougdahl Deposition, pp. 52-53, 117)). {fn60} All four patients have submitted affidavits wherein they state that no employee or officer of P.T.-O.T. including Kirsch ever solicited their business or downgraded IHHC.61. Id. at ¶ 49 (citing DSMF, Exh. 38 (Affidavit of Susie Munson); Exh. 39 (Affidavit of Tom Greene); Exh. 40 (Affidavit of Phillip Love); Exh. 48 (Affidavit of Alice Suchta) (Attached to Defendants’ Reply Memorandum)). See also DSMF at ¶¶ 50-51 (citing DSMF, Exh. 41 (Meier Deposition, p. 379; Hougdahl Deposition, pp. 59-60)); DSMF at ¶ 53 (citing DSMF, Exh. 44 (Meier Deposition, pp. 263-64)). {fn61} It is undisputed that IHHC’s patients are not bound by any contract to remain with them for any length of time because it is the patient’s choice who will be the patient’s home health care provider.62. Id. at ¶ 52 (citing DSMF, Exh. 43 (Meier Deposition, pp. 93, 197, 213, 218-219, 236, 391, and 397-98)).{fn62}

SUMMARY JUDGMENT STANDARD

[¶18]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶19]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶20]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). To survive summary judgment there must be evidence that “reasonably tends to prove” plaintiffs’ theory; defendants meet the burden under Fed. R. Civ. P. 56(c) when it is conclusively shown that the facts upon which the nonmoving party relied to support the allegations were not susceptible of the interpretation which was sought to give them; only reasonable inferences can be drawn from the evidence in favor of the nonmoving party; and the Court must consider whether the inference of conspiracy is reasonable. Id. (citations omitted).

[¶21]  Where there has been ample opportunity for discovery, summary judgment is appropriate in antitrust litigation just as in any other litigation upon a showing by the moving party of an absence of any genuine issue of material fact. Willmar Poultry Co. v. Morton- Norwich Prod., Inc., 520 F2d 289 (8th Cir. 1975), cert. denied, 424 US 915, 96 SCt 1116, 47 LEd2d 320 (1976).63. The trilogy of Celotex, Anderson, and Matsushita has redefined the standard for summary judgment previously annunciated in Adickes v. S.H. Kress & Co., 398 US 144, 157, 90 SCt 1598, 1608, 26 LEd 2d 142 (1970) and Poller v. Columbia Broadcasting, Inc., 368 US 464, 467, 82 SCt 486, 7 LEd 2d 458, 488 (1962). Poller and Adickes run counter to the teachings of Celotex, Anderson, and Matsushita which take issue with the concept that summary judgment is to be used sparingly. In First National Bank of Ariz. v. Cities Serv. Co., 391 US 253, 88 SCt 1575, 20 LEd 2d 569 (1968), an antitrust case decided by the Supreme Court six years after Poller, the Court set forth that:

[T]o the extent that petitioner’s burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations, we decline to accept it. While we recognize the importance of preserving litigants’ rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

Id. 391 US at 289-90, 88 SCt at 1593. This case has been interpreted to soften Poller by rejecting the view that summary judgment “should, in effect, be read out of antitrust cases.” See William W. Schwarzer, Alan Hirsch, and David J. Barrans, The Analysis and Decision of Summary Judgment Motions: A Monograph on Rule 56 of the Federal Rules of Civil Procedure, Federal Judicial Center, at 4 (1991). {fn63} This action was commenced over one year ago. The record comprises 111 entries in four files. There have been numerous depositions and affidavits filed. Ample time for discovery has passed. Should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions in antitrust cases, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Electric Co- op., 838 F2d 268 (8th Cir. 1988) laid such thoughts to rest. He stated that, “a trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. Id. at 273. See also Midwest Radio Co. v. Forum Pub. Co., 942 F2d 1294, 1296 (8th Cir. 1991). The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.” Id.

[¶22]  Based on the foregoing, the trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing defendants’ motion for summary judgment against all of plaintiffs’ claims and in favor of defendants’ counterclaims. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson). Under this trilogy, it is incumbent upon the nonmoving party (plaintiffs), based upon the showing set forth by the moving party (defendants), to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991).

[¶23]  Plaintiffs have been unable to sustain their burden in the face of defendants’ showing. Plaintiffs’ conspiracy allegations in support of their antitrust claim are based solely upon surmise, conjecture, and conclusions from unsupported facts. Plaintiffs have failed to produce probative evidence to support their breach of contract and tortious interference of contract and business expectancy claims. Furthermore, plaintiffs have failed to counter defendants’ showing that they are entitled to summary judgment on their counterclaims.

DISCUSSION

[¶24]  A.  ANTITRUST

[¶25]  Section 1 of the Sherman Act proscribes “(e)very contract, combination ... or conspiracy, in restraint of trade or commerce ... .” 15 USC § 1. A successful claim under Section 1 of the Sherman Act requires proof of three elements: (1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in the relevant market; and (3) an accompanying injury. E.S. Dev., Inc. v. RWM Enter., Inc., 939 F2d 547, 553, 556 (8th Cir. 1991); Rosebrough Monument Co. v. Memorial Park Cemetery Ass’n, 666 F2d 1130, 1138 (8th Cir. 1981). See also Denny’s Marina, Inc. v. Renfro Prod., Inc., 8 F3d 1217, 1220 (7th Cir. 1993) (citing Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F2d 1148, 1158 (5th Cir. 1992), cert. denied sub nom., Dillard v. Security Pacific Corp., 506 US 1079, 113 SCt 1046, 122 LEd2d 355; Wilder Enter., Inc. v. Allied Artists Pictures Corp., 632 F2d 1135, 1139 n.1 (4th Cir.1980); Ernest W. Hahn, Inc. v. Codding, 615 F2d 830, 844 (9th Cir.1980); cf. Matsushita, 475 US at 586, 106 SCt at 1356). Defendants dispute all three elements of proof. Because plaintiffs’ proof clearly fails to establish the first element of their antitrust claim, the Court need not discuss the second and third elements.

[¶26]  An antitrust plaintiff is not required to prove the existence of a formal agreement among defendants to establish a combination or conspiracy. E.S. Dev., Inc., 939 F2d at 553 (citing Reed Bros., Inc. v. Monsanto Co., 525 F2d 486, 495 (8th Cir.1975), cert. denied, 423 US 1055, 96 SCt 787, 46 LEd2d 645 (1976)). “Indeed, it is axiomatic that the typical conspiracy is ‘rarely evidenced by explicit agreements,’ but must almost always be proved by ‘inferences that may be drawn from the behavior of the alleged conspirators.’” E.S. Dev., Inc., 939 F2d at 553, 554 (citing H.L. Moore Drug Exchange v. Eli Lilly & Co., 662 F2d 935, 941 (2d Cir.1981); Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F2d 1036, 1043 (2d Cir.), cert. denied, 429 US 885, 97 SCt 236, 50 LEd2d 166 (1976)), cert. denied, 459 US 880, 103 SCt 176, 74 LEd2d 144 (1982)). Furthermore, “an antitrust plaintiff may prove the existence of a combination or conspiracy by providing either direct or circumstantial evidence sufficient to ‘warrant a ... finding that the conspirators had a unity of purpose or common design and understanding, or a meeting of the minds in an unlawful arrangement.’” E.S. Dev., Inc., 939 F2d at 554 (citing American Tobacco Co. v. United States, 328 US 781, 810, 66 SCt 1125, 90 LEd 1575 (1946), quoted in H.L. Moore Drug, 662 F2d at 941; Cheatham’s Furniture Co. v. La-Z-Boy Chair Co., 728 FSupp 569, 571 (E.D. Mo.1989), aff'd, 923 F2d 858 (8th Cir. 1990); Monsanto Co. v. Spray-Rite Service Corp., 465 US 752, 764, 104 SCt 1464, 79 LEd2d 775 (1984)). However, even though all evidence and reasonable inferences are to be viewed in the light most favorable to plaintiffs, the nonmoving party, “the range of permissible inferences from ambiguous evidence is limited in a section one case.” Lovett v. General Motors Corp., 998 F2d 575, 578 (8th Cir. 1993) (citing Matsushita, 475 US at 588, 106 SCt at 1356). Stated somewhat differently, “(c)onduct that is consistent with permissible competition as with illegal conspiracy, does not, standing alone, support an inference of antitrust conspiracy.” Matsushita, 475 US at 688, 106 SCt at 1356 (citations omitted) (emphasis added).64. In considering a summary judgment motion, the Court must consider only the evidence that is admissible at trial in determining whether the evidence is sufficient to enable a reasonable jury to conclude that a combination or conspiracy did exist, keeping in mind that all evidence and reasonable inferences are to be viewed in the light most favorable to plaintiffs as the nonmoving party. Walker v. Wayne County, Iowa, 850 F2d 433, 434 (8th Cir. 1988); Multi-Tech Sys. v. Hayes Microcomputer Prod. Inc., 800 FSupp 825, 844 (D. Minn. 1992). See generally Pink Supply Corp. v. Hiebert, Inc., 788 F2d 1313, 1319 (8th Cir. 1986) (citing Burlington Coat Factory Warehouse Corp. v. Esprit De Corp., 769 F2d 919, 924 (2d Cir.1985) (“[w]ithout a showing that admissible evidence will be available at trial, a party may not rely on inadmissible hearsay in opposing a motion for summary judgment.”)). {fn64}

[¶27]  The circumstantial evidence produced by plaintiffs in support of their conspiracy theory for the most part consists of: (1) the timing of P.T.-O.T.’s termination of its physical therapy and occupational therapy services contracts with IHHC in connection with the timing of the incorporation of At Home and the formation of the P.T.-O.T./At Home service contracts;65. DSMF at ¶ 41 (citing DSMF, Exh. 13 (P.T.-O.T./At Home Services Agreement); DSMF, Exh. 31 (Meier Deposition, pp. 362-377)). {fn65} (2) certain P.T.-O.T. interoffice staff meeting minutes including the minutes from the September 28, 1995, meeting in which Kirsch informed the employees/therapists of P.T.-O.T. of the termination of the physical and occupational therapy services with IHHC;66. Id. at ¶ 43 (citing DSMF, Exh. 12 (P.T.-O.T. Staff Meeting Minutes); Exh. 31 (Meier Deposition, p. 372)).{fn66} (3) affidavits of Avis Tellinghuisen, Bob Melvin, Meier, and Hougdahl;67. See Plaintiffs’ Memorandum in Opposition to Summary Judgment at 9 (citing PSMF, Exh. 53 (Affidavit of Avis Tellinghuisen); Exh. 55 (Affidavit of Bob Melvin); Exh. 56 Affidavit of Meier); and Exh. 57 (Affidavit of Hougdahl)). {fn67} (4) deposition excerpts from Redden and Kirsch;68. Id. (citing PSMF, Exh. 69 (Redden Deposition); Exh. 70 (Kirsch Deposition)).{fn68} and (5) At Home employee set-up forms for DeAnn Myers and Trisha Kirsch.69. Id. (citing PSMF, Exh. 61 (At Home Employee Forms)).{fn69} As demonstrated below, the range of permissible inferences that may be derived from this ambiguous evidence is insufficient to combat defendants’ showing that no conspiracy existed.

[¶28]  Plaintiffs contend that the timing of P.T.-O.T.’s termination of its physical therapy and occupational therapy services contracts with IHHC which occurred on or about October 1, 1995 and September 1, 1995, respectively, in connection with the timing of the incorporation of At Home and the formation of the P.T.-O.T./At Home service contracts which occurred on or about October 2, 1995, evidences the conspiracy.70. Because P.T.-O.T. and At Home are not competitors in any market and both P.T.- O.T. and At Home acted in favor of their own economic interests in this case, a theory of conscious parallelism is unavailable to plaintiffs. As defined by the Eleventh Circuit, “(c)onscious parallelism is uniform business conduct by competitors that permits a court to infer the existence of a conspiracy between these competitors.” Todorov v. DCH Healthcare Auth., 921 F2d 1438, 1456 n.30 (11th Cir. 1991) (citing Interstate Circuit, Inc. v. United States, 306 US 208, 221, 59 SCt 467, 472, 83 LEd 610 (1939)). Proof of parallel business behavior alone is insufficient to establish a conspiracy. Theatre Enter., Inc. v. Paramount Film Distrib. Corp., 346 US 537, 540-41, 74 SCt 257, 259, 98 LEd 273 (1954). As further explained by the Eleventh Circuit,

The idea behind this theory is that competitors’ parallel business decisions are probative of the existence of a conspiracy between these competitors. The evidence used to support this theory is circumstantial. To ensure that we do not punish unilateral conduct, however, we require more than mere evidence of parallel conduct by competitors to support an inference of a conspiracy; an agreement is properly inferred from conscious parallelism only when “plus factors” exist.

Todorov, 921 F2d at 1456 n.30. These “plus factors” include actions contrary to the defendants’ economic interests and a motivation to enter into such an agreement. Petruzzi’s IGA Supermarkets v. Darling-Delaware Co., 998 F2d 1224, 1242 (3d Cir.), cert. denied, 510 US 994 (1993). See generally Admiral Theatre Corp. v. Douglas Theatre Co., 585 F2d 877, 884 (8th Cir. 1978).{fn70} P.T.-O.T. had a legitimate business reason for canceling its services contracts with IHHC. The acrimonious relationship between the parties arising out of the breakup of IHHC created an undesirable work atmosphere which could adversely affect the ultimate work product. Indeed, a unilateral refusal to deal is no Sherman Act violation. Monsanto, 465 US at 761, 104 SCt at 1469 (citing United States v. Colgate & Co., 250 US 300, 307, 39 SCt 465, 468, 63 LEd 992 (1919) (noting that a manufacturer has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently)); Health Care Equal. Comm. v. Iowa Medical Society, 851 F2d 1020, 1032 (8th Cir. 1988); Terry’s Floor Fashions v. Burlington Indus., 763 F2d 604, 610-11 (4th Cir. 1985); Aquachem Co., Inc. v. Olin Corp., 699 F2d 516, 520 (11th Cir. 1983). Plaintiffs have failed to produce sufficient evidence tending to exclude the possibility of independent action by P.T.-O.T.

[¶29]  Plaintiffs also rely on certain P.T.-O.T. interoffice staff meeting minutes including the minutes from the September 28, 1995, meeting in which Kirsch informed the employees/therapists of P.T.-O.T. of the termination of the physical and occupational therapy services with IHHC. Consistent with the foregoing discussion, these minutes only evidence P.T.-O.T.’s business decision not to renew a service contract with IHHC. Clearly, such evidence does not warrant a finding that P.T.-O.T. and At Home had a unity of purpose or common design or a meeting of the minds in an unlawful arrangement. To the contrary, the September 28, 1995, minutes support defendants’ position because Kirsch specifically instructed “the therapists to inform their patients of the termination but in no way to solicit them to any other home health care business.”71. DSMF at ¶ 20 (citing DSMF, Exh. 12 (P.T.-O.T. Staff Meeting Minutes) (emphasis added)).{fn71} Furthermore, plaintiffs have failed to produce evidence regarding At Home’s involvement in said meetings as to rule out independent action by P.T.-O.T.

[¶30]  Plaintiffs set forth their conspiracy theory in two paragraphs of their response brief wherein they contend that the following exhibits without specific references establish a conspiracy: Exh. 53 (Affidavit of Avis Tellinghuisen); Exh. 55 (Affidavit of Bob Melvin); Exh. 56 (Affidavit of Meier); Exh. 57 (Affidavit of Hougdahl); Exh. 61 (At Home Employee Forms); Exh. 69 (Redden Deposition); and Exh. 70 (Kirsch Deposition).72. See Plaintiffs’ Memorandum in Opposition to Summary Judgment at 9. {fn72} Upon thorough review of these exhibits, the Court concludes that the range of permissible inferences that may be derived from this ambiguous evidence is insufficient to combat defendants’ showing that no conspiracy existed.

[¶31]  Avis Tellinghuisen was P.T.-O.T.’s office manager during September and October of 1995. See PSMF, Exh. 53 at ¶¶ 1-2. In her affidavit, she sets forth that Redden called Kirsch on the average of three to four times per day. Id. at ¶¶ 3-4. Evidence of meetings alone is not sufficient to support a conspiracy particularly in light of the fact that Tellinghuisen does not state what was said in the telephone conversations. Hanson v. Shell Oil Co., 541 F2d 1352, 1359 (9th Cir. 1976), cert. denied, 429 US 1074, 97 SCt 813, 50 LEd2d 792 (1977). There is no evidence that Redden and Kirsch entered into a conspiracy or furthered a conspiracy during these phone conversations.

[¶32]  Bob Melvin is an independent insurance agent who alleges he had a phone interview with Trisha Kirsch, R.N., a former employee of IHHC, wherein she explained that she was leaving IHHC because of Karl Kirsch her “jackass brother-in-law.” See PSMF, Exh. 55 at ¶¶ 1-2.73. Trisha Kirsch categorically denies ever having made any such statement about Karl Kirsch. See DSMF, Exh. 51 (Affidavit of Trisha Kirsch).{fn73} Aside from the inherent evidentiary problems emanating from this affidavit, it is not relevant to proving there was any conspiracy.

[¶33]  Plaintiff Meier submitted an affidavit wherein he discusses IHHC’s loss of its contract with P.T.-O.T., as well as the loss of certain patients and employees. However, the affidavit provides only speculation, conjecture, and surmise regarding defendants’ actions and plaintiffs’ loss of P.T.-O.T.’s contract. See PSMF, Exh. 56 (Affidavit of Meier). The same is true as to plaintiff Hougdahl’s affidavit wherein she sets forth only conclusory statements as to the alleged conspiracy without providing specifics or evidence from which a reasonable jury could infer that a combination or conspiracy existed. See PSMF, Exh. 57 at p. 8 (Affidavit of Hougdahl).74. The Court recognizes that in certain aspects both Meier’s and Hougdahl’s affidavits contradict their prior deposition testimony. See generally Camfield Tires, Inc. v. Michelin Tire Corp., 719 F2d 1361, 1364-66 (8th Cir. 1983) (submission of an affidavit contradicting earlier deposition testimony in order to raise a “sham issue” to defeat summary judgment should be ignored).{fn74}

[¶34]  Plaintiffs also submitted At Home employee set-up forms which indicate Trisha Kirsch and DeAnn Myers went to work for At Home on or about October 2, 1995. See PSMF, Exh. 61 (At Home Employee Forms). In her affidavit, Trisha Kirsch states,

[I] left Innovative Home Health Care on or about September 1995. I was not forced to leave Innovative by Karl Kirsch. I left Innovative because after Dennis Meier became in charge, my workload dropped from 20 to 25 patients per week to 8 to 10 patients per week. When I left Innovative Home Health Care, I did not go to At Home Quality Health Care. I went to Rapid City Regional Hospital. Later, I did go to work for At Home Quality Health Care.

See DSMF, Exh 51 at ¶ 2 (Affidavit of Trisha Kirsch). In her affidavit, DeAnn Myers stated that prior to her seeking employment with At Home, she was concerned her employment would be terminated if Dennis Meier became owner of IHHC in the buy-out. See DSMF, Exh. 57 at ¶ 4 (Affidavit of DeAnn Myers). There is simply no evidence contained in the At Home employee set-up forms which aids plaintiffs’ conspiracy theory.

[¶35]  Plaintiffs cite an excerpt from Redden’s deposition to support their theory that Kirsch and Redden embarked on a conspiracy to deprive IHHC of business. See Plaintiffs’ Memorandum in Opposition to Summary Judgment at 9 (citing PSMF, Exh. 69 at pp. 158-159). That portion of Redden’s testimony discusses two incidents. The first incident pertains to Hougdahl’s claims that she saw IHHC employees DeAnn Myers and Gayle Effenberger, who are now employed by At Home, removing materials from IHHC late one night.75. PSMF at ¶ 56 (citing PSMF, Exh. 69 (Susan Redden Deposition, pp. 157-59)).{fn75} In her affidavit, DeAnn Myers explains the incident outside IHHC as follows:

I was one of the two employees who was confronted by Gwen Hougdahl outside Innovative’s premises on a Monday night at approximately 10:45 p.m. on or about September 11, 1995. I was working late because before the buy-out, the attorneys wanted Gayle Effenberger to compile financial statements by the next morning. I offered to stay late with her as we felt it was an unsafe neighborhood late at night, and I had other unfinished paperwork I could do.

After looking both ways upon exiting the building ... we proceeded to our cars, when Gwen Hougdahl jumps out of nowhere and asks, “What do you have there?” We were terrified with the sudden outburst and appearance in the dark of night. Realizing then it was Gwen, I said, “Here’s my stuff. Do you want to see?” Gwen replied, “No, I just want to make sure you don’t have any manuals.” The items I was carrying consisted of a paper bag of apples, a frame that Susan Redden had given me, and some of my birthday and other cards. Gayle and I both felt our employment would be terminated if Dennis Meier became owner in the buy-out, so we had decided we would take some of our personal items home.

See DSMF, Exh. 57 at ¶¶ 3-4 (Affidavit of DeAnn Myers). Gayle Effenberger corroborates DeAnn Myers’ explanation in her affidavit. See DSMF, 58 at ¶¶ 2-3 (Affidavit of Gayle Effenberger). The incident outside IHHC does not support plaintiffs’ theory that Kirsch and Redden embarked on a conspiracy to deprive IHHC of business.

[¶36]  The second matter Redden refers to in her deposition pertains to the state court’s prior determination that Redden had oppressed the other owners of IHHC. See DSMF, Exh. 69 at pp. 158-59 (Redden Deposition). Redden’s oppressive conduct was ultimately resolved by the Settlement Agreement whereby Meier, Hougdahl, and IHHC purchased the interests of Kirsch and Redden in IHHC.76. DSMF at ¶ 12 (citing DSMF, Exh. 4 at pp. 2-3). {fn76} Evidence that Redden had oppressed other owners of IHHC is too ambiguous to warrant a finding that there was a conspiracy or that any of the alleged conspirators had a unity of purpose or common design and understanding, or a meeting of the minds in an unlawful arrangement.

[¶37]  Finally, plaintiffs contend that excerpts of Kirsch’s deposition helps establish the conspiracy. While Kirsch testified that he had talked to Redden, there is no evidence that the content of any conversations either established or furthered any alleged conspiracy.77. PSMF, Exh. 70 at pp. 35-42 (Kirsch Deposition).{fn77} See generally Hanson, 541 F2d at 1359 (evidence of meetings alone is not sufficient to support a conspiracy). Kirsch also discussed an incident wherein he requested Gayle Effenberger to call Medicare to determine the ownership of IHHC because Hougdahl was calling P.T.-O.T.’s employed therapists and soliciting them.78. Id. at pp. 50, 86, 104-105.{fn78} All the evidence plaintiffs have submitted to support their conspiracy theory, considered as a whole, is too ambiguous for a reasonable jury to infer the existence of a conspiracy.

[¶38]  Because the Court finds that all defendants are entitled to summary judgment on the antitrust claim based on plaintiffs’ failure to produce sufficient probative evidence that a combination or conspiracy existed between defendants, the Court need not inquire into the standards for evaluating whether the alleged restraint of trade is unreasonable or whether there exists an antitrust injury.

[¶39]  B.  SUPPLEMENTAL JURISDICTION

[¶40]  Having granted summary judgment to defendants on plaintiffs’ federal claim, the remaining issues are plaintiffs’ state law claims for breach of contract and tortious interference with contract and business expectancy, and defendants’ counterclaims for breach of contract and indemnification.79. Plaintiffs seek to invoke this Court’s supplemental jurisdiction pursuant to 28 USC § 1367(a) for claims for breach of contract in regard to the Settlement Agreement and intentional interference with contract and business expectancy. Defendants Kirsch and Redden also seek to invoke this Court’s supplemental jurisdiction for their claims of breach of contract and indemnification set forth in their counterclaims. {fn79} This Court is granted supplemental jurisdiction80. Pursuant to the Judicial Improvements Act of 1990, the former common-law doctrines of pendent and ancillary jurisdiction were codified “under the new rubric of supplemental jurisdiction” in 28 USC § 1367. See Willman v. Heartland Hosp. East, 34 F3d 605, 613 (8th Cir. 1994); North Cent. F.S., Inc. v. Brown, 951 FSupp 1383, 1410 (ND Iowa 1996).{fn80} over state law claims and counterclaims which form part of the same case or controversy as claims over which this Court has original jurisdiction. See 28 USC § 1367(a);81. 28 USC § 1367(a) provides in relevant part,

  [I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution... .{fn81} Achtien v. City of Deadwood, 814 FSupp 808, 819 (DSD 1993); North Cent. F.S., Inc. v. Brown, 951 FSupp 1383, 1410 (ND Iowa 1996) (once a federal district court has subject matter jurisdiction over a claim, an opposing party’s compulsory counterclaim also comes within the court’s jurisdiction, even when that counterclaim lacks an independent basis for federal subject matter jurisdiction). However, this Court also has broad discretion to dismiss state law claims and counterclaims over which it has only supplemental jurisdiction if the Court has dismissed all claims over which the Court had original jurisdiction. See 28 USC § 1367(c)(3); Willman v. Heartland Hosp. East, 34 F3d 605, 613 (8th Cir. 1994) (recognizing that the district court has broad discretion to exercise what it still described as “pendent” jurisdiction over the state-law claims and “ancillary” jurisdiction over the counterclaims); Achtien, 814 FSupp at 819.

[¶41]  Accordingly, the Court must determine whether in its discretion, given the facts and circumstances of this case, it should retain jurisdiction over these claims under 28 USC § 1367(c)(3). The same determination must be made as to defendant Kirsch’s and Redden’s counterclaims with the admonition that the counterclaims must be “compulsory” counterclaims within the meaning of Fed. R. Civ. P. 13(a). As recognized by the Eighth Circuit Court of appeals, “[i]ssues such as judicial efficiency, convenience, and fairness to the litigants are relevant to the federal court’s exercise of its discretion.” Condor Corp. v. City of St. Paul, 912 F2d 215, 221 (8th Cir. 1990). These factors weigh in favor of resolving the state issues presented here.

[¶42]  This action is the third in a series of litigation between some or all of the parties which arose out of differences in the business of IHHC. The facts and circumstances upon which plaintiffs base their antitrust claim form the basis behind the breach of the Settlement Agreement and tortious interference of contract and business expectancy claims. These facts were developed through over a year’s worth of discovery. The record is replete with references to the state claims in numerous depositions and affidavits. In addition, the case comprises 111 entries contained in four files. Ample time for discovery has passed. This Court has developed the majority of the facts necessary for the resolution of the state claims in the adjudication of the federal antitrust claim. The parties have presented their arguments in support of their state claims in the motion for summary judgment. In addition, as demonstrated below, because the Court finds that there is no genuine issue as to any material fact and that defendants are entitled to judgment as a matter of law on the state claims, this matter is resolved without the additional burdens associated with trial. As for defendants Kirsch’s and Redden’s counterclaims, they are “compulsory” counterclaims within the meaning of Fed. R. Civ. P. 13(a) in that they arise out of the transaction or occurrence that is the subject matter of plaintiffs’ antitrust claim and do not require for their adjudication the presence of third parties of whom the Court cannot acquire jurisdiction.82. Fed. R. Civ. P. 13(a) provides that:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action, or (2) the opposing party brought suit upon the claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim, and the pleader is not stating any counterclaim under this Rule 13.

It is well established that failure to plead a compulsory counterclaim while litigation is pending bars the party from raising the claim. Law Offices of Jerris Leonard v. Mideast Sys., Ltd., 111 F.R.D. 359, 361 (D.D.C. 1986) (citations omitted). {fn82}

[¶43]  1.  Breach of Settlement Agreement

[¶44]  On September 21, 1995, defendants Kirsch and Redden and plaintiffs Meier, Hougdahl, and IHHC entered into a Settlement Agreement in order to resolve the dissolution action of IHHC filed in state court.83. DSMF, Exh. 4 (Settlement Agreement).{fn83} Under the terms of the Settlement Agreement, Meier, Hougdahl, and IHHC purchased the interests of Kirsch and Redden in IHHC.84. Id. at pp. 2-3. {fn84} Meier, Hougdahl, and IHHC were to pay an amount of $73,333.33 to both Kirsch and Redden.85. Id. at p. 2. {fn85} Payments in the amount of $50,000 were made to both Kirsch and Redden at the time of the Settlement Agreement.86. Id. {fn86} At issue in this case is the remaining balance in the amount of $23,333.33 plus interest at the annual rate of 10.5 percent which was to be paid to both Kirsch and Redden on March 22, 1996.87. Id.{fn87} Meier and Hougdahl executed promissory notes and personal guarantees for said amount.88. DSMF at ¶ 13 (citing DSMF, Exh. 5-6). {fn88}

[¶45]  Paragraph V of the Settlement Agreement contains a non-interference clause which provides:

Defendants [Kirsch and Redden] agree to and shall abide by the terms of the Innovative Home Health Care, Inc., Confidentiality Statement, a copy of which is annexed hereto as exhibit A. The Confidentiality Statement shall not be construed to prohibit defendants from employment in their professions or from placing newspaper advertisements or notices, Yellow Page notices, or other general advertising or marketing not specifically directed at the corporation’s patients, vendors, or customers. This Agreement specifically shall not be construed to preclude Defendant Kirsch or any entity he is with from providing physical or occupational therapy to other home health care entities; provision of therapy services shall not, in and of itself, constitute a breach of this Agreement.

The parties shall not disparage, unlawfully disrupt, or unlawfully and intentionally interfere with the business or lawful activities of any other party.

See DSMF, Exh. 4 at p. 4. The Confidentiality Statement, which is annexed to the Settlement Agreement, contains the following two proscriptions: (1) prohibition against use, copying, reproduction or taking confidential information, which is described as certain written information; and (2) prohibition against competition, competition being defined as soliciting for the purpose of rendering service to any person or organization that is or was a patient/customer of IHHC. See DSMF, Exh. 4 at Attachment A (Confidentiality Statement).

[¶46]  This action was brought on or about the due date of the promissory notes; hence, the due date of the notes has passed and no payments have been made on said notes.89. Id. at ¶ 15 (citing DSMF at Exh. 7 (Meier Deposition, pp. 202-203; Hougdahl Deposition, p. 62)).{fn89} Plaintiffs contend that they are not obligated to pay the remaining balance due because Kirsch and Redden have breached the terms of the Settlement Agreement. Specifically, plaintiffs allege that Kirsch and Redden have committed the following acts in violation of the terms of their Settlement Agreement: (1) kept, used, or disclosed confidential and proprietary information belonging to IHHC; (2) solicited the existing patients who were customers of IHHC; (3) appropriated a marketing opportunity belonging to IHHC; (4) disparaged IHHC by publishing or causing to be published false and malicious statements concerning its continued viability; and (5) unlawfully and intentionally disrupted or interfered with IHHC’s business. In regard to plaintiffs’ breach of contract claim, defendants Kirsch and Redden filed counterclaims against plaintiffs Meier, Hougdahl, and IHHC alleging breach of contract of the Settlement Agreement. Defendants Kirsch and Redden allege in their counterclaims that they have not breached the Settlement Agreement; therefore, plaintiffs are in default under the terms of the Settlement Agreement, promissory notes, and personal guarantees owing each defendant $23,333.33 plus 10.5 percent interest accruing from September 22, 1995.

[¶47]  After reviewing all facts and inferences derived therefrom in a light most favorable to plaintiffs this Court concludes that defendants Kirsch and Redden did not breach the Settlement Agreement. Plaintiffs have failed to present sufficient evidence that defendants kept, used, or disclosed confidential and proprietary information belonging to IHHC. As previously discussed in the antitrust section, Hougdahl’s claims that she saw IHHC employees DeAnn Myers and Gayle Effenberger, who are now employed by At Home, removing materials from IHHC late one night does not establish that defendants removed any confidential or proprietary information. Furthermore, DeAnn Myers and Gayle Effenberger set forth in their affidavits that they were merely removing personal items.

[¶48]  Plaintiffs’ contention that defendants breached the Settlement Agreement by soliciting customers of IHHC is unsupported by the record. Meier also testified that due to defendants’ actions at least 10 to 20 patient referrals were lost. However, the record also indicates that plaintiffs are unaware of any lesser number of referrals or even the overall number of referrals to other home health agencies during the time period of the alleged wrongdoing. In fact, the record indicates that the number of home health care patients that IHHC had increased from 80 to 85 patients in July of 1995, to 92 or 93 patients in September of 1996. In addition, at a P.T.-O.T. staff meeting held on September 28, 1995, Kirsch specifically instructed “the therapists to inform their patients of the termination but in no way to solicit them to any other home health care business.”90. DSMF at ¶ 20 (citing DSMF, Exh. 12 (P.T.-O.T. Staff Meeting Minutes)).{fn90} In further support of plaintiffs’ allegations that defendants steered or solicited patients of IHHC, Hougdahl in her deposition identified the following four patients who left IHHC: Susie Munson, Tom Greene, Phillip Love, and Alice Suchta.91. DSMF at ¶ 48 (citing DSMF, Exh. 37 (Hougdahl Deposition, pp. 52-53, 117)). {fn91} All four patients have submitted affidavits wherein they state that no employee or officer of P.T.-O.T., including Kirsch, ever solicited their business or downgraded IHHC.92. Id. at ¶ 49 (citing DSMF, Exh. 38 (Affidavit of Susie Munson); Exh. 39 (Affidavit of Tom Greene); Exh. 40 (Affidavit of Phillip Love); Exh. 48 (Affidavit of Alice Suchta) (Attached to Defendants’ Reply Memorandum)). See also DSMF at ¶¶ 50-51 (citing DSMF, Exh. 41 (Meier Deposition, p. 379; Hougdahl Deposition, pp. 59-60)); DSMF at ¶ 53 (citing DSMF, Exh. 44 (Meier Deposition, pp. 263-64)). {fn92} It is undisputed that IHHC’s patients are not bound by any contract to remain with them for any length of time because it is the patient’s choice who will be the patient’s home health care provider.93. Id. at ¶ 52 (citing DSMF, Exh. 43 (Meier Deposition, pp. 93, 197, 213, 218-219, 236, 391, and 397-98)).{fn93}

[¶49]  There is no evidence that Kirsch and Redden appropriated a marketing opportunity belonging solely to IHHC. The Settlement Agreement specifically provides that it “shall not be construed to preclude Defendant Kirsch or any entity he is with [i.e. P.T.-O.T.] from providing physical or occupational therapy to other home health care entities [i.e. At Home]; provision of therapy services shall not, in and of itself, constitute a breach of this Agreement.” See DSMF, Exh. 4 at p. 4.

[¶50]  Plaintiffs have also failed to produce sufficient evidence indicating that defendants disparaged IHHC by publishing or causing to be published false and malicious statements concerning its continued viability.94. The Settlement Agreement prohibits defendants from disparaging, unlawfully disrupting, or unlawfully and intentionally interfering with the business or lawful activities of plaintiffs. See DSMF, Exh. 4 at p. 4.{fn94} In support of this allegation plaintiffs make reference to Meier’s deposition testimony wherein he states that an unknown person told doctors in the community that IHHC was going out of business. See PSMF ¶ 53; DSMF ¶ 53 (citing DSMF Exh. 44 at pp. 263-64) (Meier Deposition)). Without additional evidence, this Court will not accept plaintiffs’ invitation to attribute these statements to defendants merely because they were made around the same time that Kirsch and Redden were bought out of IHHC. The Court further finds that deposition comments by Brad Ferguson, a partner in P.T.-O.T., wherein he states that the reason P.T.-O.T. terminated the contract with IHHC was due in part to a disagreement with the way IHHC conducted business does not establish that defendants disparaged IHHC by publishing or causing to be published false and malicious statements concerning its continued viability. See DSMF ¶¶ 53-54 (citing DSMF, Exh. 32) (Brad Ferguson Deposition). See generally DSMF, Exh. 32 (Kirsch Deposition); DSMF, Exh. 12 (P.T.-O.T. Staff Meeting Minutes).

[¶51]  Finally, plaintiffs contend that defendants unlawfully and intentionally disrupted or interfered with IHHC’s business by soliciting IHHC’s patients and taking confidential and proprietary information belonging to IHHC. As previously discussed, plaintiffs have failed to produce sufficient probative evidence that defendants engaged in such conduct.

[¶52]  Because plaintiffs have failed to combat defendants’ showing that defendants did not breach the Settlement Agreement, defendants shall have summary judgment against plaintiffs as to their breach of contract claim contained in Count II of their Amended Complaint. In addition, summary judgment is granted in favor of defendants Kirsch’s and Redden’s breach of contract counterclaim. Because defendants have not breached the Settlement Agreement, plaintiffs Meier, Hougdahl, and IHHC are in default under the terms of the Settlement Agreement, promissory notes, and personal guarantees owing each defendant $23,333.33 plus 10.5 percent interest accruing from September 22, 1995.

[¶53]  2.  Indemnification

[¶54]  Defendants Kirsch and Redden are also seeking indemnification from plaintiffs Meier and Hougdahl for all reasonable costs and expenses including reasonable attorney’s fees incurred in defending this lawsuit.95. Due to the nature of this action, defendants are foreclosed from seeking indemnification from IHHC. See generally S.D.C.L. § 47-2-58.2 (precludes a corporation from indemnifying a director, officer, employee, or agent of a corporation from an action by or in the right of the corporation); SDCL § 47-2-58.8; SDCL § 47-5-27.{fn95} Defendants rely on the indemnification clause contained in paragraph 4 of the Settlement Agreement which specifically provides,

Plaintiffs [Meier and Hougdahl] and Innovative Home Health Care, Inc., agree to indemnify and defend defendant directors and to hold defendant directors harmless from any and all claims, demands, and causes of action, including third-party actions or cross-actions seeking contribution or indemnity, or any other liability that arises out of or is related to the operation of Innovative Home Health Care, Inc., either before or after the execution of this Agreement.

See DSMF, Exh. 4 at pp. 3-4 (emphasis added).96. The Settlement Agreement also provides that,

d.  Upon due diligence examination by plaintiffs, to be completed prior to plaintiffs’ possession of the corporation even if such possession occurs prior to the exchange of consideration for this Agreement plaintiffs and corporation shall individually and jointly indemnify and release defendants from any and all liabilities or obligations relating to or arising out of their capacity as shareholders, officers, directors, or employees of said corporation, except to the extent such release would be inconsistent with the terms of this Agreement.  

See DSMF, Exh. 4 at pp. 2-3. {fn96} Under the Matsushita, Celotex, and Anderson trilogy, it is incumbent upon the Meier and Hougdahl as the nonmoving parties, based upon the showing set forth by Kirsch and Redden, the moving parties, to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc., 934 F2d at 979. Plaintiffs Meier and Hougdahl have failed to combat defendants’ showing. Accordingly, defendants Kirsch and Redden are entitled to all reasonable costs and expenses, including reasonable attorney fees, incurred by the filing of this suit.

[¶55]  3.  Tortious Interference With Contractual Relations

[¶56]  The essential elements of a cause of action for tortious interference with contractual relations are as follows:

(1)  the existence of a valid business relationship or expectancy;

(2)  knowledge by the interferer of the relationship or expectancy;

(3)  an intentional and unjustified act of interference on the part of the interferer;

(4)  proof that the interference caused the harm sustained; and

(5)  damage to the party whose relationship or expectancy was disrupted.

Nelson v. WEB Water Dev. Ass’n, 507 NW2d 691 (SD 1993) (quoting Tibke v. McDougall, 479 NW2d 898, 908 (SD 1992)).

[¶57]  The Court has heretofore concluded that defendants did not unlawfully and intentionally disrupt or interfere with IHHC’s business by engaging in any of the following conduct:

(1)  keep, use, or disclose confidential and proprietary information belonging to IHHC;

(2)  solicit the existing patients who were customers of IHHC;

(3)  appropriate a marketing opportunity belonging to IHHC; or

(4)  disparage IHHC by publishing or causing to be published false and malicious statements concerning its continued viability.

[¶58]  Plaintiffs have failed to produce significant probative evidence to controvert defendants’ showing of the lack of an unjustified act of intentional interference necessary to invoke liability under plaintiffs’ theory of tortious interference with contractual relations so as to preclude summary judgment on that issue. See Terry A. Lambert Plumbing, Inc., 934 F2d at 979.

CONCLUSION

[¶59]  After viewing the arguments presented by both parties and after reviewing the facts and inferences that may be derived therefrom in a light most favorable to plaintiffs, this Court concludes that plaintiffs have failed to present sufficient probative evidence in support of their conspiracy theory as to create a genuine issue of material fact to withstand defendants’ motion for summary judgment on the antitrust claim alleged in Count I of Plaintiffs’ Amended Complaint. The Court further finds that defendants are entitled to summary judgment against plaintiffs on the breach of contract and tortious interference with contractual and business relations claims alleged in Counts I and II of Plaintiffs’ Amended Complaint. In addition, defendants Kirsch and Redden are entitled to summary judgment against plaintiffs for their counterclaims of breach of contract and indemnification. Because said plaintiffs are in default under the terms of the Settlement Agreement, promissory notes, and personal guarantees, they shall pay each defendant $23,333.33 plus 10.5 percent interest accruing from September 22, 1995. Furthermore, plaintiffs Meier and Hougdahl shall indemnify defendants Kirsch and Redden for all reasonable costs and expenses, including reasonable attorney fees, incurred by the filing of this suit. Accordingly, judgment shall be issued forthwith.



Wilcox v. Callahan, 1997 DSD 13

LOLA M. WILCOX,

Plaintiff,

v.

JOHN J. CALLAHAN,

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 13]

United States District Court

District of South Dakota - Western Division

CR 96-5069

MEMORANDUM OPINION AND ORDER

Filed May, 1997

RICHARD H. BATTEY, Chief Judge

PROCEDURAL HISTORY

[¶1]  On August 29, 1996, plaintiff/claimant Lola M. Wilcox (Wilcox) filed a complaint seeking review of the decision denying her social security benefits. On February 14, 1997, Wilcox filed a motion for summary judgment requesting that the Commissioner’s decision be reversed or in the alternative that the case be remanded to the agency for consideration of new and material evidence. On March 10, 1997, Acting Commissioner of Social Security, John J. Callahan, responded to Wilcox’s motion requesting that the Commissioner’s decision be affirmed on the ground that no genuine issue as to any material fact exists and that the Commissioner is entitled to summary judgment as a matter of law. The Court has jurisdiction pursuant to 42 USC § 405(g).

[¶2]  On April 24, 1994, Wilcox filed applications for Title II disability benefits under Title II of the Social Security Act (the Act), 42 USC §§ 401-33, and for Supplemental Security Income (SSI) benefits under Title XVI, 42 USC §§ 1381-83. Wilcox alleges an onset date for her disability of May 5, 1991. Initially, her applications were denied. Wilcox next filed a Request for Reconsideration which was also denied.

[¶3]  Wilcox then requested a hearing before the Administrative Law Judge (ALJ). On November 30, 1995, ALJ James W. Olson held a hearing on this matter. On January 25, 1996, the ALJ issued an opinion which denied Wilcox benefits. The ALJ determined that Wilcox had not been engaged in substantial gainful activity since the alleged onset of her disability and that claimant has a severe impairment. (AR 23). However, the ALJ found that Wilcox was not considered disabled under the Listing of Impairments (Appendix 1 to Subpart P, 20 CFR Part 404). (AR 23). The ALJ concluded that although Wilcox could not perform her past relevant work she would be able to perform sedentary jobs which exist in significant numbers in the regional or national economy. (AR 25). On July 1, 1996, the Appeals Council declined to review the ALJ’s decision. Wilcox then requested judicial review by this Court.

FACTS

[¶4]  On April 20, 1994, Wilcox filled out a disability report. She stated that her disabling condition was “Charco[t] Marie” which affects her from her ankles down. (AR 87). She said the disease causes her feet to swell and that she cannot stand for long periods of time. (AR 87). The report stated that Wilcox could not walk up stairs without using the railing. (AR 87).

[¶5]  The disease Wilcox suffers from is a genetically transmitted neurological disease known as Charcot-Marie-Tooth. (AR 35). When Wilcox was ten years old, she had surgery on her feet due to the disease. (AR 35, 87). She was required to have heel-cord lengthening procedures and fusion of both ankles. (AR 121, 177). Wilcox is unable to pronate, supinate, or dorsiflex either foot and does not have a passive or aggressive range of motion in her right ankle. (AR 124). Wilcox has a limp to the left and has difficulty putting weight on her right ankle without pain. (AR 124).

[¶6]  Despite this disease, Wilcox is responsible for taking care of herself. (AR 102). She does not require any assistance in caring for herself. (AR 102). Wilcox cooks and does all her own shopping. (AR 102). As for household maintenance, Wilcox washes her dishes and cleans the house everyday. She does laundry two times a week. (AR 87). Wilcox also works in the garden. (AR 103). In May of 1994, Wilcox’s little boy was only a year old and a lot of her time was spent caring for him. (AR 103).

[¶7]  On August 11, 1994, Wilcox filled out another form, a Reconsideration Disability Report. This report asked Wilcox to describe the changes in daily activities since she filed her claim. (AR 98). Wilcox stated that she gets tired when standing and that her feet hurt and are stiff after she has been sitting down. (AR 98). She also stated that it is difficult to get up steps without holding on to anything. (AR 98). On December 12, 1994, Wilcox filled out a form requesting a hearing before an ALJ. When asked to describe the changes in her condition, Wilcox stated that one side was getting stiffer than the other and that if she walked too much her ankles would hurt. (AR 107). Wilcox also stated that she is not able to get around without first putting on her boots and that she is unable to walk long distances. (AR 107).

[¶8]  On July 19, 1994, a functional capacities assessment was performed on Wilcox. The conclusion of the individual who performed the functional capacity assessment was that Wilcox’s ankles limited her ambulation but that she could still do sedentary work. (AR 112). The individual also noted that Wilcox had good upper body strength and ability. (AR 112). On July 14, 1994, Melanie Schramm, D.O., noted that Wilcox’s upper extremities were normal and that no reduced range of motion was noted. (AR 122). Dr. Schramm concluded that Wilcox’s upper body strength and function was normal. (AR 124). Dr. Schramm also stated that Wilcox is “limited in her motion and ambulation due to the problems with [her] ankles.” (AR 124). Dr. Schramm determined that Wilcox could perform work that involved her upper body and that she would not have difficulty communicating and sitting. (AR 124).

[¶9]   Since the surgery, Wilcox testified that she has had swelling in her ankles and that more recently her hands are starting to swell. She stated that she can use her hands for about twenty minutes before she has to quit using them. (AR 42). Wilcox testified that she can sit for 15 minutes before her hands start swelling up. At the hearing, she stated that when she walks for long distances her ankles get sore and she can hardly move them. (AR 36). She testified that if she is not wearing shoes she is not able to walk. (AR 44). According to Wilcox, wearing her cowboy boots help her to walk. (AR 44). At the time of the hearing before the ALJ, Wilcox was taking one Motrin a day to deal with the pain. (AR 38). Wilcox testified that her ankle is in slight constant pain and that there is not a cure for her disease. (AR 37).

[¶10]  As of November 30, 1995, Wilcox testified that she had seen three doctors about her ankle: Dr. Delany, Dr. Gulf, and Dr. Arlen. (AR 37). She stated that Dr. Delany is her treating physician. (AR 42).

STANDARD OF REVIEW

[¶11]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994), cert. denied, 573 US 1076, 115 SCt 722, 130 LEd2d 627 (1995)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). See also Onstead v. Sullivan, 962 F2d 803 (8th Cir. 1992) (quoting Whitehouse v. Sullivan, 949 F2d 1005, 1007 (8th Cir. 1991)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991).

[¶12]  However, the Court’s role under section 405(g) is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))). The Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith v. Sullivan, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980). As long as the ALJ’s decision is supported by substantial evidence, then this Court cannot reverse the decision of the ALJ even if the Court would have decided it differently. Smith v. Shalala, 987 F2d at 1374.

DISCUSSION

[¶13]  A disability is defined as

inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

In determining when a disability has occurred in a case, the ALJ must follow five prescribed steps.1. The steps are summarized as follows:

(1) First, a determination is made whether claimant is currently engaged in substantial gainful activity; if so, she must be found not disabled.

(2) If claimant is not engaged in substantial gainful activity, the next question is whether she is suffering from a severe impairment, defined as one that significantly limits the ability to perform basic work-related functions. If a severe impairment is not found claimant must be found not disabled.

(3) If there is a severe impairment, and it is one listed in Appendix 1 to Subpart P, claimant is found disabled on the medical evidence alone. [ See Appendix 1 to Subpart P of Part 404, 20 CFR §§ 404.1501 et seq. (1996)].

(4) If the impairment is not listed in Appendix 1, the next inquiry is whether claimant can perform relevant past work. If she can, a finding of no disability is required.

(5) Finally, if claimant cannot perform relevant past work, the question then becomes whether she can nevertheless do other jobs that exist in the national economy, despite his having a severe impairment that prevents return to his previous work.

McCoy v. Schweiker, 683 F2d 1138, 1141-42 (8th Cir. 1982). See also 20 CFR § 404.1520; 1 Harvey L. McCormick, Social Security Claims and Procedures § 410, at 346 (4th ed. 1991). {fn1} See Evaluation of Disability Rule, 20 CFR § 404.1520 (1996).

[¶14]  Wilcox does not object to the ALJ’s conclusions as to steps one, two, and three. Wilcox’s objections stem from the process the ALJ went through in reaching his conclusions to steps four and five— that a significant number jobs exist in the national economy which Wilcox is capable of performing.

I.

[¶15]  Wilcox’s first objection is that the ALJ failed to give adequate weight to the evidence that her hand was impaired. Wilcox argues that the fact that her hand was impaired was supported by substantial evidence. Wilcox states that two physicians rendered expert opinions that use of her hands was limited by her disease. Wilcox relies on the opinion of Dr. Bryan D. Den Hartog “that repetitive activities of the hands would be precluded by claimant’s disease.” However, this opinion is dated February 21, 1996, and was not part of the record when the ALJ made his decision. The Appeals Council did consider the assessment by Dr. Hartog; therefore, this Court will consider this report in determining if there was substantial evidence for the ALJ to refuse to consider Wilcox’s hand pain. See Mackey v. Shalala, 47 F3d 951, 953 (8th Cir. 1995) (stating that when considering if the ALJ’s decision is supported by substantial evidence the reviewing court will consider “new evidence deemed material by the Appeals Council that was not before the ALJ”).2. Although, the Appeals Council failed to make a finding that the evidence was material, the council considered the report of Dr. Hartog. This Court finds that the council must have considered the evidence to be material and this Court will therefore consider this evidence when reviewing the entire record.{fn2}

[¶16]  Based upon the evidence before him, the ALJ concluded that all Wilcox’s claims of pain, functional limitations, and total disability were not fully credible. The ALJ found that Wilcox’s complaints were credible to the extent that “they limit her performing work in which she is not required to stoop, climb stairs, traverse uneven ground, stand or walk for more than short periods of time, or lift more than 25 pounds on occasion, but not repetitively.” (AR 24). However, considering all the evidence, the ALJ found that Wilcox’s complaints of back pain and her problems with her hands were not credible.3. Wilcox has not appealed the ALJ’s conclusion as to her back pain.{fn3} (AR 24).

[¶17]  When assessing the credibility of Wilcox’s testimony the ALJ set forth and applied the standard established in Polaski v. Heckler, 751 F2d 943 (8th Cir. 1984).4. Under the standard set forth in Polaski, the ALJ noted that factors to be considered are “claimant’s work record, the observations of physicians and third parties, the claimant’s daily activities, the duration, frequency, and intensity of her symptoms, precipitating and aggravating factors, her medications and use of medical treatment other than medications; her other attempts to obtain relief; and her functional restrictions must all be carefully considered.” (AR 24). {fn4} In reaching his conclusion that Wilcox’s complaints of back and hand pain were not credible, the ALJ noted that Wilcox had not complained of these problems to her doctors. In addition, the record also represents that Wilcox failed to describe this type of pain in her original application for benefits or in any of her subsequent applications. (AR 87, 96, 107). The ALJ also took Wilcox’s daily activities into account. He noted that Wilcox testified that she crochets blankets and that this activity was not compatible with her allegation of pain and swelling in her hands. (AR 24). The ALJ also found that the other activities performed by Wilcox (daily household chores in spurts, cooking breakfast, cleaning up, caring for her son, doing the dishes, dusting, sweeping, and vacuuming) are not compatible with Wilcox’s allegation that she is unable to work. (AR 24). When assessing Wilcox’s credibility, the ALJ pointed out that the only pain medication Wilcox uses is over-the-counter Motrin. In fact, at the hearing Wilcox testified that she only takes Motrin once a day. (AR 24).

[¶18]  The ALJ also relied, in part, on the conclusion by Dr. Schramm, a consultative doctor, who found that Wilcox’s upper body strength and function were normal. (AR 25). The ALJ relied on Dr. Schramm’s conclusion that Wilcox would be able to perform active employment that involved her upper body but not a lot of walking and that Wilcox would not have a problem sitting.5. The ALJ recognized that Dr. Schramm’s conclusion contained an inconsistency. Dr. Schramm stated, “[Wilcox] would be able to work in any active employment that involved her upper body, but not involving a lot of walking or sitting... She would not have difficulty in sitting, communicating or handling objects. She would be limited in her stooping, climbing, kneeling and crawling.” (AR 25). The ALJ concluded, “Dr. Schramm’s statement contains an internal inconsistency regarding the claimant’s ability to sit, but [the undersigned] concludes that Dr. Schramm meant that she could not do a lot of walking or standing, and that she would not have problems sitting, since the claimant had only on[e] complaint, which concerned her ankle problems.” (AR 25). This Court agrees with the ALJ’s conclusion. Wilcox has not specifically challenged this conclusion by the ALJ. {fn5} The ALJ also had in the record the report of the doctor who performed the functional capacities assessment. The conclusion by this doctor was that Wilcox should be able to do sedentary work. (AR 112).

[¶19]  When considering an issue on appeal, this Court is also required to examine the testimony which is disfavorable to the conclusion reached by the ALJ. In support of her argument, Wilcox also points to the medical records of Dr. Steven K. Goff and Dr. Hartog. Dr. Goff’s examination revealed that Wilcox’s hands showed an intrinsic weakness. (AR 177). However, Dr. Goff, unlike Dr. Schramm, did not make any assessment as to whether Wilcox could work. Wilcox urges that Dr. Schramm did not examine her hands and that therefore the ALJ must rely on the medical records of a doctor who performed those examinations.

[¶20]  The Eighth Circuit has stated, “An ALJ may not disregard a claimant’s subjective complaints of pain solely because they are not fully supported by objective medical evidence, but may properly discount the subjective complaints if inconsistencies exist in the record as a whole.” Wilson v. Chater, 76 F3d 238 (8th Cir. 1996). See also Conley v. Bowen, 781 F2d 143 (8th Cir. 1986) (stating that the ALJ may consider inconsistencies in the record when determining credibility findings as to claimant’s pain). In this case, the ALJ concluded that Wilcox’s complaints of pain were not credible based upon the lack of medical evidence, her daily activities, and her lack of need for prescription pain medication. These are all legitimate considerations. See, e.g., Wilson v. Chater, 76 F3d 238 (holding that “although daily activities alone do not disprove disability, they are a factor to consider in evaluating subjective complaints of pain”); Woolf, 3 F3d at 1213 (court considered that there was little or no medical evidence of claimant’s alleged disability); Jeffery v. Secretary of Health & Human Servs., 849 F2d 1129, 1133 (8th Cir. 1988) (citing Williams v. Bowen, 790 F2d 713, 715 (8th Cir. 1986)) (stating, “a claimant’s allegations of pain may be discredited by evidence that [the claimant] relies on only mild pain medication or takes stronger medication only occasionally”). The ALJ considered all the evidence regarding Wilcox’s allegations of pain in her hands and after examining the record as a whole, he found these allegations to be inconsistent.

[¶21]  Wilcox urges that the ALJ’s opinion about a non-existence of an opinion or the non- seriousness of a symptom cannot supplant a doctor’s opinion. This Court does not disagree with Wilcox’s argument; however, her argument misses the point. The ALJ’s opinion in this case did not supplant the doctor’s opinion. On the contrary, the ALJ looked to the record and examined the inconsistencies. The ALJ looked to the medical evidence, Wilcox’s daily activities, and the pain medication she was taking. As emphasized above, these are all legitimate considerations. When looking at the record as a whole, the ALJ had the opinions of two consulting doctors to compare, Dr. Schramm and Dr. Goff.6. Wilcox testified that Dr. Delany was her treating physician. Therefore, given that both Dr. Goff and Dr. Schramm are consulting physicians the law does not require that the opinion of either doctor be given more weight by the ALJ when he was examining the evidence.{fn6} After considering all the evidence, it was not error for the ALJ to rely on the opinion of Dr. Schramm. The ALJ heard testimony that plaintiff performed daily household chores such as sweeping, vacuuming, washing dishes, and laundry, and that she enjoyed working in her garden and crocheting. This Court finds that it was reasonable for the ALJ to have relied on the opinion of Dr. Schramm and to have concluded that the opinion of Dr. Schramm was consistent with the other evidence presented, specifically the testimony of Wilcox.

[¶22]  In addition, Wilcox urges that the report of Dr. Hartog provides substantial evidence that the complaints regarding pain in her hands should have been taken into consideration.

Dr. Hartog concluded, “[Wilcox] has significant weakness of her hands which will restrict her in carrying things more than 10-15 pounds in weight. She is going to have problems doing repetitive motion activities with her hands because of the fatigue ability of the muscles in the hands and forearm.” (AR 13). Dr. Hartog also noted that at a maximum Wilcox is capable of lifting twenty to thirty pounds and that if employed she should have a sit down type job.

Dr. Hartog also believed that Wilcox would qualify for disability benefits. The assessment of Dr. Hartog is not sufficient to persuade this Court that substantial evidence did not exist to support the ALJ’s conclusion. Dr. Hartog’s conclusions—that if Wilcox does work she would have to have a “sit down type job,” that she cannot carry more than ten to fifteen pounds, and that she cannot lift more than twenty to thirty—lend support to the ALJ’s decision. Even Wilcox testified that she could lift twenty-five pounds if she was not required to lift that weight all day long. (AR 45). Dr. Hartog’s assessment does not cure the inconsistencies within the record.

[¶23]  After reviewing the favorable and disfavorable evidence in the record, this Court finds that there is substantial evidence in the record to support the ALJ’s finding of credibility as to Wilcox’s pain in her hands. As long as the ALJ’s decision is supported by substantial evidence, then this Court cannot reverse the decision of the ALJ even if the Court would have decided it differently. Smith, 987 F2d at 1374. In light of all the evidence, the record contains substantial evidence which supports the ALJ’s decision to not consider Wilcox’s allegations of pain in her hands.

II.

[¶24]  Wilcox’s second objection is that the hypothetical question which was posed to Louis C. Phillips, the vocational expert, was inadequate.7. The first hypothetical question asked by the ALJ stated as follows:

Q. ALJ:  Okay. Assume you have an individual who’s a younger person, meaning under the age of 50, with a high school education and work history in the production area involving small parts... . Assume you have an individual who is unable to stoop, climb stairs, and is able to stand or walk for only a veery short period [of] time; is unable to traverse uneven ground, is limited as such to where the walking precludes light work.

(AR 51).{fn7} Wilcox argues that the ALJ failed to include within the hypothetical question her allegations that she had pain in her hands. The law in this circuit does not require that a claimant’s limitations be included in a hypothetical question if the ALJ determines that such limitations are not credible. Onstad v. Shalala, 999 F2d 1232, 1234 (8th Cir. 1993); Cruse v. Bowen, 867 F2d 1183, 1187 (8th Cir. 1989). Therefore, based upon the Court’s conclusion above— that there was substantial evidence to conclude that Wilcox’s hand pain was not credible, the ALJ was not required to include this information in his hypothetical question.

III.

[¶25]  Wilcox’s third argument is that reliable evidence did not exist for the ALJ to conclude that jobs existed for Wilcox in significant numbers. In concluding that work exists in the national economy, the ALJ took administrative notice of Medical Vocational Rule 201.27 (see Table 1 of Appendix 2 to Subpart P, 20 CFR Part 404). The ALJ stated, “Using Rule 201.27 as a framework for decision-making, administrative notice is taken that there are significant numbers of jobs in the national economy which Wilcox is able to perform.” The ALJ then stated that his conclusion was further supported by the vocational expert’s testimony regarding the availability of jobs within the national economy. (AR 26).

[¶26]  42 USC § 423(d)(2)(A) defines “work within the national economy” as “work which exists in significant numbers either in the region where such individual lives or in several regions of the country.” For a finding that work exists for a claimant within the national economy, it is not required that work exist for the claimant in the immediate area which she lives. 20 CFR § 404.1566(a)(1).

[¶27]  At the hearing before the ALJ, Phillips testified that according to the Unskilled Employment Quarterly, in the third quarter of 1995 there were 1,061 individuals working as cashiers in Rapid City. He also testified that 48 of those positions would be sedentary and 278 would be light. Phillips testified that 2,474,000 individuals are working as cashiers nationally. As to the national figures, Phillips did not have an exact percentage of cashiers in the national economy which would fit the ALJ’s hypothetical requiring sedentary positions. Phillips calculated that 20 percent of the positions nationally would fit the hypothetical. Phillips based his calculation on the conclusion that the national ratio for cashier jobs to sedentary cashier jobs would be the same nationally as it is in Rapid City, South Dakota. Phillips reasoned that the ratio was one-fourth based upon the fact that there were 48 sedentary cashier jobs in Rapid City and 287 light cashier jobs. This Court believes that the more appropriate percentage would have been 5 percent. Out of 1,061 cashier positions available regionally 48, approximately 5.0 percent, were sedentary. Therefore, nationally approximately 137,350 sedentary cashier positions would be available. Phillips also testified that Wilcox could perform the job of gate guard and that 803,000 of those jobs were available in the national economy of which Wilcox could perform 1/16th, or 50,187 of the available gate guard jobs.

[¶28]  Wilcox relies on Bjornholm v. Shalala, 39 F3d 888, 891 (8th Cir. 1994), in her conclusion that reliable evidence did not exist to support the conclusion that jobs exist in significant numbers. In Bjornholm, the issue was whether “given the fact that [claimant] can now only do sedentary work, there remains a serious question as to whether there is, in fact, a significant number of jobs either in the local or in several regions of the national economy that [claimant] can perform.” Id. at 890. The ALJ in Bjornholm found that there was a significant number of jobs in the local or several regions of the national economy. Id. However, the appellate court noted that the difficulty with the ALJ’s findings is within the scope of the statistics. Id. The Dictionary of Occupational Titles (DOT) job classifications relied upon by the ALJ involved positions requiring light physical exertion. Although, the numbers provided to the ALJ may have included positions involving sedentary work, the court held

that the statistics must match the claimant: the [Commissioner] must show that there are available sedentary jobs for which Bjornholm has transferrable skills. The [Commissioner] cannot conclude that appropriate sedentary jobs exist based upon statistics for light-exertion classifications. In light of these circumstances, we have no alternative but to remand to the district court with directions to remand to the [Commissioner]. The [Commissioner] may elect either to award benefits, to remand for a further proceeding to determine whether there exists, in fact, a significant number of jobs in the local or in several regions of the national economy within any of these three DOT categories that can be performed by an individual with the skills and physical capability of Bjornholm.

Id. at 891. Based upon Phillips’ calculation, the ALJ erred when he considered that there were 549,000 sedentary cashier jobs available in the national economy.8. Given the Court’s conclusion to remand this case, the court need not determine at this time if the method used by the vocational expert to conclude the percentage of sedentary cashier and sedentary gate keeper jobs available in the national economy was permissible. Wilcox has not cited any case law which would support such a conclusion. In addition, the ALJ is required to find that there are significant jobs available in either in the region were such individual lives or in several regions of the country. 42 USC § 423(d)(2)(A). {fn8} Although this Court may consider 137,350 jobs to be significant, the ALJ did not base his finding upon this number. The Eighth Circuit has held that “a district court may not, under the Social Security Act, make findings of fact to supplement those of the [Commissioner].” Lewis v. Califano, 574 F2d 452, 456 (8th Cir. 1978) (citing 42 USC § 405(g); Torres v. Secretary of Health, Education & Welfare, 475 F2d 466 (1st Cir. 1973)).

[¶29]  The issue for this Court is whether the testimony of the vocational expert was necessary for the ALJ to have substantial evidence that there were a significant number of jobs available in the national economy which Wilcox could perform. If the testimony of the ALJ was necessary, then based on Bjornholm, this case must be remanded. However, this Court finds that this case may be distinguished from Bjornholm. Based upon the law in the Eighth Circuit, this Court believes that the testimony of the vocational expert was not necessary in concluding that there was a significant number of jobs. In McCoy v. Schweiker, 683 F2d 1138, 1148 (8th Cir. 1982) (en banc), the Court held that when the “grid” (Tables 1,2, & 3 of 20 CFR Pt. 404, Subpt. P, App.2) applies the Commissioner’s duty to call a vocational expert is eliminated. In Bjornholm, the claimant was disabled according to the Medical-Vocational Guidelines, meaning that jobs did not exist in significant numbers in the national economy which claimant could perform. The ALJ was required to prove that there were a significant number of jobs which claimant could perform either locally or in several regions of the national economy. Bjornholm, 39 F3d at 890. Therefore, in Bjornholm the testimony of the vocational expert was necessary, given the “presumption” under the “grid.” In Wilcox’s case, under 20 CFR Pt. 404, Subpt. P, App.2, Table 1, Rule 201.27, Wilcox is considered not disabled. A finding of not disabled under the “grid” means that there are significant jobs within the economy for a person with Wilcox’s age, education, RFC, and work experience. 1 Harvey L. McCormick, Social Security Claims and Procedure § 447, at 524 (4th ed. 1991). In addition, when the “grid” applies, as it does in Wilcox’s case, the testimony of a vocational expert is not required. Therefore, even though Phillips erred in calculating the number of sedentary cashier jobs available in the national economy, this Court is not required to remand this case because substantial evidence exists without the testimony of Phillips. In fact, the ALJ even noted that the testimony of Phillips lent additional support to his conclusion that under Rule 201.27 a significant number of jobs existed in the national economy.

[¶30]  Finally, this Court must consider if substantial evidence existed for the ALJ to conclude that Rule 201.27 of the “grid” was applicable to Wilcox. Rule 201.27 calls for a decision of not disabled for a claimant age 18 to 44, with a high school education or more, who is capable of performing sedentary work, and who has no previous work experience or unskilled work experience. At the time of the hearing, Wilcox was 35 years old. She also has a high school education. The record supports the conclusion that Wilcox has unskilled work experience or no previous experience. Wilcox testified that she worked in the garden and that she crocheted. She also testified that she performs many household chores. Further, 20 CFR §§ 404.1567(a) and 416.967(a) define sedentary work as lifting and carrying a maximum of ten pounds at a time, sitting, and occasional walking or standing. Wilcox testified that occasionally she could lift up to twenty-five pounds. By her testimony regarding household chores (e.g., vacuuming, dusting, dishes, laundry) and daily activities (e.g., caring for her son and herself and visiting relatives), the record also represents that Wilcox is able to walk or stand occasionally. The record contains substantial evidence to conclude that Wilcox could perform sedentary work. There was substantial evidence to conclude that Wilcox fit within the “grid” Rule 201.27.

IV.

[¶31]  Wilcox’s fourth objection is that the agency’s own standards as set forth in SSR 96- 9p require that Wilcox should be found disabled. See SSR 96-9p, 1996 WL 374185. However, this rule was enacted on July 2, 1996. The ALJ’s findings are dated January 25,1996; therefore, the ALJ could not be expected to have applied this rule. The Court is not required to make a finding as to whether it agrees with Wilcox’s interpretation of SSR 96-9p.

V.

[¶32]  Wilcox’s final argument is that the case should be remanded for new and material evidence. Wilcox believes that her new and material evidence meets the standard required by 42 USC § 405(g) for remanding a case. Wilcox alleges new and material evidence of a hand impairment and an affective disorder (“mild but long-standing depression”).

[¶33]  A reviewing court is permitted to order remand for additional evidence to be considered “‘only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding.’” Woolf, 3 F3d at 1215 (quoting 42 USC § 405(g)). See also Mackey, 47 F3d at 953.

[¶34]  This Court finds that Wilcox’s evidence as to her hand impairment is not new evidence. A medical assessment by Dr. Hartog was not provided to the ALJ but was provided to the Appeals Council. Wilcox believes that this medical assessment provides new and material evidence. The Eighth Circuit has stated, “When the Appeals Council has considered material new evidence and nonetheless declined review, the ALJ’s decision becomes the final action of the [Commissioner]... . At this point, our task is only to decide whether the ALJ’s decision is supported by substantial evidence in the record as a whole, including the new evidence deemed material by the Appeals Council that was not before the ALJ.” Mackey, 47 F3d at 953. The Appeals Council stated in its report that it did consider Dr. Hartog’s report and concluded that it did not provide “a basis for changing the Administrative Law Judge’s decision.” (AR 3). This evidence is not considered to be new evidence before this Court.

[¶35]  Wilcox also urges that the report of Dr. Donald W. Burnap provides new and material evidence and that the case should be remanded because of this evidence. At the request of Wilcox’s attorney, Dr. Burnap met with Wilcox. Dr. Burnap is trained as both a physician and a psychiatrist. He has practiced medicine for twenty years and has done several hundred evaluations at the request of the Social Security Administration. Based upon a hour conversation with Wilcox, Dr. Burnap has diagnosed her with Dysthymic Disorder, 300.4. Dr. Burnap stated that Wilcox suffers from “mild but long-standing depression.” See Letter to Catherine Enyeart dated February 6, 1997 (Docket #17). He believes that she is employable in the future with therapy and vocational rehabilitation training, but given the resources which are available where she lives and her emotional problems, Dr. Burnap believes that she would not be employable for two to three years.

[¶36]  Dr. Burnap’s assessment is dated February 6, 1997. This is more than one year after the decision of the ALJ and seven months after the decision of the Appeals Council. 42 USC § 405(g) requires that “there is good cause for the failure to incorporate such evidence into the record in a prior proceeding.” Wilcox has not provided the Court with any reason for her failure to provide this evidence at a prior proceeding.

[¶37]  When considering whether the evidence of Wilcox’s alleged mental impairments should have been remanded, the court in Sullins v. Shalala, 25 F3d 601, 604 (8th Cir. 1994), found it noteworthy that “[the claimant] did not allege a disabling mental impairment in her application for disability benefits” and “that she did not offer the impairment as a basis for her disability at her hearing” before the ALJ. Id. The evidence offered in Sullins in support of the claimant’s argument of her alleged mental impairment was a consultative report prepared by a doctor which arrived too late to be considered. Id. The Court recognized that the report was material because it offered evidence that claimant did suffer from mental impairments. Id. at 605 n. 6. However, the court found that

there was no good cause for [claimant’s] failure to incorporate it in the record. She had full opportunity to develop the record as to any mental impairments before the administrative record was closed, but failed to do so.

Id. See also Smith v. Shalala, 987 F2d 1371, 1375 (8th Cir. 1993) (court refused to remand case based upon additional medical reports because claimant had opportunity to consult with psychiatrist before record was closed and also the time frame between the medical reports and the ALJ’s decision— two years— and the decision of the Appeals Council and the medical reports—one year—does not warrant remanding the case); Delrosa v. Sullivan, 922 F2d 480, 484- 85 (8th Cir. 1991); Williams v. Bowen, 790 F2d 713, 715 (8th Cir. 1986).

[¶38]  Wilcox failed to allege any allegations of depression in her disability applications or in the hearing before the ALJ. See Sullins, 25 F3d at 604. Wilcox also had full opportunity to develop her record before the administrative law judge. In addition, Wilcox failed to provide good cause for presenting this evidence earlier. See id. This Court does not know what the impact of Dr. Burnap’s assessment would be on a newly-filed application for benefits; however, this Court finds that Wilcox has failed to show good cause for her failure to present this evidence. See Smith, 987 F2d at 1375.

CONCLUSION

[¶39]  There is substantial evidence within the record to support the ALJ’s conclusion that Wilcox is able to perform significant jobs within the national economy and that as a result she is not disabled. Accordingly, it is hereby

[¶40]  ORDERED that the decision of the ALJ shall be affirmed and the Commissioner’s motion for summary judgment (Docket #20) is granted and Wilcox’s motion is denied.



Perez v. Gaffey, 1997 DSD 14

DAVID PEREZ and PAULINE McBRIDE,

husband and wife,

Plaintiffs,

v.

MATTHEW F. GAFFEY,

duly appointed, qualified, and acting Deputy States Attorney of Charles Mix County,

ROY KING, a duly appointed, qualified, and acting Social Worker of the State of South Dakota,

and SALLY WINTER, an individual,

Defendants.

[1997 DSD 14]

United States District Court

District of South Dakota - Southern Division

CIV. 96-4326

MEMORANDUM OPINION

Mark F. Marshall, Magistrate Judge

[¶1]  This matter came before the court for a motions hearing on Monday, May 19, 1997, at 2:00 p.m. for consideration of Defendant Sally Winter’s Motion for Summary Judgment and Request for Oral Argument (Doc. 11) and Defendant Matthew F. Gaffey’s Motion for Summary Judgment and Request for Oral Argument (Doc 14). The plaintiffs appeared by their counsel, John E. Burke, while the defendants, Matthew F. Gaffey and Sally Winter, appeared by their counsel, Sandra K. Hoglund and Rick W. Orr. Craig K. Kennedy, counsel for defendant, Roy King, was also present.

I.

[¶2]  David Perez and Pauline McBride, husband and wife, brought this action against Matthew F. Gaffey, the duly appointed, qualified, and acting Deputy States Attorney for Charles Mix County, Roy King, a duly appointed, qualified, and acting Social Worker for the State of South Dakota, and Sally Winter, an individual. Apparently at the behest of King, Gaffey instituted an investigation to determine whether Perez had violated the provisions of SDCL ch 22-46. Chapter 22-46 was designed to prevent the abuse or neglect of “disabled adults”. Perez, while 39 years of age, married McBride while she was 85 years of age. Perez also apparently received gifts of money or property from McBride

[¶3]  Pursuant to his investigation, Gaffey determined that the matter should be presented to a grand jury. He thus convened a Charles Mix County grand jury on April 10, 1996. Two witnesses, King and Winter testified before the grand jury. The appearance of the witnesses was compelled by subpoena. At the conclusion of the grand jury session, Perez was indicted on counts of theft by deception under SDCL §§ 22-30A-3 and 22-30A-17, as well as a count of theft by exploitation under SDCL §§ 22-46-3 and 22-30A-17.

[¶4]  On June 5, 1996, Perez moved to dismiss the indictment claiming that Ms. McBride had undergone a psychiatric examination which showed her mentally competent and capable of disposing of her property as she saw fit. Instead of granting the motion to dismiss, the Circuit Court ordered, on Gaffey’s motion, an indepedent psychological examination to assist Gaffey in his determination of whether continued prosecution of the criminal case was appropriate. On August 5, 1996, Perez, McBride, and Gaffey stipulated and agreed that Ms. McBride would submit to an independent psychological evaluation to be conducted by Dr. David Bean.

[¶5]  Bean conducted his evaluation of Ms. McBride and determined that she was not a “disabled adult” within the meaning of SDCL § 22-46-3. Moreover, Dr. Bean also determined that McBride was competent to make her own decisions regarding the disposition of her property. Shortly after receiving Dr. Bean’s evaluation, Gaffey, on behalf of the State, voluntarily dismissed the indictment against Mr. Perez.

[¶6]  The plaintiffs complain that the acts which violated their constitutional rights include the testimony of the defendants before the grand jury, the summoning of the grand jury, action of the state’s attorney before the grand jury, and obtaining an indictment in front of the grand jury, as well as the arrest and imprisonment of Plaintiff Perez by law enforcement officers.

[¶7]  For the reasons discussed in this memorandum, the court finds the actions of Defendant Gaffey and Defendant Winter are the appropriate subject of absolute immunity.

II.

A.

[¶8]  For nearly sixty years the “Rules of Federal Civil Procedure have authorized motions for summary judgment upon proper showings of lack of a genuine, triable issue of material fact.” Celotex Corp. v. Catrett, 477 US 317, 327 (1986). Summary judgment is authorized when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Brandsis v. Kaiser Aluminum & Chemical Corp., 47 F3d 947, 949 (8th Cir. 1995); Beyermach v. Sears, 49 F3d 1324, 1325 (8th Cir. 1995).

[¶9]  The moving party, here States Attorney Gaffey and witness Sally Winter, bears “the initial responsibility for informing the court of the basis for their motion and identifying those portions of the record which show lack of a genuine issue. Reed v. Woodruff County, Ark., 7 F3d 808, 810 (8th Cir. 1983). When the moving party has met this burden, the non-moving party may not rest upon the mere allegations or denials of its pleadings. By affidavit or otherwise...the non-moving party must set forth specific facts showing there is a genuine issue for trial. Although “direct proof is not required to create a jury question, ... to avoid summary judgment, ‘the facts and circumstances relied upon must attain the dignity of substantial evidence and must not be such as merely to create a suspicion.’” Metge v. Baehler, 762 F2d 621, 625 (8th Cir. 1985) (quoting Impro Products, Inc. v. Herrick, 715 F2d 1267, 1272 (8th Cir. 1983), cert. denied 465 US 1026 (1984)).

[¶10]  The trial court’s function is not to weigh the evidence and determine the truth of the matter but to ascertain whether there is a genuine issue for trial. Johnson v. Enron Corp. 906 F2d 1234, 1237 (8th Cir 1990). The trial court must assess the adequacy of the non-moving party’s response and whether that showing, upon admissible evidence, would be sufficient to carry the burden of proof at trial. If the non-moving party fails to make a sufficient showing of a genuine issue of material fact, the moving party is entitled to judgment as a matter of law.

B.

[¶11]  As the United States Supreme Court has observed, “our system of jurisprudence rests on the assumption that all individuals, whatever their position in government, are subject to federal law.” Butz v. Economou, 438 US 478, 506, 98 SCt 2894, 2910 (1978). Nevertheless, mindful that for the sake of the nation’s general good, the Constitution empowers officials to act within the scope of their official responsibilities, the United States Supreme Court has recognized “that there are some officials whose special function require a full exemption from liability” for their performance of official acts. Id. at 508, 98 SCt at 2911.

[¶12]  The list of those entitled to absolute immunity from civil liability includes the President of the United States for official acts, Nixon v. Fitzgerald, 457 US 731, 756, 102 SCt 2690, 2704 (1982); members of Congress for their legislative acts, regardless of motive, under the Speech and Debate Clause, US Const. Art. I, §6, Dombrowski v. Eastland, 387 US 82, 84-5, 87 SCt 1425, 1427-28 (1967) (per curiam); Tenney v. Brandhove, 341 US 367, 372, 377, 71 SCt 783, 786, 788 (1951); judges in courts of general jurisdiction for judicial acts, Stump v. Sparkman, 435 US 349, 359-60, 98 SCt 1099, 1106-07 (1978); prosecutors for prosecutorial functions, Imbler v. Pachtman, 424 US 409, 427, 96 SCt 984, 993 (1976); and witness are entitled to absolute immunity from civil suit for testimony given in judicial proceedings, Briscoe v. LaHue, 460 US 325, 334, 103 SCt 1108, 1115 (1983).

C.

[¶13]  As the United States Supreme Court has noted, “absolute immunity defeats a suit at the outset, so long as the official’s actions were within the scope of immunity.” Imbler v. Pachtman, 424 US at 419 n. 13, 96 SCt at 990 n. 13. In the mid-nineteenth century, the United States Supreme Court recognized that it was “a general principle of the highest importance to the proper administration of justice that a judicial officer, in exercising the authority vested in him, [should] be free to act upon his own convictions, without apprehension of personal consequences to himself.” Stump v. Sparkman, 435 US at 355, 98 SCt 1104 quoting Bradley v. Fisher, 80 US 335, 347 (1872). Absolute immunity protects participants in judicial proceedings to help guaranty independent decision making and present harassment and intimidation. See Johnson v. Kegans, 870 F2d 992, 996 (5th Cir.), cert. denied 492 US 921, 109 SCt 3250 (1989).

[¶14]  Prosecutors are absolutely immune for their conduct in “initiating a prosecution and in presenting the state’s case” because such activities are “intimately associated with the judicial phase of the criminal process.” Imblar v. Pachtman 424 US at 430, 96 SCt at 995. Prosecutors enjoy immunity from Section 1983 actions “so long as the actions complained of appear to be within the scope of prosecutorial duties.” Price v. Moody, 677 F2d 676, 677 (8th Cir. 1982). It is fundamental that “[p]reparation both for the initiation of the criminal process and for trial may require the obtaining, reviewing, and evaluating of evidence.” Imblar v. Pachtman, 424 US at 431 n. 33, 96 SCt at 995 n. 33. If the prosecutor is acting as an advocate for the state in a criminal prosecution, then the prosecutor is entitled to absolute immunity. Buckley v. Fitzsimmons, 509 US 259, _____, 113 SCt 2606, 2615 (1993).  

[¶15]  Under the authority cited above, Gaffey is entitled to absolute immunity for all of his acts undertaken in preparation for presentation of the Perez matter to the grand jury. While one may fault the thoroughness with which Gaffey obtained, reviewed, and evaluated the evidence which he presented to the grand jury, there can be no doubt whatsoever that what Gaffey did was within the scope of his role as an advocate for the state in a criminal prosecution.

[¶16]  Although it is not completely clear that plaintiffs allege that Gaffey violated their constitutional rights with regard to the ultimate disposition of the case, whether they make such an allegation is of no moment. Gaffey’s decision to dismiss the case only after obtaining an independent opinion as to Ms. McBride’s competency was one made within the scope of Gaffey’s role as an advocate for the state. Thus, Gaffey is absolutely immune for the decisions he made with respect to the disposition of Perez’s case. See Zar v. South Dakota Board of Examiners, 976 F2d 459, 466 (8th Cir. 1992); Williams v. Hartje, 827 F2d 1203, 1210 (8th Cir. 1987). Gaffey simply does not have to defend alleged prosecutorial mistakes if those mistakes occurred in the performance of a function recognized as inherent in his role as an advocate for the state. Brodnicki v. City of Omaha, 75 F3d 1261, 1268 (8th Cir. 1996) citing Meyers v. Morris, 810 F2d 1437, 1446 (8th Cir.) cert. denied, 484 US 828, 108 SCt 97 (1987).

[¶17]  Because Gaffey is absolutely immune as discussed in this opinion, there is no need to address the issue of qualified immunity nor immunity under SDCL § 22-46-6. However, even if Gaffey was found not to have absolute immunity, he nonetheless would be entitled to summary judgment under the provisions of SDCL § 22-46-6. That statute provides:

Any institution regulated pursuant to Chapter 34-12 and any employee, agent, or member of a medical or dental staff thereof who, in good faith, makes a report of abuse, exploitation, or neglect of a disabled adult is immune from any liability, civil or criminal, that might otherwise incurred or imposed, and has the same immunity with respect to participation in any judicial proceeding resulting from such report. Immunity also extends in a like manner to public officials involved in the investigation of abuse, exploitation, or neglect of disabled adult, or to any person or institution provided herein who, in good faith, cooperates with such officials in an investigation.

[¶18]  While the South Dakota Supreme Court has not interpreted this statute, its language plainly states that public officials like Gaffey have immunity from civil actions for their investigation of abuse, exploitation, or neglect of disabled adults such as McBride was alleged to be.

[¶19]  “The intent of a statute must be derived from the statute as a whole, from its language, and by giving it its plain, ordinary, and popular meaning.” Bryant v. Butte County, 457 NW2d 467, 470 (SD 1990). The plain language of SDCL § 22-46-6 provides Gaffey with immunity from this suit.

[¶20]  Plaintiffs have alleged, in addition to their Section 1983 claims, a claim of malicious prosecution under South Dakota law. This claim falls within the District Court’s supplemental jurisdiction.

[¶21]  28 USC § 1367(a) provides:

[I]n any civil action of which the District Courts have original jurisdiction, the District Court shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

[¶22]  A court “may decline to exercise supplemental jurisdiction” if “(3) the District Court has dismissed all claims over which it has original jurisdiction.” 28 USC § 1367(c); see Packett v. Stenberg, 969 F2d 721, 726-27 (8th Cir. 1992). Because the court has dismissed all claims against Defendant Gaffey which fall within this court’s original jurisdiction, it will exercise its discretion under 28 USC § 1367(c) and dismiss the malicious prosecution action.

D.

[¶23]  As noted in the previous section, prosecutors are absolutely immune from civil suits for money damages under 42 USC § 1983. See Imblar v. Pachtman, 424 US at 431. Moreover, conspiracy allegations will not pierce a prosecutor’s absolute immunity. See Ashelman v. Pope, 793 F2d 1072, 1078 (9th Cir. 1986) (en banc).

[¶24]  Just as prosecutors are absolutely immune from civil suits for money damages under Section 1983, so to are witnesses who testify in the course of judicial proceedings are absolutely immune. Briscoe v. LaHue, 460 US 325, 329-334, 103 SCt 1108 (1983). Several circuit courts of appeal have extended Briscoe to immunize grand jury witnesses as well. Holt v. Castaneda, 832 F2d 123, 125-26 (9th Cir. 1987); Alioto v. City of Shively, 835 F2d 1173, 1174 (6th Cir. 1987); Kincaid v. Eberle, 712 F2d 1023, 1024 (7th Cir.) (per curiam), cert. denied, 464 US 1018, 104 SCt 551 (1983).

[¶25]  Moreover, grand jury witnesses are immune from civil suit for liability under Section 1983 for their testimony even if the testimony was perjured. Alioto v. City of Shively, 835 F2d at 1174; Holt v. Castaneda, 832 F2d at 125-26; Blevins v. Ford, 572 F2d 1336, 1338 (9th Cir. 1978).

[¶26]  While plaintiffs allege some kind of conspiracy between witness Winter and Assistant States Attorney Gaffey, there is no evidence before the court of such a conspiracy sufficient to create a genuine issue of material fact. Moreover, conclusory allegations of a conspiracy between the prosecutor and a detective witness are not sufficient to pierce the prosecutor’s absolute immunity. Ashelman v. Pope, 793 F2d 1072, 1078 (9th Cir. 1986) (en banc); Ivey v. Board of Regents, 673 F2d 262, 268 (9th Cir. 1982). If such allegations are insufficient to pierce a prosecutor’s absolute immunity, such allegations must likewise be insufficient to pierce the absolute immunity afforded grand jury witnesses. Because witness Winter has absolute immunity for her conduct before the grand jury, her motion for summary judgment must be granted.

[¶27]  Because Winter is absolutely immune as discussed in this opinion, there is no need to address the issue of qualified immunity nor immunity under SDCL § 22-46-6. However, even if Winter was found not to have absolute immunity, she nonetheless would be entitled to summary judgment under the provisions of SDCL § 22-46-6. That statute provides:

Any institution regulated pursuant to Chapter 34-12 and any employee, agent, or member of a medical or dental staff thereof who, in good faith, makes a report of abuse, exploitation, or neglect of a disabled adult is immune from any liability, civil or criminal, that might otherwise incurred or imposed, and has the same immunity with respect to participation in any judicial proceeding resulting from such report. Immunity also extends in a like manner to public officials involved in the investigation of abuse, exploitation, or neglect of disabled adult, or to any person or institution provided herein who, in good faith, cooperates with such officials in an investigation.

[¶28]  While the South Dakota Supreme Court has not interpreted this statute, its language plainly states that persons like Winter who cooperate in good faith with an official investigation have immunity from civil actions for their investigation of abuse, exploitation, or neglect of disabled adults such as McBride was alleged to be.

[¶29]  “The intent of a statute must be derived from the statute as a whole, from its language, and by giving it its plain, ordinary, and popular meaning.” Bryant v. Butte County, 457 NW2d 467, 470 (SD 1990). The plain language of SDCL § 22-46-6 provides Winter with immunity from this suit.

[¶30]  Plaintiffs have alleged, in addition to their Section 1983 claims, a claim of malicious prosecution under South Dakota law. This claim falls within the District Court’s supplemental jurisdiction.

[¶31]  28 USC § 1367(a) provides:

[I]n any civil action of which the District Courts have original jurisdiction, the District Court shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

[¶32]  A court “may decline to exercise supplemental jurisdiction” if “(3) the District Court has dismissed all claims over which it has original jurisdiction.” 28 USC § 1367(c); see Packett v. Stenberg, 969 F2d 721, 726-27 (8th Cir. 1992). Because the court has dismissed all claims against Defendant Winter which fall within this court’s original jurisdiction, it will exercise its discretion under 28 USC § 1367(c) and dismiss the malicious prosecution action.

III.

[¶33]  For all of the reasons discussed in this Memorandum Opinion, Defendant Gaffey’s Motion for Summary Judgment (Doc. 14) and Defendant Winter’s Motion for Summary Judgment (Doc. 11) shall be granted.



Primeaux v. United States, 1997 DSD 15

LESA M. PRIMEAUX, f/k/a LESA M. LAMONT,

f/k/a LISA M. BAD WOUND,

Plaintiff,

v.

UNITED STATES OF AMERICA,

Defendant.

[1997 DSD 15]

District of South Dakota - Western Division

CIV. 94-5048

MEMORANDUM OPINION AND ORDER



NATURE AND PROCEDURAL HISTORY

[¶1]  On July 11, 1994, plaintiff commenced this action under the Federal Tort Claims Act, 28 USC §§ 1346(a), 2671 et seq. (FTCA). She seeks damages arising from a sexual assault by Bureau of Indian Affairs (BIA) police officer Kenneth Michael Scott (Scott). At the conclusion of a three-day trial, the Court entered its findings of fact and conclusions of law whereby the Court found that while there was a sexual assault, it was committed while Scott was on a frolic of his own and not acting in the course or scope of his employment. (T.T. 259). Thereafter, judgment was entered in favor of the government.

[¶2]  Upon appeal to the Eighth Circuit Court of Appeals, the majority opinion determined that this Court’s “finding that Scott’s assault was not foreseeable because he was not acting within the scope of his actual authority-that is, exercising law enforcement duties-was too narrow.” Primeaux v. United States, 102 F3d 1458, 1463 (8th Cir. 1996). On February 24, 1997, the Eighth Circuit issued its mandate remanding the case for reconsideration of the factual findings with application of South Dakota law relating to apparent authority. Id. The Court issued a revised briefing schedule which required the parties to complete their submissions on or before April 15, 1997. The parties have submitted briefs in support of their positions in regard to Scott’s apparent authority and the matter is ripe for adjudication. Based on the following discussion, the Court finds that the unique facts and circumstances present in this case do not support a finding that Scott’s conduct falls within the doctrine of apparent authority.

FACTS

[¶3]  On November 9, 1991, at approximately 1 a.m., plaintiff was driving on South Dakota Highway 18 (T.T. 243). When she turn her car around, it became stuck in a snowbank (T.T. 26, 245). After several futile attempts to free her vehicle, she began walking toward the nearest town of Martin, South Dakota, a distance of approximately two to three miles (T.T. 245).1. At trial plaintiff testified that after she unsuccessfully attempted to free her vehicle, she remained in her car until officer Scott came upon the scene (T.T. 27). However, officer Scott testified that he came upon plaintiff while she was walking down the highway toward Martin (T.T. 120). Based on express evidence and inferences naturally flowing from that evidence, the Court made its finding that plaintiff was walking toward Martin (T.T. 245).{fn1} It was dark and cold, but it was not snowing (T.T. 26, 38, 120, 245). Scott, a police officer on the Rosebud Indian Reservation who was outside his jurisdiction while returning from a physical fitness training seminar in Artesia, New Mexico, came upon plaintiff’s car (T.T. 118). He stopped to offer assistance; however, no one was there. Id. Scott was driving a white government vehicle with government license plates, a police light bar on the roof, and a radio, but no decals on the side or cage inside (T.T. 71, 120, 139, 246). The government paid for the training and travel expenses (T.T. 142, 259). In addition, Scott did not use leave time to attend the session but was on “travel status,” continuing to draw his BIA salary (T.T. 140- 41, 150-51). Although Scott was not dressed in official uniform,2. Scott was unarmed without a night stick and was not wearing a badge (T.T. 82, 217, 190- 91).{fn2} he was wearing clothing that a civilian could reasonably mistake for a police uniform (T.T. 28, 133, 252).

[¶4]  After he determined that the car was abandoned, Scott continued to proceed toward Martin (T.T. 119-20). Approximately 300 to 400 yards down the road, Scott came upon plaintiff walking on the shoulder of the road (T.T. 120). Scott stopped, turned on the red lights on the roof, and offered her a ride (T.T. 27). At trial, Scott testified that he stopped to offer a ride as an individual, not as a police officer (T.T. 134, 145). Plaintiff accepted and got in the front seat of the car (T.T. 30). Plaintiff testified on direct examination that when she was sitting in the car she was fearful Scott would arrest her for drinking and driving or turn her over to the Martin authorities, although she acknowledged that he did not ask her if she had been drinking or threaten to arrest her (T.T. 30-31, 134). On cross examination she testified that she voluntarily got into the vehicle because she wanted a ride (T.T. 72).

[¶5]  While en route to Martin, Scott informed plaintiff that he was a police officer from Rosebud Indian Reservation (T.T. 88, 121). Soon thereafter, Scott pulled off the highway onto a side road, ostensibly to stretch his legs and to relieve himself (T.T. 32-33, 122-23, 248). After driving a short distance on the side road, Scott stopped the vehicle and ordered plaintiff to step out of the vehicle (T.T. 33, 123, 248-49). Plaintiff testified that one of the reasons she got out of the vehicle was because of his status as a police officer (T.T. 33). He then grabbed her, unzipped and pulled down her jeans, pulled her by the hair, and committed an act of sexual penetration (T.T. 249).3. In the end, plaintiff, having a very submissive and passive personality, submitted out of fear and intimidation to Scott who maintained a significant physical advantage (T.T. 247, 252, 254). {fn3} Thereafter, he attempted oral intercourse with her. Id.

DISCUSSION

[¶6]  A.  GOVERNING PRINCIPLES

[¶7]  The applicable South Dakota law governing the scope of employment issue presented by this case is set forth in Primeaux v. United States, 102 F3d 1458 (8th Cir. 1996). The three primary authorities relied on by the Eighth Circuit for determining the scope of employment test to be used in this case consist of Deuchar v. Foland Ranch, Inc., 410 NW2d 177 (SD 1987),4. In Deuchar, the South Dakota Supreme Court relied on the factors listed in Restatement (Second) of Agency § 229 in determining whether a ranch hand was acting within the scope of his employment when he accidentally shot a hunter. Deuchar, 410 NW2d at 180 n.2. The Deuchar court quoted from § 229 in relevant part:

(1)  To be within the scope of the employment, conduct must be of the same general nature as that authorized, or incidental to the conduct authorized.

(2) In determining whether or not the conduct, although not authorized, is nevertheless so similar to or incidental to the conduct authorized as to be within the scope of employment, the following matters of fact are to be considered:

(a) whether or not the act is one commonly done by such servants;

(b) the time, place and purpose of the act;

(c) the previous relations between the master and the servant;

(d) the extent to which the business of the master is apportioned between different servants;

(e) whether or not the act is outside the enterprise of the master or, if within the enterprise, has not been entrusted to any servant;

(f) whether or not the master has reason to expect that such an act will be done;

(g) the similarity in quality of the act done to the act authorized;

(h) whether or not the instrumentality by which the harm is done has been furnished by the master to the servant;

(i) the extent of departure from the normal method of accomplishing an authorized result; and

(j) whether or not the act is seriously criminal.

Id. at 180 n.2 (quoting Restatement (Second) of Agency § 229). {fn4} Leafgreen v. American Family Mut. Ins. Co., 393 NW2d 275 (SD 1986), and Red Elk v. United States, 62 F3d 1102 (8th Cir. 1995). These cases, in addition to other cases applying South Dakota law, establish that foreseeability is the linchpin of the South Dakota scope of employment test. Primeaux, 102 F3d at 1461.

[¶8]  In Leafgreen, the South Dakota Supreme Court stated that “a principal is liable for tortious harm caused by an agent where a nexus sufficient to make the harm foreseeable exists between the agent’s employment and the activity which actually caused the injury.” Leafgreen, 393 NW2d at 280. The Leafgreen court further recognized that foreseeability is governed by the following standard: “[T]he employee’s conduct must not be so unusual or startling that it would be unfair to include the loss caused by the injury among the costs of the employer’s business.” Id. at 280-81. The South Dakota court applied Restatement (Second) of Agency § 261, which discusses apparent authority as it relates to fraud. Id. at 277. As stated by the Eighth Circuit in Primeaux, the analogous section of the Restatement relating to tortious wrongdoing reads as follows:

(2)  A master is not subject to liability for the torts of his servants acting outside the scope of their employment, unless:

   . ...

(d) the servant purported to act or to speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation.

Primeaux, 102 F3d at 1462 (quoting Restatement (Second) of Agency § 219(2)(d)).

[¶9]  The Primeaux court further noted that section 265(1) of the Restatement gives the general rule for apparent authority, which is that “‘[a] master or other principal is subject to liability for torts which result from reliance upon, or belief in, statements or other conduct within an agent’s apparent authority.’” Id. (quoting Restatement (Second) of Agency § 265(1)).5. The Eighth Circuit further noted that South Dakota cases consistently articulate respondeat superior law as including principles of apparent authority. Id. (citing Leafgreen, 393 NW2d at 277 (“Under general rules of agency law, a principal may be held liable for fraud and deceit committed by an agent within his apparent authority, even though the agent acts solely to benefit himself.”); McKinney v. Pioneer Life Ins. Co., 465 NW2d 192, 194 (SD 1991) (“Generally, a principal may be held liable for the fraud and deceit of his agent acting within the scope of his actual or apparent authority, even though the principal was unaware of or received no benefit from his agent’s conduct.”) (citing Dahl v. Sittner, 429 NW2d 458, 462 (SD 1988)); State v. Hy Vee Food Stores, Inc., 533 NW2d 147, 149 (SD 1995) (discussing vicarious criminal liability and noting, “Well settled is the basic principle that criminal liability for certain offenses may be imputed to corporate defendants for the unlawful acts of its employees, provided that the conduct is within the scope of the employee’s authority whether actual or apparent”); Siemonsma v. David Mfg. Co., 434 NW2d 70, 73 (SD 1988) (relying on Restatement (Second) of Agency § 265(1))).{fn5} Based on the foregoing, the Eighth Circuit reads South Dakota law to hold the employer vicariously liable not only for foreseeable tortious wrongs committed pursuant to the employee’s actual authority, but also for those committed when apparent authority of the employee “puts him in a position where his harmful conduct would not be ‘so unusual or startling that it would be unfair to include the loss caused by the injury among the costs of the employer’s business.’” Primeaux, 102 F3d at 1462-63 (quoting Olson v. Tri-County State Bank, 456 NW2d 132, 135 (SD 1990) (quoting Leafgreen, 393 NW2d at 280-81)). Hence, “[f]oreseeability necessarily includes not only instances of use or abuse of actual authority, but also of use or abuse of apparent authority.” Id. at 1463.

[¶10]  In Red Elk v. United States, 62 F3d 1102 (8th Cir.1995), the Eighth Circuit determined that under the facts and circumstances presented by that case that it was foreseeable that an on-duty tribal police officer would violate the position of trust his employment provided and sexually assault a victim. Id. at 1107.6. This Court in its oral findings and conclusions of law distinguished the present case from Red Elk by noting that under the facts presented here, Scott was not on duty for enforcement purposes, was not armed, was outside of his jurisdiction, and was not picking up plaintiff for any violation of law (T.T. 259). {fn6} In Primeaux, the Eighth Circuit expounded on this notion by stating that,

It is no less foreseeable that such an abuse of authority could occur while the officer is not technically on duty, but rather possesses the apparent authority sufficient to cause a person to rely on or fear that authority and succumb to sexual advances.

Primeaux, 102 F3d at 1463.7. The Primeaux court further recognized numerous cases holding employers liable for sexual assaults or excessive use of force by police officers for the reason that such conduct is foreseeable because of the unique position of trust held by such officers. Primeaux, 102 F3d at 1463 (citing Mary M. v. City of Los Angeles, 54 Cal. 3d 202, 285 Cal. Rptr. 99, 814 P.2d 1341, 1352 (1991) (holding a police officer liable for a sexual assault because he took “advantage of his authority and control as a law enforcement officer”)); White v. County of Orange, 166 Cal. App. 3d 566, 571, 212 Cal. Rptr. 493, 496 (Cal. Ct. App.1985) (holding that a police officer could have acted within the scope of his employment when he stopped a motorist and sexually assaulted her, and noting that “the police officer carries the authority of law with him into the community ... [and] the officer’s method of dealing with this authority is certainly incidental to his duties”); Applewhite v. City of Baton Rouge, 380 So. 2d 119, 122 (La. Ct. App. 1979) (finding employer liability for a police officer’s sexual abuse of a woman in his custody, and noting “where it is found that a law enforcement officer has abused the ‘apparent authority’ given such persons to act in the public interest, their employers have been required to respond in damages”)).

  The Primeaux court went on to state that “[i]t is equally likely that this trust is relied upon when officers appear to be exercising their authority, especially because of the ‘on-call’ nature of their employment.” Id. (citing Osborne v. Lyles, 63 Ohio St. 3d 326, 587 N.E.2d 825, 831 (1992) (reversing summary judgment for the city in a case of excessive force used by an off-duty police officer at an accident scene in part because the officer was to “be considered on duty at all times, for purposes of discipline”); Daigle v. City of Portsmouth, 129 N.H. 561, 534 A.2d 689, 699 (1987) (holding the city liable for an off-duty police officer’s assault because the employment-related activities of employees who have an “obligation, or at least the option, to perform official duties whenever the need may arise” are considered within the scope of their employment)).{fn7} As to the present case, the Eighth Circuit recognized that it is possible that Scott was aided in his assault of plaintiff by the existence of the agency relation. Id. (citing Restatement (Second) of Agency § 219(2)(d). Accordingly, “[i]f Scott accomplished his objective by using his status as a police officer, and if Primeaux relied on his position in succumbing to his advances, then his conduct may fall within the doctrine of apparent authority.” Id. (citing Restatement (Second) of Agency § 265) (emphasis added).

[¶11]  B.  APPARENT AUTHORITY

[¶12]  While it is clear from the Court’s oral findings of fact and conclusions of law that Scott’s sexual act was not preceded by an assertion of actual authority, the issue remains whether it was preceded by an assertion of apparent authority. It is also manifest that under the unique facts and circumstances of this case, once plaintiff entered the front seat of the vehicle, plaintiff did not succumb to Scott’s actions based on any reliance on actual or apparent authority. Rather, she submitted out of fear and physical intimidation to Scott who maintained a significant physical advantage (T.T. 247, 252, 254). The scene of the rape occurred off a side road located several miles from the town of Martin late at night. There was little or no action she could have taken once she entered the vehicle.8. Although plaintiff testified that one of the reasons she got out of the vehicle was because of his status as a police officer (T.T. 33), it is clear that at that point in time there was little or no action she could take under the circumstances.{fn8} Therefore, the Court’s analysis focuses on the facts and circumstances present at the point plaintiff entered the front seat of the vehicle.

[¶13]  The significance of Scott’s status or appearance as an officer of the law is minimized under the unique circumstances present in this case. Unlike the vast body of case law holding the employer liable for sexual assaults committed by officers who were aided in accomplishing a sexual assault by utilizing their position of authority to detain or stop their victims, Scott did not arrest, detain, or even stop plaintiff through use of actual or apparent authority. See generally Red Elk, 62 F3d at 1104 (officer ordered victim into back of car for curfew violation); Bates v. United States, 701 F2d 737, 739 (8th Cir. 1983) (holding military policeman’s conduct in stopping automobile and raping young women did not arise out of scope of employment under Missouri law); Mary M. v. City of Los Angeles, 54 Cal. 3d 202, 285 Cal. Rptr. 99, 814 P.2d 1341 (1991) (officer detained the victim by activating his red lights and threatened to take her to jail for driving while intoxicated); White v. County of Orange, 166 Cal. App. 3d 566, 212 Cal. Rptr. 493 (Cal. Ct. App. 1985) (officer stopped victim’s car); Applewhite v. City of Baton Rouge, 380 So. 2d 119 (La. Ct. App. 1979) (officer used authority to place victim into police custody for vagrancy). To the contrary, plaintiff was stranded “[o]n a cold winter night in [the] middle of practically nowhere near the Indian reservation.” (T.T. 252). See also (T.T. 26, 38, 120, 245). Although plaintiff testified that before entering the vehicle she noticed that the red lights on the roof were turned on, she acknowledged that she voluntarily got into the vehicle because she wanted a ride (T.T. 27, 72).9. At trial, Scott testified that he stopped to offer a ride as an individual, not as a police officer (T.T. 134, 145). There is no evidence that Scott turned on his red lights to stop or detain plaintiff. {fn9}

[¶14]  Plaintiff testified on direct examination that when she was sitting in the car she was fearful Scott would arrest her for drinking and driving or turn her over to the Martin authorities; however, she acknowledged that he did not ask her if she had been drinking or threaten to arrest her (T.T. 30-31, 134). In addition, Scott never requested her driver’s license nor did he ask her to perform a breathalyzer or field sobriety test. Plaintiff has failed to show by a preponderance of the evidence that she relied on the cloak of Scott’s apparent authority as an officer to enter into the front seat of his vehicle. See generally Leafgreen, 393 NW2d at 280 (foreseeability of an agent’s criminal or tortious conduct when operating with apparent authority is seen through the eyes of the third party who was harmed by the agent’s conduct rather than from the principal’s or the agent’s point of view). Plaintiff attempts to convince the Court that she relied upon Scott’s authority as a police officer in submitting to his demands. This she must do to bring her case under the umbrella of the Red Elk and Deuchar. The Court finds her attempt lacking credibility. On the dark, cold night in practically the middle of nowhere, plaintiff accepted the ride in order to escape the elements. Based upon the facts, the Court is not convinced that the police vehicle had anything to do with the assault which later took place. In any event, she has not met her burden in this regard.

[¶15]  It is this significant point that distinguishes this case from the decisions of Red Elk,10. Red Elk v. United States, 62 F3d 1102 (8th Cir.1995).{fn10} Deuchar,11. Deuchar v. Foland Ranch, Inc., 410 NW2d 177 (SD 1987).{fn11} and Leafgreen.12. Leafgreen v. American Family Mut. Ins. Co., 393 NW2d 275 (SD 1986).{fn12} In Red Elk, the two officers were clearly aided by their status as police officers and the victim had relied on said status. Red Elk, 62 F3d at 1107. When the officers picked up the victim ostensibly to return her safely home as a curfew violator, they were on duty, in uniform, armed, and patrolling in a marked police car. Id. The victim clearly relied on their authority when she entered the rear seat of the patrol car from which she had no way to exit without the officers’ help. Id. To the contrary, officer Scott was not purporting to act on behalf of the government by stopping, detaining, or arresting plaintiff for any violation of the law. Moreover, plaintiff has not shown that she relied on Scott’s apparent authority when entering the front seat of the vehicle.

[¶16]  In Deuchar, the South Dakota Supreme Court held that a genuine issue of material fact existed as to whether a ranch hand without the required specific authority of the ranch owner to hunt on a particular occasion was acting within the scope of his employment, as measured by the foreseeability test, when he shot a hunter he was guiding. Deuchar, 410 NW2d at 182. The ranch owner had testified that hunters could not hunt on the ranch unless accompanied by corporate employees. Id. at 179. Thus, under this unique factual scenario, it could be foreseeable that a hunter could rely on the ranch hand’s apparent authority to guide a hunt which was in furtherance of the ranch business. The present case is distinguishable in that Scott was not purporting to act on behalf of the government when he offered plaintiff a ride. Furthermore, plaintiff did not rely on any apparent authority of an agent, as the hunter presumably did under the circumstances present in Deuchar.

[¶17]   In Leafgreen, insureds brought suit against their insurer for damages stemming from the wrongful acts of the insurer’s agent. Leafgreen, 393 NW2d at 276. The agent had gained access into the insureds’ home for the ostensible purpose of writing liability insurance for them. Id. However, the agent was really gaining information to assist two professional burglars, who latter burglarized the residence. Id. In affirming the trial court’s grant of summary judgment in favor of the insurer, the South Dakota Supreme Court held that there was an insufficient nexus between the agent’s employment as an insurance agent and the burglary as to make the harm foreseeable and impute liability to insurer. Id. at 281. The South Dakota court based its decision in part on the fact that the agent had learned that the insureds would be out of town the day of the burglary through his friendship with the insureds, and not because of this status as an insurance agent. Id. Similarly, plaintiff entered the front seat of the vehicle because she needed a ride that cold, dark night, not because of Scott’s status as a law enforcement officer. Leafgreen is authority for the rule that there must be a sufficient nexus between the agent’s employment and the agent’s acts to impute liability upon the principal. Plaintiff fails to establish such nexus between Scott’s employment and his assaultive conduct.

CONCLUSION

[¶18]  Plaintiff has failed to meet her burden of proving that Scott accomplished his objective by using his status as a police officer or that she relied upon Scott’s apparent authority when she entered the front seat of his vehicle. Hence, Scott’s assault was not foreseeable because he was not acting within the scope of his actual or apparent authority. However reprehensible Scott’s actions, to hold otherwise under the unique facts and circumstances presented by this case would blur the settled law of South Dakota as determined by the Red Elk, Deuchar, and Leafgreen trilogy. In short, plaintiff’s case is not a Red Elk and Deuchar case. Accordingly, judgment for the government shall be issued forthwith.

  4th day of June, 1997.

RICHARD H. BATTEY, CHIEF JUDGE





Bordeaux v. United States, 1997 DSD 16

DARWIN THOMAS BORDEAUX,

Plaintiff/Petitioner,

v.

UNITED STATES OF AMERICA,

Defendant/Respondent.

[1997 DSD 16]

United States District Court

District of South Dakota - Central Division

CIV. NO. 96-3036

CRIM. NO. 96-30049-03

REPORT AND RECOMMENDATIONS

FOR DISPOSITION

Filed May 6, 1997

Mark A. Moreno, Magistrate Judge

[¶1]  The above-captioned matter1. Plaintiff/Petitioner, Darwin Thomas Bordeaux, will be referred to as “Bordeaux” and Defendant/Respondent, United States of America, will be referred to as “Government".{fn1} was referred to this Court by the District Court,2. The Honorable Charles B. Kornmann, United States District Judge, presiding.{fn2} pursuant to 28 USC § 636(b)(1)(B) for the submission to the latter Court of proposed findings of fact and recommendations for disposition of the matter. Docket No. 204.

[¶2]  Having carefully reviewed and considered all of the records on file herein and being fully advised in the premises, this Court does now make and propose the following Findings of Fact, Report and Recommendations for Disposition.

PROCEDURAL HISTORY

[¶3]  Bordeaux, along with Augustin Ashton White Horse, Anthony Provancial and Willis Edward Dickson, II, was charged conjointly by an Indictment, filed on October 27, 1994, with Kidnapping and Second Degree Murder in violation of 18 USC §§ 2, 1153, 1111, and 1201(a)(2). He was arrested, arraigned (after pleading not guilty to both charges) and released pending trial. On April 28, 1995/ a jury found Bordeaux guilty of Kidnapping as charged and guilty of the lesser offense of Voluntary Manslaughter, in violation of 18 USC §§ 2, 1153 and 1112.

[¶4]  The trial court sentenced Bordeaux to a term of imprisonment of sixty-three months, to be followed by five years of supervised release. Bordeaux thereafter appealed and his convictions were affirmed by the Eighth Circuit Court of Appeals. United States v. Bordeaux, 84 F3d 1544, 1546, 1549 (8th Cir. 1996).

[¶5]  Subsequently, on September 9, 1996, Bordeaux filed a pro se Motion under 28 USC § 2255 to Vacate, Set Aside or Correct Sentence. After counsel was appointed to represent him, Bordeaux filed an Amended Motion and both parties submitted written arguments in the form of memoranda.

FACTUAL BACKGROUND

[¶6]  Some time after 6:30 a.m. on January 17, 1993, Bordeaux, White Horse, Provancial, Dickson and M.F., a juvenile, were driving around Mission, South Dakota when they observed Dale Williams walking along the road. Williams was wearing the leg brace he regularly wore because of an accident he had suffered several years before. One of the group members offered Williams a ride. Williams accepted, saying that he was going to his mother’s house. Instead of taking Williams home, Dickson drove Williams to Dickson’s own house, where all of the members of the group got out of the vehicle and started kicking and hitting Williams as he attempted to leave the area. After beating Williams for several minutes, laughing and cheering all the while, the members of the group put Williams back into the vehicle and drove to an isolated location east of Mission. There, Williams was removed from the car, kicked and beaten with fists and with a small baseball bat, which the members of the group took turns using. White Horse broke the bat over Williams’ head, whereupon the members of the group struck Williams with the broken pieces. Williams was then put into the trunk of the vehicle and the group members drove back to Dickson’s home. White Horse, Provancial and Dickson left Bordeaux and M.F. in the vehicle. Bordeaux thereafter got out of the vehicle and, pursued by M.F., ran to the home of an acquaintance. A short time later, Dickson’s father, who lived behind Dickson, got into the vehicle to move it and discovered Williams in the trunk. Unaware of the nature and extent of Williams’ injuries, Dickson’s father drove Williams to Williams’ mother’s residence and left him there. Subsequently, a neighbor noticed Williams sitting on the porch of the residence and called the tribal police department. The police responded, and after finding that Williams had been severely beaten, summoned an ambulance. Williams went into cardiac arrest while being transported to the Indian Health Service Hospital in Rosebud, South Dakota and died soon afterward as a result of the injuries inflicted upon him by members of the group. [q7] Bordeaux, White Horse, Provancial and Dickson were indicted and charged with Kidnapping and Second Degree Murder. Provancial and Dickson pled guilty to a Superseding Information charging them with Voluntary Manslaughter and agreed to testify at trial. M.F. pled guilty to an Information charging him with being a juvenile delinquent and likewise agreed to testify at trial. Bordeaux and White Horse were tried together on the charges in the Indictment and found guilty of Kidnapping and Voluntary Manslaughter.

[¶8]  Following the imposition of a prison sentence of more than five years and an unsuccessful appeal, Bordeaux filed a pro se Motion under 28 USC § 2255 seeking three grounds for relief, to wit:

1.  That he was denied effective assistance of counsel;

2.  That there was insufficient evidence to support his kidnapping conviction; and

3.  That his trial should have been severed.

Later, after counsel was appointed, Bordeaux filed an Amended Motion alleging that “[hgis right to effective assistance of counsel was denied to him by the actions and/or omissions of his trial counsel” by virtue of counsel’s deficient performance and, in particular, counsel’s failure:

1.  “[T]o file pre-trial motions relating to the limitation of evidence";

2.  “[T]o file any jury instructions either before the trial, pursuant to the pretrial order, or during the trial"; and

3.  “[T]o properly object to the Government’s peremptory dismissal of jurors based solely upon race.”

In a Memorandum in support of his Motion for Evidentiary hearing, Bordeaux alleged, for the first time, that trial counsel’s performance was objectively unreasonable because counsel “failed to properly apprise his client of the reason of the interview by the Assistant United States Attorney and the Federal Bureau of Investigation [FBI] and allowed the prosecution to develop the outcome of that interview to the jury.”

DISCUSSION

[¶9]  I. RELEVANT STANDARDS.

[¶10]   i. Pleading

[¶11]  Section 2255 (1996),3.  This statute was amended last year by Title I of the Anti-Terrorism and Effective Death Penalty Act of 1996, signed into law by the President on April 24, 1996. Pub. L. No. 104-32, 110 Stat. 1214. The new statute created a one year statute of limitations for filing § 2255 motions and established a number of triggering dates for the one year period, including “the date on which the judgment of conviction becomes final.” See § 2255(1)-(4). Although the statute, or for that matter the Act itself, does not define when such a judgment becomes “final”, it appears that the triggering event is the completion of certiorari proceedings in the United States Supreme Court on direct review or the expiration of the time for filing a writ of certiorari in cases in which certiorari is not sought. Indeed, the language used in the statute closely parallels the test the Supreme Court utilizes when applying its Teague doctrine to determine at what point in time a prisoner’s conviction “becomes final” when scrutinizing retroactivity claims in habeas corpus cases. See e.g., Teague v. Lane, 489 US 289, 305 (1989) (new rule applies in habeas corpus proceeding only if announced while prisoner’s case was “pending on direct review of not yet final”); see also, Caspari v. Bohlen, 510 US 383, 390 (1994) (“a state conviction and sentence become final for purposes of retroactivity analysis when the availability of direct appeal to the state courts has been exhausted and the time for filing a petition for writ of certiorari has elapsed or a timely petition has been finally decided”). Moreover, when Congress chooses to employ language that has become recognized in prior precedent in a particular area of law, the rules of statutory construction call for defining a statute’s terms in accordance with the judicial meaning already in place. See e.g., Evans v. United States, 504 US 255, 259-60 & n.3 (1992) (“It is a familiar ‘maxim that a statutory term is generally presumed to have its common-law meaning’ ... [o]r as Justice Frankfurter advised, ‘if a word is obviously transplanted from another legal source, whether the common law or other legislation, it bring the old soil with it."')

  Bordeaux’s original § 2255 Motion was filed on September 9, 1996, less than two months after his request for rehearing was denied by the Eighth Circuit. His Motion, therefore, is timely and properly before the District Court for consideration.{fn3} the Rules Governing § 2255 Proceedings (1993) and the Model Motion appended to the Rules require a prisoner to “specify all of the grounds for relief which are available to [the prisoner] and of which he has or, by the exercise of reasonable diligence, should have knowledge and [to] set forth in summary form the facts supporting each of the grounds thus specified.” Rule 2(b) of the Rules Governing § 2255 Proceedings (emphasis added); see also, Model Form for Motions Under 28 USC § 2255 (1982) (“[y]our attention is directed to the fact that you must include all grounds for relief and all facts supporting such grounds for relief in the motion you file seeking relief from any judgment of conviction” (emphasis added)). This “fact pleading” requirement - which is distinct from the “notice pleading” rules applicable in other federal civil cases, see Fed. R. Civ. P. 8; McFarland v. Scott, 512 US 849, 860 (1994) (O'Connor, J., concurring in judgment in part) (“habeas petition, unlike a [civil] complaint, must allege the factual underpinnings of the [prisoner’s] claims”)4. See also, Advisory Committee Note to Rule 4 of the Rules Governing § 2254 Cases (quoting Aubut v. State of Maine, 431 F2d 688 (lst Cir. 1970)) (“notice pleading is not sufficient [in habeas corpus pleadings], for the petition is expected to state facts that point to a ‘real possibility of constitutional error"').{fn4} ; - is significant and mandates that the prisoner, at a minimum, summarily plead specific facts supporting each of his/her claims for relief. See e.g., McFarland, 512 US at 856 (“habeas corpus petitions must meet heightened pleading requirements”); Hill v. Lockhart, 474 US 52, 60 (1985); McMann v. Richardson, 397 US 759, 764 n.9 (1970). Althoughthe Rules governing § 2255 cases do not require an itemization of the relevant evidence and legal authority in the pleading, see e.g., Jones v. Jerrison, 20 F3d 849, 853 (8th Cir. 1994), they do require enough supporting facts for each claim to distinguish it from generic-type claims5. See e g. Hill, 474 US at 57-60 (general allegation of ineffective assistance of counsel is insufficient; prisoner must allege specific facts establishing both unreasonable-representation and prejudice prongs of ineffective assistance standard); Strickland v. Washington, 466 US 668, 687-700 (1984) (absence of specific allegations of prejudice).{fn5} and to justify the granting of habeas relief once the facts alleged have been proven.6. See e.g Voytik v. United States, 778 F2d 1306, 1310 (8th Cir. 1985) (“to maintain a claim for ineffective assistance of counsel [a prisoner] must plead facts sufficient to show that both his counsel’s performance fell below an objective standard of reasonable representation and that he was prejudiced by this deficient performance”); Hill, 474 US at 61-63 (White, J., concurring) (pleading insufficient on reasonable-representation prong of ineffective assistance claim because prisoner did not support allegation that counsel was remiss in failing to advise him of effective prior conviction with allegation that counsel knew of prior conviction); Blackledge v. Allison, 431 US 63, 75 n.7 (1977) (petition must “state facts and point to a ‘real possibility of error"'); Wright v. Minnesota, 833 F2d 746, 749 (8th Cir. 1987) (“[d]ismissal of a petition without a hearing is proper if the allegations, even if true, fail to state a claim cognizable in federal habeas corpus proceeding”), cert. denied, 485 US 1011 (1988).{fn6}

[¶12]  B. Evidentiary Hearing.

[¶13]  A prisoner is entitled to an evidentiary hearing on a § 2255 motion “[u]nless the motion and the files and records of the case conclusively show that the prisoner is entitled to no relief.” 28 USC § 2255; Standing Bear v. United States, 68 F3d 271, 272 (8th Cir. 1995), cert. denied, 116 SCt 1444 (1996); Fngelen v. United States, 68 F3d 238, 240 (8th Cir. 1995); United States v. Duke, 50 F3d 571, 576 (8th Cir.), cert. denied, 116 SCt 224 (1995). An evidentiary hearing, however, need not be held if the claims raised in the motion are inadequate on their face. Payne v. United States, 78 F3d 343, 347 (8th Cir. 1996): Shaw v. United States, 24 F3d 1040, 1043 (8th Cir. 1994). Thus, a motion containing mere “conclusory allegations unsupported by specifics” may be summarily dismissed without an evidentiary hearing. Rule 4(b) of the Rules Governing § 2255 Proceedings7. Rule 4(b) states in pertinent part as follows:

  If it plainly appears from the face of the motion and any annexed exhibits and the prior proceedings in the case that the movant is not entitled to relief in the district court, the judge may make an order for its summary dismissal and cause the movant to be notified.{fn7} ; Voytik, 778 F2d at 1308 (no evidentiary hearing required where prisoner failed to make specific, non-conclusory allegations); Smith v. United States, 677 F2d 39, 41 (8th Cir. 1982) (conclusory allegations, unsupported by any specifics, are subject to summary dismissal); Smith v. United States, 618 F2d 507, 510 (8th Cir. 1980)(claims based on unsupported conclusions will not suffice to demand an evidentiary hearing).8. See also, Engelen, 68 F3d at 240; Hollis v. United States, 796 F2d 1043, 1046 (8th Cir.), cert. denied, 479 US 965 (1986); United States v. Lambros, 614 F2d 179, 180-81 (8th Cir. 1980); c.f., United States v. McMullen, 98 F3d 1155, 1158-59 (9th Cir. 1996); Aleman v. United States, 878 F2d 1009, 1012-14 (7th Cir. 1989).{fn8}

[¶14]  C. Ineffective Assistance of Counsel.

[¶15]  “The well-established framework for analyzing ineffective assistance of counsel claims reflects the Sixth Amendment’s focus on assuring the ‘fairness’ and ‘legitimacy’ of our adversary system.” Payne v. United States, 78 F3d at 345 (citing Strickland). The Strickland standard, “although by no means insurmountable, is highly demanding.” Payne, 78 F3d at 345 (quoting Kimmelman v. Morrison, 477 US 365, 382 (1986)). The analysis is two-fold:

First, the defendant must show that counsel’s performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as “counsel” guaranteed the defendant by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defendant. This requires showing that counsel’s errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable.

Strickland, 466 US at 687-700; see also, Willis v. United States, 87 F3d 1004, 1006 (8th Cir. 1996); Shaw v. United States, 892 FSupp 1265, 1270 (DSD 1995), aff'd, 92 F3d 1189 (8th Cir. 1996). The defendant must make both of the showings in order to obtain habeas relief based on an ineffective assistance of counsel claim. Strickland, 466 US at 687, 690-94; see also, Engelen, 68 F3d at 240.

[¶16]  With respect to the performance aspect of the Strickland test, the defendant must demonstrate that counsel’s representation fell below an objective standard of reasonableness under prevailing professional norms. Strickland, 466 US at 688; Azure v. United States, 925 FSupp 671, 677 (DSD 1996). Judicial review of counsel’s performance is highly deferential; a court must indulge a strong presumption that counsel’s conduct falls within the wide range of professionally reasonable assistance and sound trial strategy. Strickland, 466 US at 689; Azure, 925 FSupp at 677-78.

[¶17]  Professionally unreasonable trial errors, however, do not satisfy the burden of proving ineffectiveness absent a showing of prejudice to the defendant. Strickland, 466 US at 691-92; Driscoll v. Delo, 71 F3d 701, 706 (8th Cir. 1995), cert. denied, 117 SCt 273 (1996). A court will set aside the judgment of conviction only when counsel’s performance renders the result of the trial proceeding unreliable or fundamentally unfair. Lockhart v. Fretwell, 506 US 364, 372 (1993); Azure, 925 FSupp at 678 & n.6. Unreliability or unfairness does not result if the ineffectiveness of counsel does not deprive the defendant of any substantive or procedural right to which the law entitles him or her. Fretwell, 506 US at 372; Azure, 925 FSupp at 678.

[¶18]  II. APPLICATION.

[¶19]  A.  Failure to File Pretrial Motions to Limit Evidence.

[¶20]  In his Amended Motion, Bordeaux alleges that he received ineffective assistance of counsel because his trial counsel failed to file pretrial motions “relating to the limitation of evidence.” He does not specify, in either his Motion or accompanying Memorandum, the evidence that allegedly should have been limited or provide any constitutional, statutory or other basis for the limitation of such evidence. The factual allegations concerning the “deficiency” prong of the Strickland test are vague and generalized and those relating to the “prejudice” prong of the test are nowhere to be found. His ineffectiveness claim, therefore, is legally insufficient and subject to dismissal without an evidentiary hearing. Hill, 474 US at 57-60; Strickland, 468 US at 700; United States v. Robinson, 64 F3d 403, 405 (8th Cir. 1995); Hollis, 796 F2d at 1046; Voytik, 778 F2d at 1308-10; Smith, 677 F2d at 41; Smith, 618 F2d at 510.9. See also, Anderson v. Collins, 18 F3d 1208, 1221 (5th Cir. 1994) (ineffective-assistance claims must specify action attorney should have taken and why it would have made a difference); Siciliano v. Vose, 834 F2d 29, 31 (lst Cir. 1987) (proper to deny evidentiary hearing and dismiss if pleadings do not allege “specific and detailed supporting facts”); Smith v. Wainwright, 777 F2d 609, 616 (1 Ith Cir. 1985) (general allegation of ineffective assistance of counsel is insufficient; petition must allege specific errors in counsel’s performance and facts showing prejudice), cert. denied, 477 US 905 (1986).{fn9}

[¶21]  B.  Failure to File Jury Instructions.

[¶22]  Bordeaux next claims that trial counsel’s failure to file any jury instructions before or during the trial amounted to ineffective assistance. He does not, however, allege that the instructions given by the trial court were erroneous or explain how he was prejudiced by counsel’s omissions. Nor does he articulate exactly how counsel’s failure to propose instructions constitutes deficient performance in this instance. His claim as presented, therefore, does not contain allegations or supporting facts that, if accepted as true, would satisfy the Strickland standard and entitle him to habeas relief. Willis, 87 F3d at 1006-08; Payne, 78 F3d at 347; Engelen, 68 F3d at 240-41.110. See also, Hill, 474 US at 61-63 (White, J., concurring); Larson v. United States, 905 F2d 218, 220-21 (8th Cir. 1990); Wright, 833 F2d at 749.{fn10}

[¶23]  C.  Failure to Object to Government’s Use of Peremptory Challenges.

[¶24]  Bordeaux also claims that trial counsel was ineffective by virtue of counsel’s failure to object to the Government’s use of peremptory challenges to strike a number of Native Americans. Bordeaux, however, does not support his claim with the predicate facts required to state a claim for relief. His scanty and conclusory allegations, put forth with little or no background substantiation, do not satisfy the pleading requirements for § 2255 cases or make out a viable Strickland ineffectiveness claim. Murray v. Groose, 106 F3d 812, 815 (8th Cir. 1997); Carter v. Hopkins, 92 F3d 666, 669-70 & n.3 (8th Cir. 1996), cert. denied, 117 SCt 1113 (1997); Randolph v. Delo, 952 F2d 243, 246-47 (8th Cir. 1991), cert. denied, 504 US 920 (1992); Voytik, 778 F2d at 1308-10.11. See also, Hill, 474 US at 57-63; Strickland, 468 US at 687-700; United States v. Williams, 954 FSupp 1093, 1094-95 (D. Md. 1997); Davidson v. Gengler, 852 FSupp 782, 785-89 (W.D. Wisc. 1994).{fn11}

[¶25]  D. Failure to Give Proper Advice Regarding Prosecution Interview and to Object to the Prosecution’s Use of the Same at Trial.

[¶26]  Finally, although not raised or even alluded to in his Amended Motion, Bordeaux claims in a Memorandum submitted in support of his Motion for Evidentiary Hearing, that he received ineffective assistance when his trial counsel failed to properly advise him of the reasons for an interview by the prosecutor and an FBI Agent and allowed the Government to “develop the outcome” of the interview before the jury at trial. Inasmuch as this claim is vague, lacking in specifics, difficult to understand, speculative, conclusory and fails to include allegations that provide a colorable basis for relief under the Strickland test, it must be summarily dismissed. Payne, 78 F3d at 345-48; Thomas v. United States, 27 F3d 321, 326-27 (8th Cir. 1994); Voytik, 778 F2d at 1308-10.12. See also, Hill, 474 US at 57-63; Strickland, 468 US at 687-700; Drew v. United States, 46 F3d 823, 825-26 (8th Cir.), cert. denied, 116 SCt 72 (1995); Whitnev v. United States, 513 F2d 326, 329-30 (8th Cir. 1974).{fn12}

REPORT AND RECOMMENDATIONS FOR DISPOSITION

[¶27]  After a careful review of the record in light of applicable precedent, this Court believes that Bordeaux in not entitled to relief under 28 USC § 2255 and that his Amended Motion should be dismissed without an evidentiary hearing. Accordingly, based on the foregoing findings of fact and legal discussion and pursuant to 28 USC § 636(b)(1)(B) and (C), it is hereby

[¶28]  RECOMMENDED that Bordeaux’s Motion for Evidentiary Hearing, Docket No. 210, be DENIED. It is further

[¶29]  RECOMMENDED that Bordeaux’s Amended Motion/Petition Under 28 USC 2255 to Vacate and Set Aside Sentence, Docket No. 206, be   DENIED in all respects and dismissed with prejudice.



Fines v. Callahan, 1997 DSD 17

DUANE FINES,

Plaintiff,

v.

JOHN J. CALLAHAN,1. Effective March 1, 1997, President Clinton appointed John J. Callahan to serve as Acting Commissioner of Social Security to succeed Shirley S. Chater. Pursuant to Fed. R. Civ. P. 25(d)(1), John J. Callahan is substituted for Shirley S. Chater as the defendant in this action. See also 42 USC § 405(g). {fn1}

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 17]

United States District Court

District of South Dakota - Western Division

CIV. 96-5112

MEMORANDUM OPINION AND ORDER



RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Pending are the claimant’s (Fines’) and the defendant’s (Commissioner’s) cross- motions for summary judgment. Fines filed an application for Title II disability insurance benefits2. Under Title II of the Social Security Act, a claimant is considered disabled “if he is unable to engage in any substantial activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.” 42 USC § 1382c(a)(3)(A). {fn2} on May 24, 1994, alleging disability due to a lower back injury as of May 10, 1991 (A.R. 54, 58-61). After being denied through the reconsideration level, he timely requested a hearing which was held before an Administrative Law Judge (ALJ) on September 28, 1995 (A.R. 28). Fines was represented by counsel at the hearing. (A.R. 28). Fines and vocational expert Robert Peregrine provided testimony at the hearing (A.R. 28-57).

[¶2]  On December 28, 1995, the ALJ issued his decision denying the claim (A.R. 11-21). The ALJ determined that Fines was not disabled because he retained the ability to perform light3. “Light work involves lifting no more than 20 pounds at a time with frequent lifting or carrying of objects weighing up to 10 pounds.” See 20 CFR §§ 404.1567(b) (1996).{fn3} to sedentary4 “Sedentary work involves lifting no more than 10 pounds at a time and occasionally lifting or carrying articles like docket files, ledgers, and small tools.” See 20 CFR §§ 404.1567(a) (1996).{fn4} work, a significant number of which exist in the regional and national economy (A.R. 19 (Findings 11-13)). On November 19, 1996, the Appeals Council declined review of the ALJ’s determination making it the Commissioner’s final decision (A.R. 3-4). See 20 CFR § 404.981 (1996). On December 17, 1996, Fines commenced this action to review the Commissioner’s final decision denying his claim. See Docket #1.

[¶3]  This Court has jurisdiction under 42 USC § 405(g) and 42 USC § 1383(c)(3).

FACTS

[¶4]  Fines was born in February of 1939 (A.R. 58). Thus, he was approaching age 55 on his onset date, and he was 57 at the time of his hearing. He has an eighth-grade education and he has not obtained a GED (A.R. 32, 81). Fines has over 30 years’ experience as a freight delivery truck driver for Hyman Freight (A.R. 33). His duties included driving trucks, loading and unloading freight weighing up to 100 pounds, and operating a forklift (A.R. 33-34, 81).

[¶5]  A.  MEDICAL/PSYCHOLOGICAL EVIDENCE

[¶6]  On June 30, 1994, Dr. Daniel A. Rey performed a consultative examination on Fines (A.R. 145-47). Dr. Rey noted that Fines only had intermittent exacerbations of back pain and he has reached the point where he is able to determine what activities he can tolerate (A.R. 145). Dr. Rey also noted that aspirin provides modest relief for Fines’ pain and that he has not been placed on any regular medications. Id. See also A.R. 156, 210. Dr. Rey opined that Fines’ avoidance of bending and lifting and his use of chiropractic manipulations when needed enable him to be very active, walk, mow the lawn, and engage in other activities without significant limitations (A.R. 147).

[¶7]  On September 15, 1994, Fines sought treatment for back and knee pain (A.R. 156). X- rays were taken of his back and knees revealing some congenital anomalies in his back; however, no significant treatment was suggested, and Fines was told to return in six months (A.R. 157). The medical evidence indicates that Fines has a long-standing history of low back pain with x-ray evidence of mild degenerative changes of the spine (A.R. 146). While he has a history of knee pain, x-rays of the knee are negative (A.R. 175-188).

[¶8]  On October 5, 1994, Fines underwent a consultative psychological evaluation due to his allegation of a learning disorder (A.R. 89, 169-74). The examining psychologist, Dr. James Snow, noted Fines’ full scale IQ was 119, based on a verbal score of 107 and a performance score of 131 (A.R. 172). He rated Fines’ IQ in the “bright normal range of intellectual functioning and the verbal and performance score in the average and very superior ranges” (A.R. 172). Fines’ memory testing score was 77, placing him in the “low average” range (A.R. 173). Dr. Snow found no marked psychological problems and made no diagnosis of any psychological condition (A.R. 173-74).

[¶9]  B.  ALJ DECISION

[¶10]  In evaluating Fines’ claim, the ALJ applied the five-step sequence specified in 20 CFR §§ 404.1520 (AR. 14-20).5. The determination of whether a claimant is entitled to Title II disability insurance benefits must be made according to the following five-step sequential evaluation. See 20 CFR § 404.1520. Step One: The ALJ must determine if the claimant is engaged in “substantial gainful activity.” If so, the claimant cannot be found disabled. Step Two: If the claimant is not engaged in substantial gainful activity, the ALJ must determine if the claimant suffers from a “severe impairment.” Step Three: If the claimant does have a severe impairment, the ALJ must next determine if this impairment meets or equals an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. If the claimant has a listed impairment, then the claimant must be found to be disabled. Step Four: If the claimant does not have a listed impairment, the ALJ must determine whether the claimant can return to his or her past relevant work. If the claimant can return to past relevant work, he or she is not entitled to benefits. Step Five: If the claimant cannot return to past relevant work, then the burden shifts to the Commissioner to demonstrate that the claimant can do some other work which exists in substantial numbers in the national economy. If the Commissioner does not carry this burden, the claimant must be found to be disabled. {fn5} The ALJ first determined that Fines has not engaged in substantial gainful activity since May 10, 1991 (A.R. 15, 18 (Finding 2)). In step two of the sequential evaluation, he determined that Fines has a “severe impairment.” (A.R. 15). After a review of the medical and other evidence, he found that Fines has degenerative changes of the spine, knee pain, and a history of collarbone fracture (A.R. 15, 18 (Finding 3)). The ALJ further noted that although Fines alleges a learning disability, the medical evidence does not support the presence of any severe medically determinable cognitive deficit or psychological impairment (A.R. 15). Ultimately, the ALJ concluded in step three of the sequential evaluation that although Fines’ impairments may be considered to be “severe,” they are not impairments which meet or equal an impairment listed in 20 CFR Part 404, Subpt. P, App. 1 (A.R. 15, 18 (Finding 3)).

[¶11]  In step four of the sequential evaluation, the ALJ determined that based on the medical evidence and testimony, Fines would be unable to return to his past relevant work as a truck driver because of the exertional requirements involved in this occupation (A.R. 17, A.R. 18 (Finding 6)). In assessing Fines’ credibility regarding subjective symptoms, the ALJ applied the standards enumerated in Polaski v. Heckler, 739 F2d 1320 (8th Cir. 1984) (A.R. 17). The ALJ determined that Fines’ testimony in regard to his physical limitations was generally credible (A.R. 17). Based on the evidence, the ALJ concluded that Fines “has the residual functional capacity to perform the physical exertional and nonexertional requirements of work except for lifting in excess of 20 pounds or sitting for more than 30 minutes without changing positions (A.R. 17, A.R. 18 (Finding 5)). See 20 CFR § 404.1545.

[¶12]  Under step five of the sequential evaluation, the ALJ acknowledged that the Commissioner had the burden of proving that a significant number of jobs existed in the national economy which Fines could still perform in light of vocational factors (A.R. 17). Based in part on the testimony of vocational expert Robert Peregrine, the ALJ found Fines to have some transferable work skills such as eye-hand-foot coordination, mathematics, collection of money, use of a radio, and some light maintenance skills, which he demonstrated in his past work (A.R. 17, 19 (Finding 10)). The ALJ concluded that although Fines’ additional nonexertional limitations do not permit him to perform the full range of light and sedentary work, given his transferable skills jobs exist in significant numbers in the national and regional economy which Fines is capable of performing (A.R. 19 (Finding 12)).6. In his assessment, the ALJ took into account the fact that Fines was 57 years old and had an eighth-grade education (A.R. 18-19 (Findings 8-9)).{fn6} Specifically, such occupations as identified by the vocational expert include check cashier, gaming cashier, time keeper, telephone answering service operator, automobile service station attendant, sales clerk, park aide, and recreation facilities aide. Id. Therefore, the ALJ concluded Fines cannot be found disabled, at any time through the date of the ALJ’s decision, as defined by the Social Security Act (A.R. 19 (Finding 13)) (citing 20 CFR § 404.1520(f)).

STANDARD OF REVIEW

[¶13]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991). However, the Court’s role is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))).

[¶14]  In addition to reviewing the Commissioner’s decision to determine if it is supported by substantial evidence in the record as a whole, the Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980).

DISCUSSION

[¶15]  In his motion for summary judgment, Fines focuses on step five of the ALJ’s decision. Specifically, Fines contends that his particular job as a freight delivery truck driver constituted unskilled work and that he did not have any transferable skills. Based in part on the vocation expert’s testimony, the ALJ classified Fines’ skill level as semi-skilled (A.R. 17, 19 (Finding 10), 50).

[¶16]  The regulations define semi-skilled work as follows:

Semi-skilled work. Semi-skilled work is work which needs some skills but does not require doing the more complex work duties. Semi-skilled jobs may require alertness and close attention to watching machine processes; or inspecting, testing or otherwise looking for irregularities; or tending or guarding equipment, property, materials, or persons against loss, damage or injury; or other types of activities which are similarly less complex than skilled work, but more complex than unskilled work. A job may be classified as semi-skilled where coordination and dexterity are necessary, as when hands or feet must be moved quickly to do repetitive tasks.

See 20 CFR § 404.1568(b).7 The regulations define unskilled work as follows:

Unskilled work. Unskilled work is work which needs little or no judgment to do simple duties that can be learned on the job in a short period of time. The job may or may not require considerable strength. For example, we consider jobs unskilled if the primary work duties are handling, feeding and offbearing (that is, placing or removing materials from machines which are automatic or operated by others), or machine tending, and a person can usually learn to do the job in 30 days, and little specific vocational preparation and judgment are needed. A person does not gain work skills by doing unskilled jobs.

20 CFR § 404.1568(a).{fn7}

[¶17]  Transferability is defined as follows:

We consider you to have skills that can be used in other jobs, when the skilled or semi-skilled work activities you did in past work can be used to meet the requirements of skilled or semi-skilled work activities of other jobs or kinds of work. This depends largely on the similarity of occupationally significant work activities among different jobs.

See 20 CFR § 404.1568(d)(1).

[¶18]  The operation of a motor vehicle in combination with Fines’ additional duties at Hyman Freight unquestionably constituted “semi-skilled” work within the meaning of that term as used in Social Security law. See generally Barker v. Shalala, 40 F3d 789, 792-93 (6th Cir. 1994) (classifying work as a truck driver as semi-skilled work); Paulson v. Bowen, 836 F2d 1249, 1251 (9th Cir. 1988) (finding no basis to refute ALJ’s determination that prior truck driving work was semi-skilled); Perez v. Heckler, 777 F2d 298, 303 (5th Cir. 1985) (finding that “[t]ruck driving requires coordination, dexterity, alertness, and use of the hands and feet; therefore, the ALJ’s determination that [claimant’s] past work experience was semi-skilled was supported by substantial evidence.”); Smith v. Sullivan, 1990 WL 92665, *3 (6th Cir. 1990).

[¶19]  Furthermore, Fines’ duties at Hyman Freight imparted transferable skills aside from that of driving an automobile. The ALJ pointed to a number of specific skills that Fines has developed such as eye-hand-foot coordination, mathematics, collection of money, use of a radio, and some light maintenance skills.8 Intelligence tests administered to Fines by Dr. James Snow provide further support for the ALJ’s conclusion regarding Fines’ developed skills and his ability to engage in light duty semi-skilled work. Cf. Walston v. Sullivan, 956 F2d 768, 771-72 (8th Cir. 1992). Dr. Snow rated Fines’ IQ in the bright normal range of intellectual functioning and the verbal and performance score in the average and very superior ranges. {fn8} The ALJ determined that such skills are transferable to various semi-skilled light jobs existing in significant numbers in the national economy as identified by the vocational expert including check cashier, gaming cashier, time keeper, telephone answering service operator, automobile service station attendant, sales clerk, park aide, and recreation facilities aide. See Bates v. Chater, 54 F3d 529, 533 (8th Cir. 1995) (holding that ALJ could properly rely on testimony of vocation expert9 See generally Jenkins v. Bowen, 861 F2d 1083, 1086-87 (8th Cir. 1988) (noting the significance of the fact that the VE sat in on the entire hearing and listened to all the testimony).{fn9} that there were jobs in the local and national economy which truck driver suffering from herniated disc could perform). Because the jobs so identified are similar in the degree of skill required and the types of processes and services involved, this Court finds that there is substantial evidence that Fines’ skills are transferable.

CONCLUSION

[¶20]  The Commissioner’s decision that Fines is not disabled because he has the residual functional capacity to perform the physical exertional and nonexertional requirements of work, except for lifting in excess of 20 pounds or sitting for more than 30 minutes without changing positions, of which a substantial number exist in the national and regional economies is supported by substantial evidence in the record as a whole. Accordingly, it is hereby

[¶21]  ORDERED that Fine’s motion for summary judgment (Docket #8) is denied.

[¶22]  IT IS FURTHER ORDERED that the Commissioner’s motion for summary judgment (Docket #10) is granted. The Commissioner shall have judgment against Fines.



Efinchuk v. Callahan, 1997 DSD 18

HEATHER EFINCHUK,

Plaintiff,

v.

JOHN J. CALLAHAN,1. Effective March 1, 1997, President Clinton appointed John J. Callahan to serve as Acting Commissioner of Social Security to succeed Shirley S. Chater. Pursuant to Fed. R. Civ. P. 25(d)(1), John J. Callahan is substituted for Shirley S. Chater as the defendant in this action. See also 42 USC § 405(g). {fn1}

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 18]

United States District Court

District of South Dakota - Western Division

CIV. 97-5002

MEMORANDUM OPINION AND ORDER



RICHARD H. BATTEY, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Pending are the claimant’s (Efinchuk’s) and the defendant’s (Commissioner’s) cross- motions for summary judgment. Efinchuk filed her first application for Title II disability insurance benefits2. Under Title II of the Social Security Act, a claimant is considered disabled “if he is unable to engage in any substantial activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.” 42 USC § 1382c(a)(3)(A). {fn2} on October 15, 1981 (A.R. 182-85). The claim was denied and she did not appeal (A.R. 186-88). On July 7, 1987, Efinchuk filed her second application for disability insurance benefits, the denial of which was also not appealed (A.R. 191-96). On November 20, 1992, Efinchuk filed her third application which is at issue in this appeal alleging that she became disabled as of June 16, 1987, due to residuals of treatment for breast cancer, arthritis, breathing problems, and mental disorders (A.R. 210-13, 236). Her insured status expired on June 30, 1991 (A.R. 222). After being denied through the reconsideration level, she timely requested a hearing before an Administrative Law Judge (ALJ) (A.R. 214-16, 219-21).

[¶2]  A hearing was held on July 20, 1994 (A.R. 56-118). Efinchuk was represented by a law student. Id. The hearing was adjourned to provide Efinchuk the opportunity to further develop the record (A.R. 21, 117-18). On April 20, 1995, a supplemental hearing was held and Efinchuk was again represented by the law student (A.R. 119). Efinchuk, James F. Hammarsten, M.D., and William Rutenbeck testified as a neutral vocational expert (A.R. 119-181).

[¶3]  On September 27, 1995, the ALJ issued his decision denying the claim (A.R. 18-49). The ALJ determined that Efinchuk was not disabled because on or before June 30, 1991, the date she was last insured for purposes of receiving benefits under Title II of the Act, she retained the residual functional capacity to perform her past relevant work as a mobile home salesperson (A.R. 39, 40 (Finding 6)). On December 23, 1996, the Appeals Council declined review of the ALJ’s determination making it the Commissioner’s final decision (A.R. 6-7). See 20 CFR § 404.981 (1996). On February 14, 1997, Efinchuk commenced this action to review the Commissioner’s final decision denying her claim. See Docket #1.

[¶4]     This Court has jurisdiction under 42 USC § 405(g) and 42 USC § 1383(c)(3).

FACTS

[¶5]  Efinchuk was 55 years old when her insured status expired. She has three years of college education (A.R. 210). During 1985 and 1986, Efinchuk was employed as a mobile home sales representative (A.R. 132-33). At the hearing she acknowledged that she earned approximately $10,000 in 1985, and $8,887 in 1986, selling mobile homes on commission (A.R. 133).

[¶6]  In 1981, she was discharged from the Army where she had worked as a recruiter for many years (A.R. 131-32). She was rated 90 percent disabled and received service-connected compensation (A.R. 108). On August 27, 1991, she applied for a higher disability rating (A.R. 1028). On August 23, 1993, Efinchuk was found to be totally and permanently disabled. Id. This became effective as of August 27, 1991, the date of the application. Id. At the hearing, she indicated she is currently receiving approximately $1,500 per month in VA benefits (A.R. 133).

[¶7]  A.  MEDICAL EVIDENCE

[¶8]  In September of 1980, Efinchuk underwent a modified radical mastectomy for breast cancer for infiltrating duct carcinoma with lymph node metastasis; however, the record indicates that she has had no recurrence of breast carcinoma (A.R. 289-304).3. Following this procedure she underwent chemotherapy and radiation therapy which ended in 1981.{fn3} As for degenerative changes in the spine and joints, x-rays of the right shoulder and the knees in February of 1983 were normal.4. Efinchuk did have 25 to 35 percent limitation of the arm, but made no subsequent complaints of shoulder pain until October 1984 (A.R. 382, 387-88, 391).{fn4} A bone scan in February of 1984 showed only slight degenerative changes in the ankles, knees, hips, shoulders, elbows, and wrists (A.R. 409). An x-ray of the left foot in September of 1984 showed only a small bone spur (A.R. 408). In August of 1984, it was noted that Efinchuk had symptoms consistent with degenerative joint disease of the left knee, but x-rays were negative (A.R. 402). She was treated symptomatically in October and December of 1984, after complaints of neck and shoulder pain and of diffuse arthralgia and nocturnal leg cramps (A.R. 390-91).

[¶9]  In June of 1985, she was prescribed Motrin after indicating that her knees hurt and that she could barely walk (A.R. 431). In March of 1986, it was opined that she suffered from minimal osteoporosis and a small bone spur of the left foot (A.R. 425, 500). In April of 1986, the claimant was found to have mild degenerative changes in the lumbar spine, knees, and ankles (A.R. 443, 445, 471, 481). She was diagnosed with a lumbosacral strain and was recommended to apply moist heat (A.R. 477). In June of 1986, it was noted that she was ambulating with a cane and had a limp, and she was recommended for quadriceps strengthening exercises and a home program (A.R. 469). In July of 1986, she reported knee and ankle pain, and was again prescribed Motrin (A.R. 464). She was started on Clinoril in December of 1986 for arthritic back and hip pain (A.R. 460).

[¶10]  On February 27, 1987, a bone scan revealed probable mild degenerative changes (A.R. 513). When she complained of left knee pain in September of 1988, it was noted that she had patellar tenderness but good range of motion, and x-rays revealed left medial joint line narrowing which was considered mild. (A.R. 886). A bone scan in February of 1990 showed mild to moderate degenerative joint changes, and Efinchuk was treated with Motrin for low back pain and elbow and wrist discomfort (A.R. 582-83, 592). In September of 1990, x-rays of the lumbar spine indicated mild degenerative joint disease (A.R. 588). In November of 1990, she complained of chronic left knee pain (A.R. 587). X-rays showed questionable minimal lateral subluxation of the patella and questionable minimal lateral tilting of the patella. Id.

[¶11]  In January 1991, Efinchuk complained of left knee pain, right shoulder pain, and back pain. Shoulder range of motion was noted to be limited but functional and improving, and home exercise was recommended (A.R. 624). In November of 1991, she reported back and hip pain since chemotherapy, and indicated that she preferred using over-the-counter Tylenol to prescribed Motrin (A.R. 617-18).5. Efinchuk sought treatment in November of 1991 for back and hip pain and was found to have negative straight leg raising and a tender left sacral disc (A.R. 618). A bone scan in February of 1992 revealed abnormal intake and uptake in the skull and lumbar spine, consistent with previous studies (A.R. 659). She sought no further treatment until July of 1992.{fn5} In February of 1992, a bone scan revealed abnormal increased intake in the lumbar spine (A.R. 658). A physical examination on September 1, 1992, revealed full range of motion of the neck, tight trapezium muscles, and full range of motion of the shoulders, elbows, wrists, and fingers (A.R. 706). There was no trace of arthritis in the fingers, no numbness or effusion, and only some joint line tenderness of the medial joint of the left knee. Id.

[¶12]  The record indicates that she sustained an injury to her right shoulder in March of 1993 (A.R. 727). An MRI scan revealed evidence consistent with tendinitis and a partial tear of the cuff; however, she never underwent surgery for this condition and apparently improved with physical therapy (A.R. 735-36, 741, 744-745). On September 27, 1993, it was noted the claimant had resolving right shoulder impingement (A.R. 923). Efinchuk began physical therapy in October of 1993 for severe neck and shoulder spasm, but did not return after November 24, 1993 (A.R. 904, 906). On March 28, 1994, it was noted that her right shoulder was tender, but that she had full range of motion (A.R. 974). X-rays of the left knee on June 8, 1994, were normal, and x-rays of the left ankle showed a plantar spur (A.R. 839). A bone scan revealed increased uptake in the bones associated with chemotherapy for breast cancer, and the ankle showed a trace of active arthritis (A.R. 838, 841). On January 9, 1995, Efinchuk was treated conservatively for low back pain/strain, receiving a back brace which she indicated worked well (A.R. 1005). On April 25, 1995, it was noted that she was experiencing low back pain, and walking with a cane (A.R. 994-95).

[¶13]  Efinchuk also asserts that she is unable to work due to breathing problems. The record documents sporadic reporting of complaints and treatment as follows: (1) complaints of sinusitis in September of 1982; (2) problems with allergies in May of 1983; (3) chronic allergic rhinitis in November of 1983; (4) pneumonia in April of 1984; (5) dizziness probably secondary to sinusitis in June of 1984; (6) sinus problems, headaches, and difficulty breathing in September of 1984; (7) chronic allergic rhinitis in April of 1987; (8) difficulty breathing, swollen tongue, and closed throat in May of 1987; (9) symptomatic allergic rhinitis in June of 1987; (10) chronic sinusitis with difficulty breathing in the cold in August of 1992; (11) upper respiratory infection and sinusitis in August of 1992; and (12) allergic rhinitis verses vasomotor rhinitis in September of 1992 (A.R. 358, 377, 379, 396, 404, 502, 508, 510, 628-29, 648, 701, 888).6. With respect to chronic obstructive pulmonary disease, the record documents that Efinchuk has undergone pulmonary function testing on at least two occasions, but has not obtained results consistent with a listed impairment. Her height has been noted as 67-1/2 inches. For that height, she would need Forced Expiratory Volume after one second (FEVI) values of 1.35 to 1.45, or Forced Vital Capacity (FVC) values equal to or less than 155 or 165. The record indicates that in May of 1988, Efinchuk’s spirometry was considered within normal limits. Although her FEV1 value was below normal in pre-bronchodilator testing, it improved marginally following bronchodilator use, suggesting possible restricted airway disease. However, the FEV1 value was 2.16 pre-bronchodilator use and 2.50 post-bronchodilator use, which is well above listing level. In addition, her FVC value was 2.92 pre-bronchodilator use and 2.98 post-bronchodilator use, also well above listing level (A.R. 562). Pulmonary function testing on June 8, 1994, revealed an FEVI value of 1.94 and an FVC value of 2.43, which, while lower than previous testing results, were considered to indicate only mild restriction, and are well above listing level severity (A.R. 833). {fn6}

[¶14]  B.  PSYCHOLOGICAL EVIDENCE

[¶15]  With respect to mental impairments existing on or before June 30, 1991, a medical report dated November 16, 1983, indicates that Efinchuk was seeing a psychiatrist for increased fatigue and memory lapses (A.R. 377).7. A record dated December 6, 1983, indicates an additional symptom of forgetfulness, but that this symptom was improving (A.R. 374).{fn7} However, there are no records from any psychiatrist or psychologist for that time period. The record indicates that a CT scan of the brain was performed in February 1984, and was considered normal (A.R. 407).

[¶16]  On August 24, 1984, it was recommended that Efinchuk obtain the services of a psychology consultant to evaluate depression (A.R. 402). She underwent consultation on September 10, 1984, during which she reported a history of depression and a suicide attempt about one year previously (A.R. 399). She was diagnosed with an adjustment disorder with depressed mood, and it was noted that she displayed mild to moderate depression and was not suicidal. Id. On September 18, 1984, it was noted that she was being seen at a mental hygiene center for supportive psychotherapy (A.R. 395). She had indicated that she was leaving her present job and planned to return home to Bryan, Texas. Id. Her mood was depressed and she was struggling with loneliness and problems developing interpersonal relationships. Id. On September 26, 1984, she indicated that she had quit her job and was moving back to Texas; however, she was in good spirits, relaxed, and her problems had resolved (A.R. 392).

[¶17]  On March 18, 1985, Efinchuk was referred to the mental hygiene clinic for evaluation regarding post-traumatic stress disorder (A.R. 434, 437).8. The evaluation was conducted on April 15, 1985.{fn8} It was noted that tearing and hostility were present and that further evaluation would be required following crisis intervention and supportive therapy. Id. It was further noted that her working diagnosis consisted of an adjustment disorder with depressive features.9. On May 8, 1995, she appeared at the mental hygiene clinic 20 minutes late, and seemed distant and eager to get to another appointment (A.R. 887). No meaningful exchange took place, and she was to return in 30 days. Id. {fn9} Id. On May 9, 1985, it was determined that she required individual psychotherapy every 30 days and development of a strategy for establishing a network of relationships around people with similar interests based on her complaints of experiencing situational anxiety, employment problems, and companionship problems (A.R. 433). On July 23, 1986, it was noted she had not returned to the mental hygiene clinic in over a year, and her file was closed (A.R. 462).

[¶18]  Efinchuk sought no further mental health treatment until July 27, 1992, over six years later and over a year after her insured status expired (A.R. 643-44). At that time, she requested help in dealing with anxiety at the Minneapolis Veterans Administration Medical Center (VAMC). Id. She denied depression and was not suicidal or homicidal. Id. She indicated that she was sleeping seven and one-half to ten and one-half hours per night and was eating normally. Id. She reported that her concentration was poor and that she tended to procrastinate a lot.10. She didn’t open bags of mail for fear she might get bad news, and that this was her way of avoiding having to deal with things.{fn10} Id. She reported no alcohol or drug use, no psychiatric hospitalizations, and no counseling. Id. She was diagnosed with an adjustment disorder with anxious mood, and referred to the mental hygiene clinic. Id. On July 29, 1992, she was seen for a mental hygiene clinic intake (A.R. 642). It was noted that she was isolated socially and appeared to be in massive denial and evasion. Id. Efinchuk’s intelligence estimate derived from the Shipley Institute of Living Scale fell high in the average range (A.R. 639-40).11. An MMPI was considered valid and indicative of considerable depression in an individual with many bodily concerns and hysteroid complaints with repression and denial appearing to be favored defenses making psychological intervention difficult (A.R. 639-40). The profile also revealed anxiety, worry, and possible rumination to the point of obsessional concerns. Id. Low self esteem was suggested, as well as a somewhat cynical distrustful attitudes towards others. Id. {fn11} On August 17, 1992, she was seen for a psychiatric examination and diagnosed with an adjustment disorder with mixed emotional features (A.R. 902). Supportive psychotherapy was recommended, but no medications (A.R. 633).

[¶19]  The record indicates that Efinchuk was seen for psychotherapy from September 17, 1992, to October 6, 1992 (A.R. 653, 684, 694, 697-98). During therapy sessions, she indicated less depression but anxiety, stress, and frustration in connection with problems with the Veterans Administration system, and her lack of a support system. Id. She also noted a history of sexual harassment within the military and within the Veterans Administration in general, and expressed an interest in speaking with someone from the EEOC at the Veterans Administration about her experience. Id. When last seen on October 6, 1992, she wanted a diagnosis of post-traumatic stress disorder noted in her chart, secondary to trauma related to her mastectomy. Id. However, the therapist concluded that there was not enough information to even suggest that she had shown symptoms consistent with post-traumatic stress disorder. Id.

[¶20]  On March 1, 1993, she underwent a psychological evaluation at the request of the Social Security Administration by Diane Henze, Ph.D., LP (A.R. 720). At that time, she complained of constant pain, difficulty breathing, and nervousness Id. She indicated that she ignored problems as a means of coping and reported having several bags of unopened mail (A.R. 722). She lived in an apartment with two cats (A.R. 74-76). Her daily activities consisted of the following: arising between 8 and 9 a.m.; grooming herself; feeding her cats; taking her medication; having breakfast consisting of juice, tea, and a muffin; watching television, reading two to three books a day, running errands or grocery shopping; having coffee in a restaurant with women friends; eating dinner; watching more television; and going to bed between 10:30 p.m. and 1:30 a.m. (A.R. 722-23). A Beck Depression Inventory indicated moderate to severe depression (A.R. 724). It was also noted that she had average concentration and adequate memory during the course of the interview. Id. Efinchuk was administered the Wechsler Adult Intelligence Scale-Revised, which resulted in a verbal I.Q. score of 113, a performance I.Q. of 107, and a full-scale score of 110, indicating intellectual functioning in the top average range (A.R. 724-25). On the Wechsler Memory Scale, she received scores indicating overall memory scales in the superior range with attention and concentration within the average range (A.R. 725).

[¶21]  She resumed therapy in February of 1993, at which time she began biofeedback and relaxation therapy (A.R. 905). In October of 1993, she underwent a psychological examination, at which time she reported depression with low motivation, low self esteem, decreased energy, anxiety, social isolation, and financial problems (A.R. 907-08). An MMPI was administered revealing serious psychological disturbance and discomfort. Id. It was noted that when compared to the results of a previous MMPI in July 1992, she was currently expressing more anxiety and depression, and less physical symptomatology. Id. In February of 1994, she reported insomnia for many years and was given suggestions for improving her sleep pattern which apparently helped her in this respect (A.R. 978). She began attending a women’s support group and progress notes from that group indicate problems connecting with others (A.R. 927, 931, 934, 938).

[¶22]  On August 1, 1994, she underwent a psychiatric consult for difficulty with concentration, attention, memory, abusive foul language, and handling frustration and anger (A.R. 963). She was diagnosed with depression and started on Sertraline. Id. She was also seen for individual therapy and indicated that she was doing okay in her relationships and had become sexually intimate with her live-in boyfriend. Id. The record indicates that she has continued with individual psychotherapy with Dr. Goldberg through April 25, 1995, when she requested to be transferred to a female therapist (A.R. 996, 998-1004). Dr. Goldberg’s notes indicate that she was having problems with her boyfriend and experienced an episode of domestic violence in February of 1995, at which time the relationship apparently ended. Id. Progress notes also reflect ongoing social isolation, difficulty meeting people, financial problems, and confusion regarding the future. Id. Periodically, Efinchuk reported residual depressive symptoms, particularly low energy, but her psychiatrist indicated that she was responding well to medication. Id.

[¶23]  C.  ALJ DECISION

[¶24]  In evaluating Efinchuk’s claim, the ALJ applied the five-step sequence specified in 20 CFR §§ 404.1520 (AR. 22-40).12. The determination of whether a claimant is entitled to Title II disability insurance benefits must be made according to the following five-step sequential evaluation. See 20 CFR § 404.1520. Step One: The ALJ must determine if the claimant is engaged in “substantial gainful activity.” If so, the claimant cannot be found disabled. Step Two: If the claimant is not engaged in substantial gainful activity, the ALJ must determine if the claimant suffers from a “severe impairment.” Step Three: If the claimant does have a severe impairment, the ALJ must next determine if this impairment meets or equals an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. If the claimant has a listed impairment, then the claimant must be found to be disabled. Step Four: If the claimant does not have a listed impairment, the ALJ must determine whether the claimant can return to his or her past relevant work. If the claimant can return to past relevant work, he or she is not entitled to benefits. Step Five: If the claimant cannot return to past relevant work, then the burden shifts to the Commissioner to demonstrate that the claimant can do some other work which exists in substantial numbers in the national economy. If the Commissioner does not carry this burden, the claimant must be found to be disabled. {fn12} The ALJ first determined that Efinchuk has not engaged in substantial gainful activity since June 16, 1987, her alleged onset date of disability (A.R. 22, 39 (Finding 2)). In step two of the sequential evaluation, he determined that Efinchuk has a “severe impairment.” (A.R. 22-29). After a thorough review of the medical and other evidence, he found that on or before the expiration of her insured status on June 30, 1991, Efinchuk was severely impaired by the following: (1) infiltrating duct carcinoma of the right breast with lymph node metastasis, status-post modified radical mastectomy with residual scarring in the right upper lung, and some limitation of motion of the right shoulder; (2) degenerative changes in the spine, shoulders, elbows, wrists, hips, knees, and ankles; (3) chronic allergic rhinitis and sinusitis; and (4) chronic obstructive pulmonary disease (A.R. 22, 39 (Finding 3)).13. The ALJ further noted that the record indicated that Efinchuk was diagnosed with hypothyroidism in 1992 (A.R. 23). Symptoms related to this condition were not documented previous to that time, and thyroid tests in October 1986 and January 1992 were normal. Id. (citing Exhibits 28, p. 24; and 37, p. 43). An abnormal test was noted on August 1992, but a subsequent test in May 1993 was normal on medication. Id. (citing Exhibits 37, p. 36; and 40, p. 2) Based in part on the foregoing, the ALJ found no evidence of hypothyroidism during the period relevant to this adjudication, such that it would have constituted a severe impairment on or before June 30, 1991, and did find evidence that this condition was adequately treated with medication after August 1992. Id.{fn13}

[¶25]  The ALJ further determined that Efinchuk suffered from an adjustment disorder and possibly a depressive disorder (A.R. 28). He then evaluated these disorders under section 12.04 of the Listing of Impairments relating to affective disorders (A.R. 28-29). He found that during the period from June 16, 1987, to June 30, 1991, the record documented no clear evidence of restriction as a result of such impairments to daily activities, maintaining social functioning, concentration, persistence, pace, or episodes of deterioration or decompensation in work or work-like settings (A.R. 29). He further noted that: (1) during this period Efinchuk sought treatment only for physical complaints; (2) prior to this period she sought only sporadic treatment for complaints consistent with an adjustment disorder, but did not follow through with treatment recommendations; and (3) following this period she sought more consistent mental health treatment, particularly beginning in July of 1992, which would suggest a worsening of her condition at that time.14. Based on the lack of documentation in the record, the ALJ could not relate this worsening of her condition to the relevant period from June 16, 1987, through June 30, 1991 (A.R. 29).{fn14} Id. The ALJ concluded that during the period of June 16, 1987, through June 30, 1991, the record does not document evidence of a severe medically determinable mental impairment. Id.

[¶26]  In step three of the evaluation, the ALJ concluded that Efinchuk did not have an impairment or combination of impairments which meet or equal the relevant criteria of any impairment listed at 20 CFR Part 404, Subpart P, Appendix 1. (A.R. 29-33, 39 (Finding 3)). Specifically, the ALJ evaluated Efinchuk’s right breast carcinoma under section 13.09 of the Listing of Impairments. Based largely in part on the fact that Efinchuk has had no recurrence of breast carcinoma following her modified radical mastectomy in September of 1980, the ALJ concluded that this impairment did not meet or equal the criteria of the section 13.09 (A.R. 29). He evaluated Efinchuk’s degenerative changes in the spine and joints under sections 1.03, 1.04, and 1.05C of the Listing of Impairments (A.R. 29-32). The ALJ found that none of these degenerative changes reflected the findings required by any of these sections. Id. He also concluded that Efinchuk’s chronic obstructive pulmonary disease did not meet or equal the relevant criteria of any listed impairment (A.R. 32). As for her allergies, the ALJ concluded that listings do not contain a section under which to evaluate the impairment. Id. He found that the sporadic reporting of allergy complaints and treatment was not consistent with an impairment of listing level severity (A.R. 33). The ALJ further concluded that the combination of Efinchuk’s severe impairments was not sufficient to meet or equal the relevant criteria of any listing impairment. Id.

[¶27]  In assessing Efinchuk’s credibility regarding subjective symptoms, the ALJ applied the standards enumerated in Polaski v. Heckler, 739 F2d 1320 (8th Cir. 1984) and 20 CFR § 404.1529 (A.R. 33). The ALJ determined that Efinchuk’s testimony in regard to her subjective complaints was inconsistent with the record as a whole (A.R. 39 (Finding 4)). Based on the evidence, the ALJ concluded that on or before June 30, 1991, Efinchuk retained the residual functional capacity for work requiring: (1) lifting no more than 20 pounds occasionally and ten pounds frequently; (2) standing or walking six hours out of an eight-hour work day; (3) no overhead work with the right dominant upper extremity; (4) no repetitive reaching, pushing, or pulling with the right upper extremity; (5) only occasional bending and twisting; (6) no kneeling or crawling; and (7) no exposure to dust, fumes, or smoke (A.R. 33-37, 39 (Finding 5)).

[¶28]  In step four of the sequential evaluation, the ALJ determined that on or before June 30, 1991, Efinchuk’s impairments did not preclude her from returning to her past relevant work as a mobile home salesperson. (A.R. 38-39, 40 (Finding 6)). The ALJ based his decision in part on vocational expert William Rutenbeck’s testimony that an individual with Efinchuk’s vocational limitations would be able to perform her past relevant work as a mobile home salesperson (A.R. 38). Therefore, the ALJ concluded Efinchuk could not be found disabled at any time on or before June 30, 1991, as defined by the Social Security Act (A.R. 40 (Finding 7)).

STANDARD OF REVIEW

[¶29]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991). However, the Court’s role is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))).

[¶30]  In addition to reviewing the Commissioner’s decision to determine if it is supported by substantial evidence in the record as a whole, the Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff’d per curiam, 615 F2d 1288, 1289 (8th Cir. 1980).

DISCUSSION

[¶31]  In her motion for summary judgment, Efinchuk seeks reversal of the ALJ’s decision based on the following grounds: (1) her work and earnings as a mobile home salesperson do not correspond to the legal definitions of “substantial gainful activity” and “past relevant work;” (2) the ALJ’s hypothetical posed to the vocational expert (VE) failed to encompass all of her limitations; (3) the ALJ failed to give appropriate weight to the Department of Veterans Affairs (VA) finding of total disability effective in August of 1991; and (4) the ALJ failed to apply the correct legal standard to discount her subjective symptoms.

[¶32]  A.  PAST RELEVANT WORK AS SALESPERSON

[¶33]  To establish entitlement to benefits, it is Efinchuk’s burden to show that she was unable to perform any substantial gainful activity including past relevant work prior to the expiration of her insured status on June 30, 1991. Battles v. Sullivan, 902 F2d 657, 659 (8th Cir. 1990); 20 CFR § 404.1520(e). During 1985 and 1986, Efinchuk was employed as a mobile home sales representative (A.R. 132-33). At the hearing she acknowledged that she earned approximately $10,000 in 1985, and $8,887 in 1986, selling mobile homes on commission (A.R. 133). She stated that she worked for three months until she got sick, and then went back to work for another company for a few months until she got sick again. Id. Based on the evidence, the ALJ determined that Efinchuk’s impairments as set forth above did not preclude her from returning to her past relevant work as a mobile home salesperson (A.R. 38-39, 40 (Finding 6)).15. The ALJ based his decision in part on vocational expert William Rutenbeck’s testimony that an individual with Efinchuk’s vocational limitations would be able to perform her past relevant work as a mobile home salesperson (A.R. 38). In addition, Mr. Rutenbeck also testified that Efinchuk had acquired skills from her work as a mobile home salesperson which would be transferable to the semi-skilled work activities of other work within her residual functional capacity (A.R. 164-66).{fn15}

[¶34]  Her earnings raised a presumption that she was engaged in substantial gainful activity during these two years. See 20 CFR § 404.1574(b)(2); Andler v. Chater, 100 F3d 1389, 1392 (8th Cir. 1996) (citing Nettles v. Sullivan, 956 F2d 820, 822 (8th Cir. 1992)). Although “[t]his presumption may be rebutted by evidence of the nature of the applicant’s work, the adequacy of the applicant’s performance, and the time the applicant spent in work,” Efinchuk failed to produce such evidence. Anderson v. Heckler, 726 F2d 455, 456 (8th Cir. 1984). There is no evidence to rebut the presumption regarding the nature of Efinchuk’s work as a mobile home sales representative. Although she testified that she worked for about three months at time until she got sick, there is no evidence that she was fired for poor performance or that she was denied work because of any medical problem. Indeed, certain activities which last a short time may be considered “unsuccessful work attempts.” Andler, 100 F3d at 1392.16. According to the Eighth Circuit Court of Appeals,

  A work effort that lasts less than three months can be considered an unsuccessful work attempt when a claimant is unable to perform work for more than a short time, and must quit due to an impairment, or due to the removal of special conditions related to the impairment that are essential to the further performance of work.

Andler, 100 F3d at 1392 (citing Sample v. Shalala, 999 F2d 1138, 1142 (7th Cir. 1993); 20 CFR § 404.1574(a)(1)). Work efforts that last between three and six months require an additional showing that either: (1) there were frequent absences due to the impairment; (2) the work was unsatisfactory due to the impairment; (3) the work was done during a period of remission; or (4) the work was done under special conditions. Id. (citing Social Security Ruling 84-25(2)(a)-(d), WL 49799 at *2; Nettles, 956 F2d at 822).{fn16} However, the record indicates that during the period of 1985 to 1986, Efinchuk spent a considerable amount of time as a mobile home salesperson earning a substantial amount of money in commission fees. There is substantial evidence in the record as a whole to support the ALJ’s determination that Efinchuk’s work and earnings as a mobile home salesperson constituted substantial gainful activity and past relevant work.

[¶35]  B.  VE HYPOTHETICAL QUESTION

[¶36]  Efinchuk asserts that the VE’s testimony was not substantial evidence because the ALJ’s hypothetical to the VE failed to encompass all of her limitations. Specifically, she contends that the hypothetical did not include her inability to walk longer than six minutes at 1.3 miles per hour. The Court disagrees. The ALJ’s hypothetical question accurately reflected all Efinchuk’s pain and impairments which the ALJ found credible. Roe v. Chater, 92 F3d 672, 675 (8th Cir. 1996) (the hypothetical question need only include those impairments that the ALJ finds are substantially supported by the record as a whole); Totz v. Sullivan, 961 F2d 727, 730 (8th Cir. 1992); Penn v. Sullivan, 896 F2d 313, 317 (8th Cir. 1990). Efinchuk has not shown that the ALJ failed to accurately describe her conditions.

[¶37]  The VE listened to all the testimony at the administrative hearing, including Efinchuk’s allegations about her condition and pain. See generally Jenkins v. Bowen, 861 F2d 1083, 1086-87 (8th Cir. 1988) (noting the significance of the fact that the VE sat in on the entire hearing and listened to all the testimony). In posing the hypothetical question to the VE, the ALJ told the VE to assume that the hypothetical person had Efinchuk’s background, education, and work experience (A.R. 162-63). The ALJ also requested the VE to consider the limitations testified to at the hearing which included the residual functional capacity for work requiring: (1) lifting no more than 20 pounds occasionally and ten pounds frequently; (2) standing or walking six hours out of an eight-hour work day; (3) no overhead work with the right dominant upper extremity; (4) no repetitive reaching, pushing, or pulling with the right upper extremity; (5) only occasional bending and twisting; (6) no kneeling or crawling; and (7) no exposure to dust, fumes, or smoke (A.R. 163-64). The Court finds that the ALJ’s hypothetical did include all of her limitations that were supported by substantial evidence in the record. In support of her position, Efinchuk relies on a physical therapist’s report dated September 13, 1990, which indicates that based on her treadmill tolerance she could not walk longer than six minutes at 1.3 miles per hour (A.R. 1026). However, Dr. Hammarsten’s testimony provided substantial evidence in support of the ALJ’s findings regarding physical limitations including the limitation that she could be on her feet six hours out of an eight-hour workday. See Richardson v. Perales, 402 US 389, 408, 91 SCt 1430-31 (1971).

[¶38]  In response to the hypothetical, Mr. Rutenbeck testified that an individual with those vocational limitations would be able to perform Efinchuk’s past relevant work as a mobile home salesperson (A.R. 164). Mr. Rutenbeck testified that Efinchuk’s earnings for 1985 and 1986, the period during which she was selling mobile homes, were consistent with the substantial gainful activity level, which justifies inclusion of this work as past relevant work (A.R. 178, 222-231). In response to additional questioning, Mr. Rutenbeck testified that Efinchuk would have problems returning to this work if she had difficulty standing, memory problems, breathing problems such that she would be unable to remain outside, significant allergies, depression, difficulty walking, had to lie down two to three times a day, or had side effects from medications or treatment (A.R. 169-172).

[¶39]  However, the ALJ concluded that these additional limitations are not supported by substantial evidence in the record as a whole based on the following: (1) the record indicates she previously sold mobile homes despite her allergies, and the medical evidence of record does not document significant treatment for allergies during this period; (2) although she was advised to move to a drier climate, that advice came from an orthopedist; (3) the record does not document significant abnormalities which would reduce her ability to stand or walk below six hours out of an eight-hour day; (4) the record does not document any significant depressive or other mental symptomatology during the relevant period, or any significant side effects of medication; (5) the record indicates that the only medication prescribed to her during this period was Motrin and Disalcid; and (6) there is no substantiation in the medical record for a need to lie down three times per day (A.R. 38).17. The Eighth Circuit Court of Appeals has held that “in establishing eligibility for disability benefits both objective and subjective evidence must be considered, including ‘medical evidence of a claimant’s condition subsequent to the expiration of the claimant’s insured status ... because it may bear upon the severity of the claimant’s conditions before the expiration of his or her insured status.’” Martonik v. Heckler, 773 F2d 236, 240 (8th Cir. 1985) (quoting Basinger v. Heckler, 725 F2d 1166, 1169-70 (8th Cir. 1984)). The ALJ did evaluate medical evidence of Efinchuk’s condition on or before the expiration of her insured status in evaluating her Title II claim. {fn17} The Court finds that there is substantial evidence to support the ALJ’s determination in regard to these additional limitations. Accordingly, because the hypothetical question reflected an accurate account of Efinchuk’s limitations, the ALJ was entitled to consider the opinion of the VE as reliable evidence. See Onstad v. Shalala, 999 F2d 1232, 1234 (8th Cir. 1993).

[¶40]  C.  VETERANS AFFAIRS FINDING OF DISABILITY

[¶41]  On August 23, 1993, the VA found Efinchuk to be totally and permanently disabled which became effective as of August 27, 1991, the date of her application for the increased rating (A.R. 1028). Efinchuk’s revised VA disability rating which became effective as of August 27, 1991, was based primarily on an evaluation of her mental condition after June 30, 1991, her date-last-insured, as was noted by the ALJ (A.R. 37). Moreover, according to the Eighth Circuit Court of Appeals, “a disability determination by the Veterans Administration is not binding on the ALJ.” Jenkins v. Chater, 76 F3d 231, 233 (8th Cir. 1996) (citing Fisher v. Shalala, 41 F3d 1261, 1262 (8th Cir.1994); 20 CFR § 404.1504). Notwithstanding the finding of disability by another agency, the ALJ’s determination that Efinchuk is not disabled under the regulations set forth by the Social Security Administration is supported by substantial evidence in the record as a whole.

[¶42]  D.  CREDIBILITY ASSESSMENT

[¶43]  Efinchuk’s contention that the ALJ failed to follow Eighth Circuit standards for the assessment of her credibility lacks merit. The ALJ evaluated Efinchuk’s subjective allegations in accord with the regulations found at 20 CFR §§ 404.1529 and the decision of Polaski v. Heckler, 739 F2d at 1320 (8th Cir. 1984). The ALJ considered the medical and nonmedical evidence and concluded that Efinchuk’s allegations about her condition and limitations were inconsistent with the record as a whole (A.R. 39 (Finding 4)). The ALJ’s finding concerning the credibility of Efinchuk’s subjective complaints is supported by substantial evidence on the record as a whole. See Hutsell v. Sullivan, 892 F2d 747, 750 (8th Cir. 1989).

[¶44]  At the hearing, Efinchuk testified that radiation treatment following surgery for breast cancer in 1980 had caused severe burns in her chest (A.R. 87). She further stated that she had constant chest pain and difficulty breathing, and that her condition had deteriorated since 1987 (A.R. 83, 87-90). However, medical evidence including chest x-rays revealed only “mild” scarring in her right upper lung (A.R. 512 (October 1987), 573 (May 1988-89), 590 (September 1990), 626 (January 1991)). Furthermore, pulmonary functional studies in May of 1988 were essentially normal and revealed only possible reactive airway disease (A.R. 562). Although she stated that she could only walk one-half block due to an old knee injury, an x-ray of the left knee in November of 1990 revealed no evidence of arthritis and only questionable minimal lateral subluxation and tilting of the patella (A.R. 94, 587). While she testified that she had pain due to degenerative arthritis in her lower back, hips, knees, elbows, wrists, and fingers, a bone scan taken in February of 1990 revealed only mild to moderate degenerative joint changes in the extremities (A.R. 98, 583). X-rays of her lumbosacral spine consistently showed only minimal degenerative joint disease (A.R. 482, 588, 592).18. The Court further finds that the ALJ’s determination that Efinchuk did not have a severe mental impairment based in part on the absence of documentation of ongoing mental problems during the period at issue is supported by substantial evidence. See Williams v. Sullivan, 960 F2d 86, 88 (8th Cir. 1992).{fn18}

[¶45]  In addition, Efinchuk testified that she lived alone taking care of her own needs (74-76). The record further indicates that her daily activities consisted of the following: arising between 8 and 9 a.m.; grooming herself; feeding her cats; taking her medication; having breakfast consisting of juice, tea, and a muffin; watching television, reading two to three books a day, running errands or grocery shopping; having coffee in a restaurant with women friends; eating dinner; watching more television; and going to bed between 10:30 p.m. and 1:30 a.m. (A.R. 722-23). See generally Shannon v. Chater, 54 F3d 484, 487 (8th Cir. 1995); Clark v. Shalala, 28 F3d 828, 831 (8th Cir. 1994) (ability to engage in full and varied daily activities, despite pain, supports a conclusion that symptoms were not of such intensity as to preclude all substantial gainful activity); Onstead v. Sullivan, 962 F2d 803, 805 (8th Cir. 1992). Based on the foregoing, the Court finds that the ALJ’s assessment of her credibility is supported by substantial evidence on the record as a whole.

CONCLUSION

[¶46]  The Commissioner’s decision that Efinchuk is not disabled because her impairments did not preclude her from returning to her past relevant work as a mobile home salesperson is supported by substantial evidence in the record as a whole. Accordingly, it is hereby

[¶47]  ORDERED that Efinchuk’s motion for summary judgment (Docket #9) is denied.

[¶48]  IT IS FURTHER ORDERED that the Commissioner’s motion for summary judgment (Docket #11) is granted. The Commissioner shall have judgment against Efinchuk.



Homestake Mining Co. v. United Steelworkers, 1997 DSD 19

HOMESTAKE MINING COMPANY,

Plaintiff,

v.

UNITED STEELWORKERS OF AMERICA,

AFL-CIO, AFL-CIO-CLC, LOCAL 7044; and STACY OBERLE,

Defendants.

[1997 DSD 19]

United States District Court

District of South Dakota - Western Division

CIV. 97-5003

MEMORANDUM OPINION AND ORDER



RICHARD H. BATTEY, Chief Judge

PROCEDURAL HISTORY

[¶1]  Plaintiff Homestake Mining Company (Homestake) operates an underground gold mine in Lead, South Dakota. Homestake has moved this Court to vacate the decision issued by Arbitrator James Reynolds (Reynolds) on the grounds that his decision exceeded his authority under the collective bargaining agreement and that his decision violates a “well-defined” public policy. All defendants have collectively objected to Homestake’s motion. In response to Homestake’s motion, defendants have filed a motion for summary judgment. Defendants allege that there are no material issues of fact and that as a matter of law the decision of the arbitrator should be enforced.

[¶2]  This Court has jurisdiction pursuant to 29 USC § 185 (also referred to as § 301 of the Labor Management Relations Act of 1947), 9 USC § 10(a)(4), and 28 USC 1331.

FACTUAL BACKGROUND

[¶3]     This case involves a former employee of Homestake, Stacey Oberle (Oberle). Prior to his discharge, Oberle had been employed for Homestake for approximately sixteen years. When discharged, Oberle was working as a welder in the Mechanical Maintenance Department of the company. Oberle’s employment with Homestake was terminated as a result of the safety violations which Homestake believes were violated. Homestake charged Oberle with violating welding safety regulations promulgated under the Mine Safety and Health Act (MSHA), 29 USC § 801(a). Specifically, Homestake alleged that Oberle violated Mine Safety and Health Regulation (MSHR) 30 CFR, part 57.4604 and 30 CFR, part 57.14213 [hereinafter referred to as regulation 57.4604 and regulation 57.14231]. Regulation 57.4604 prohibits cutting or welding on a container that has had a flammable or combustible material in it before it is drained and ventilated and cleaned thoroughly. Regulation 57.14213 states that “welding operations shall be shielded when performed at locations where the arc flash could be hazardous to persons.”

ARBITRATOR’S DECISION

[¶4]  Reynolds stated that the issue which he was to consider was whether “[Homestake] ha[d] just cause to discharge the Grievant [Oberle].” Both parties agreed to the arbitration of this issue. If Reynolds found that the company did not have just cause to discharge Oberle, then he had to determine the appropriate remedy.

[¶5]  This Court will summarize the facts as they were set forth by Reynolds in his written opinion.1 A transcript was not taken at the hearing before the arbitrator.{fn1} Homestake is subject to federal laws and regulations regarding mine safety. If these laws or regulations are violated, Homestake could be forced to temporarily close work areas or may be subject to fines.

[¶6]  Oberle and the employee in charge of the Maintenance Department had discussed the need for a cart which could move fifty-five gallon drums of lubricant and other materials used in the mine. On March 29, 1996, on his own initiative, Oberle began to build such a cart. A barrel of eighty to ninety weight lubricant was delivered to the maintenance shop which is at the 6500 foot level of the mine. Oberle used the barrel as a pattern for the cart.

[¶7]  Reynolds found that

[t]he Grievant cut four pieces of angle iron for the outside frame of the cart using the cutoff saw near his welding bench. He then tack welded those pieces together at his bench. In order to accomplish the welding of the parts involved, the Grievant attached a ground cable which was approximately 20 feet long from the arc welder to the frame pieces. With the ground cable attached to the framework he then carried the framework, with the ground cable still attached, back to the barrel. He then cut two pieces of angle iron for the corner braces using the cut off saw. Each of the two corner pieces was ground to fit as necessary. When the corner pieces were properly fitted, the Grievant tack welded them into the frame while the frame was located on the barrel. The tack welding left a residue, but did not burn off the paint on the barrel. The barrel was new, and the plugs were in place. After two corner pieces were tack welded in place, he moved the work back to his welding bench, and welded them solid. He then moved the work back to the barrel, and proceeded to cut the last two corner pieces on the cut off saw.

[¶8]  Reynolds also concluded that the welding bench was approximately ten to twenty feet from the location of the barrel. The welding curtain which is normally located around Oberle’s work bench is portable and a welder is able to position it so that it shields others from the welding flash. While Oberle was cutting the last two corner pieces with a cut off saw, Mr. Kinghorn and Ms. Hart entered the area. When they entered the area, Oberle had the section of his curtain which was between the barrel and his work area pulled to one side. This made it easy for him to walk between the barrel and his work area. Oberle was asked by Mr. Kinghorn if he was welding on the barrel. Reynolds found that Oberle told Mr. Kinghorn that he was not welding on the barrel but was tacking parts which were positioned on top of the barrel. At that time, Mr. Kinghorn told Oberle not to do any further welding on the parts while they were located on the barrel.

[¶9]  When Oberle’s shift was finished, his supervisor informed him that Mr. Kinghorn had contacted Homestake’s Safety Department. Subsequently, Oberle was issued two notices of violation as to the MSHR. Oberle received eight points for violating regulation 57.4604 and two points for violating regulation 57.14321. Prior to these welding violations, Oberle had accumulated a total of five points in violations. Because Oberle’s total points had reached fifteen, he was subject to discharge.

[¶10]  In analyzing the evidence, Reynolds found that Articles IV and XVII of the Collective Bargaining Agreement (CBA)2 Article IV provides, in part, that management shall maintain the “right to discharge for just cause,” and unless “the Company has violated a specific term or provision of one or more of the other Articles” of the CBA, the company’s right to discharge for just cause shall not be subject to arbitration. Article XVII, Section 3, provides:

Seniority, for the purpose of promotion or demotion, shall be on a Company basis. Company seniority shall be recognized in the case of filling vacancies before hiring new employees. Company seniority shall date from the employee’s last date of hire by, or transfer into, the Company’s Lead operations. Company seniority shall accumulate without interruption until broken by ... [d]ischarge for cause, or voluntary termination.

It is the provision of Article XVII, Section 3 which is the specific provision of the CBA which is alleged to have been violated if Oberle was not discharged for just cause. {fn2} between the United Steel Workers of America, AFL-CIO-CLC and Homestake provides that employees may not be disciplined without just cause. Reynolds determined that the contract was silent as to a definition of just cause. Reynolds stated that he was required to apply the “usual and ordinary” definition of the term. Reynolds applied the definition for “cause” or “just cause” which is set forth in Robert’s Dictionary of Industrial Relations, Fourth Edition, 1994, BNA p. 377. The definition refers to the seven tests for just cause. The seven tests used by the arbitrator are as follows: (1) reasonableness of the rules and orders, (2) notice, (3) investigation, (4) fairness of investigation, (5) proof grievant is guilty as charged, (6) equal treatment, and (7) penalty of discharge reasonable.

[¶11]  Next, Reynolds analyzed each of the seven tests to determine if Homestake had just cause to discharge Oberle. Reynolds concluded that the safety rules and regulations are reasonable, but the issue in this case was whether or not Oberle actually violated the rules. As to notice, Reynolds found that Oberle received training as to safety practices in welding. Reynolds stated, “The training certification forms do not describe the specific training which was given, but do outline hazard recognition as a training subject that was covered.” Reynolds noted that the manuals for metalworker training stated that “welding curtains must be set up to protect people working in the immediate area.”

[¶12]  Reynolds determined that Homestake’s testimony that it had posted rule 57.4604 at work was not compelling. Oberle and other employees testified that they did not recall seeing the rule posted. Regardless of whether or not the rule had been posted, Reynolds determined that the rule was not relevant to the circumstances in this case. Reynolds concluded that

[t]he evidence in this case shows that the Grievant was welding on the metal parts of the cart which he had placed on the barrel for proper positioning and tacking. He was not welding on the barrel itself. The applicability of the rule is therefore in question. There is no doubt that welding, even tack welding, in such close proximity to the barrel created hazards which could ... lead to grave consequences, and could have been easily avoided. The rule, on the other hand relates to welding on a container, not welding on the parts in near proximity to the container.

[¶13]  As to step three and four, no evidence was presented as to any investigation which took place prior to the discharge of Oberle.

[¶14]  When considering whether Oberle was guilty of the alleged violations, Reynolds noted that regulation 57.4604 states “that welding to a container which has had a flammable or combustible material in it requires special safeguards.” Based upon the record, Reynolds found that Oberle was not welding to the barrel, but that “he was welding on the cart parts which he had positioned on the barrel.” Reynolds considered that distinction to be important. Reynolds found that welding near a container was done routinely when performing maintenance in the mine. The evidence revealed that nearby welding occurred without special precautions and that sanctions were not given out to employees who performed nearby welding. For example, although risks may be associated with an employee “welding near fuel or hydraulic oil tanks located on equipment,” Reynolds emphasized that sanctions had not been previously given for such actions.

[¶15]  Reynolds found that Oberle told Mr. Kinghorn he had been tacking on the barrel not welding. See Arbitrator’s Opinion at 7-8, 14. However, Reynolds found that the distinction between tacking and welding is irrelevant. Reynolds concluded that there was not clear proof that Oberle was not using the curtain to shield others. Reynolds found that “[t]he testimony of the Grievant was that he had positioned the curtain to shield the other workers, and had pushed the portion of the curtain between the barrel and his bench aside so that he could walk between the barrel and cut off saw.” Reynolds stated that he carefully reviewed that testimony by Oberle and found it to be plausible. Reynolds found

[t]he unrefuted testimony of Mark Sorensen, who was working nearby, was that he saw no welding flashed at the time the Grievant was fabricating the cart. From where Mr. Sorensen was working, it appears that the curtain must have been in place to shield him from the flashes. There is not sufficient evidence to find that the Company has met its burden to prove that the curtain was not in place.

[¶16]  Homestake urges that Reynolds concluded that Oberle had been welding with only one side of the curtain around him. This is not what the record reflects. Reynolds found that the curtain had protected the welders near Oberle when he was welding and that there was not enough evidence to show that the curtain was not in place when he was welding at his bench. Mr. Kinghorn was not in the room when Oberle was welding, so he did not observe where the curtain was when he was welding. Mr. Kinghorn asked Oberle if he had been welding to the barrel. His response was that he was tacking to the barrel. Oberle did not testify and Reynolds did not find that welding or tacking had taken place with the curtain moved.

[¶17]  In reviewing the record as to equal treatment, Reynolds found that a union witness’s unrefuted testimony was that he had welded on fuel tanks containing flammable materials in the past without being sanctioned. Reynolds felt that the union witness and Oberle were treated differently for similar actions. Finally, Reynolds concluded that there was not sufficient evidence to justify the alleged safety violations. Reynolds noted that Oberle’s prior disciplinary record did not justify discharge.

[¶18]  On October 26, 1996, Reynolds found that there was not just cause to terminate Stacy Oberle, a former employee of Homestake. Reynolds ordered that Oberle should be returned to his position as a welder for Homestake. Oberle was also awarded back pay at his regular rate of pay for the hours which he normally would have worked had he not been discharged.3 Oberle was ordered by Reynolds to cooperate with Homestake in determining the amount of unemployment compensation which should be subtracted from the back pay. {fn3} Reynolds stated that Oberle should be returned to work with all his seniority and benefits as if he had not been discharged.

DISCUSSION

[¶19]  Homestake has alleged that Reynolds’ decision to reinstate Oberle should be vacated because Reynolds exceeded his authority under the CBA and his decision violates public policy. This Court will first consider whether Reynolds exceeded his authority as an arbitrator. If this Court should conclude that Reynolds did not exceed his authority, then it will be necessary to consider the issue of whether Reynolds’ decision violated public policy.

  I. ARBITRATOR EXCEEDED HIS AUTHORITY?

[¶20]  The Federal Arbitration Act permits an arbitration award to be vacated when the arbitrator has exceeded his authority under the CBA. 9 USC § 10(a)(4). See also SDCL

§ 21-25A-24. Courts have a narrow role when reviewing an arbitrator’s decision. United Paperworkers Int’l Union v. Misco, Inc., 484 US 40, 108 SCt 364, 370, 98 LEd2d 286 (1987). Courts reviewing an arbitrator’s decision “are not authorized to reconsider the merits of an award even though the parties may allege that the award rests on errors of fact or on misinterpretation of the contract.” Id. Even if the basis for the arbitrator’s decision is ambiguous, a court is not permitted to review the merits of the arbitrator’s decision. W.R. Grace & Co. v. Local Union 759, 461 US 766, 103 SCt 2177, 2182, 76 LEd2d 298 (1983). Courts reviewing an arbitrator’s decision “do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of a lower court.” Misco, 108 SCt at 370. Thus, in reviewing Reynolds’ arbitration decision this Court will not entertain claims of factual or legal error. See Misco, 108 SCt at 370.

[¶21]  The decision by an arbitrator must be enforced by the reviewing court unless a court finds that the arbitrator’s decision did not “dra[w] its essence from the collective bargaining agreement.” Id. (citing United Steelworkers v. Enterprise Wheel & Car Corp., 363 US 593, 596, 80 SCt 1358, 1360, 4 LEd2d 1424 (1960)). An arbitration award is not legitimate if an arbitrator has exceeded his authority and is enforcing “his own brand of industrial justice.” Id. (quoting Enterprise Wheel, 80 SCt at 1361. See also Excel Corp. v. United Food & Commercial Workers, 102 F3d 1464, 1467 (8th Cir. 1996) (citing Enterprise Wheel, 80 SCt at 1361). An arbitrator is not permitted to ignore the plain language of the contract. Id. If an arbitrator ignores the plain language of the CBA, a Court may vacate the arbitration award. Id. When an arbitrator ignores the plain language of the CBA, the arbitrator has exceeded his authority. Id. In reviewing an arbitrator’s decision, a court may not reject that decision simply because it disagrees with the findings of the arbitrator even if the court believes that the arbitrator has misread the contract between the parties when making his findings. Misco, 108 SCt at 370-71. “[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced [that the arbitrator] committed serious error does not suffice to overturn the decision.” Id. at 371; Excel Corp., 102 F3d at 1467.

[¶22]  An arbitrator is permitted to look to collateral sources when interpreting the CBA; however, in so doing, the arbitrator cannot amend the agreement or impose new obligations upon the parties. Excel Corp., 102 F2d at 1467.

[¶23]  A party cannot be required to submit to the arbitration of any dispute to which it has not agreed to arbitrate. Lackawanna Leather Co. v. United Food & Commercial Workers Int’l Union, 692 F2d 536, 538 (8th Cir. 1982), on rehearing en banc 706 F2d 228 (8th Cir. 1983); John Morrell & Co. v. Local Union 304A, 708 FSupp 273, 274 (DSD 1989), aff’d 913 F2d 544, 561 (8th Cir. 1990). All parties involved in this case agreed to arbitrate the issue of whether there was just cause to terminate Oberle’s employment. The CBA incorporates the federal safety laws and regulations by reference. CBA, Article XIII, Section 5. The CBA also prohibits an arbitrator from adding to, subtracting from, or modifying the terms of the agreement. See CBA, Article XIX. Therefore, if the arbitration award modifies the agreement or adds to the agreement, Reynolds has exceeded his authority.

[¶24]  Given the law which is set forth above, this Court will consider whether Reynolds exceeded his authority by ignoring the plain language of the contract between Homestake and Union. This Court has the authority to review the issue of whether the arbitrator exceeded his authority; however, the Court “must broadly construe the collective bargaining agreement and resolve all doubts in favor of the arbitrator’s authority.” John Morrell & Co. v. Local Union 304A, 913 F2d 544, 560 (8th Cir. 1990), cert. denied, 500 US 905, 111 SCt 1683, 114 LEd2d 78 (1991).

A. Did the Arbitrator Exceed his Authority by Interpreting the Safety Regulations?

[¶25]  Homestake believes that Reynolds exceeded his authority by contradicting Homestake’s interpretation of the safety regulations which Homestake argues is reserved to management as unilateral right not arbitrable under the contract. Homestake believes that they did not consent to the arbitrator’s interpretation of the safety regulations and that as a result Reynolds exceeded his authority when he construed the safety regulations. Article IV, Section 4 of the CBA, states that exclusively retained within the authority of Homestake is “[t]he determination of the layout and equipment to be used in the business and mining operations; the processes, techniques, methods and means of manufacture, distribution, and mining operations; the materials to be used and the size and character of inventories.” Article IV, Section 13 states the expressed management rights, including Article IV, Section 4, are not subject to arbitration procedures unless in exercising its rights Homestake violated a “specific term or provision of one or more other Articles of this Agreement.”

[¶26]  Oberle is alleged to have violated two mining safety regulations, 57.4604 and 57.14231. According to Homestake, the issue submitted to the arbitrator “was whether Homestake had just cause to discharge grievant Stacy Oberle for violation of two MSHA safety regulations, located at 30 CFR parts 57.4604 and 57.14213.” The defendants agree with the issue as it was stated by the arbitrator:

The issue in this case is whether or not the Company had just cause, as required by the Collective Bargaining Agreement, to discharge the Grievant. If not, what shall the remedy be?

Both parties submitted to arbitration on the issue of whether there was just cause to discharge Oberle.

[¶27]  Essentially, Homestake is urging that Reynolds had the right to interpret the facts before him but that the CBA prohibited him from interpreting the safety regulations because such construction would have exceeded his authority. First, this Court is not convinced that the plain language of the CBA prohibited Reynolds from construing the safety regulations.4 There is a dispute between Homestake and the defendants whether the arbitrator actually interpreted regulation 57.14213. {fn4} Section 4 reserves to Homestake the technique and methods of mining operations. It reserves to Homestake that right to adopt the safety regulations (mining practices) at issue in this case. However, it does not expressly reserve to Homestake the right to prohibit the arbitrator from interpreting the plain language of the safety regulation when determining if Oberle was discharged based upon just cause. Recognizing that a court should not interfere with an arbitrator’s award “unless it can be said with positive assurance that the contract is not susceptible of the arbitrator’s interpretation,” Local 238 Int’l Brotherhood of Teamsters v. Cargill, Inc., 66 F3d 988 (8th Cir. 1995), this Court finds that Reynolds did not ignore the plain language of Article IV, Section 4 when he interpreted the safety regulations. The safety regulations were incorporated into the CBA and by interpreting them Reynolds’ decision pertained to the essence of the agreement.

[¶28]  Even if this Court were to conclude that Reynolds had ignored the plain language of Article IV, Section 4, when he construed the safety regulations, it is difficult for this Court to see how Homestake would not have consented to the arbitration of the construction of the safety regulations. Essentially, Homestake is urging that it agreed that the arbitrator could interpret the facts, but then the arbitrator was obligated to ask Homestake whether his interpretation of the facts met their definition of the safety regulations. Under such a scenario, the arbitrator would not be making the determination of whether Homestake had just cause to terminate Oberle. To determine if there was “just cause to discharge grievant Stacy Oberle for violation of two MSHA safety regulations, located at 30 CFR parts 57.4604 and 57.14213,” the arbitrator at a minimum must examine the facts and determine if those facts violated the safety regulations. It is difficult to determine if the safety regulations were violated without defining when a regulation is violated.5 In Homestake’s reply brief, it argues for the first time that Reynolds exceeded his authority under the CBA by ignoring the plain language safety regulations. The federal safety regulations were incorporated into the CBA. Regulation 57.4604 restricts welding to containers. Even if the Court thinks that Reynolds misinterpreted this provision of the CBA and disagrees with his interpretation, the Court is unable to vacate the arbitrator’s award. By agreeing to arbitration on the issue of just cause, the parties agreed to Reynolds’ interpretation of the regulations. The Court cannot say that Reynolds ignored the plain language of 57.4604; if anything, Reynolds would be guilty of over-emphasizing the plain language of the regulation.

  As to regulation 57.4312, this Court finds that Reynolds did not interpret that regulation to require that a welder only use the curtain to shield the parties around him. This Court rejects Homestake’s argument that the arbitrator’s facts require such an interpretation. The conclusion of Reynolds that there was not enough evidence to show that he was not using the curtain. This Court is not permitted to interfere with the fact finding of the arbitrator to make inferences like the inference which the defendants are urging. Misco, 108 SCt at 374. The facts represent that the welders who testified did not see a flash while Oberle was welding, that Oberle testified he shielded the other welders while he was welding, and that Mr. Kinghorn was not in the room while Oberle was welding. Given that the arbitrator did not draw the conclusion which Homestake is urging, the arbitrator did not ignore the plain language of regulation 57.4312.

  As long as Reynolds was “even arguably construing or applying the contract and acting within his scope of authority,” even if this Court thought Reynolds had committed “serious error,” the Court could not overturn his decision. John Morrell, 913 F2d at 559. {fn5}

B. Did the Arbitrator Exceed his Authority by Concluding that the CBA Did Not Define Just Cause ?

[¶29]  Reynolds concluded that the CBA was silent as to a definition of “just cause” or “cause” for employee discharge. Given that the contract was silent, Reynolds looked to the standard within the industry to define just cause. Homestake urges that Reynolds’ conclusion that the CBA was silent as to the definition of just cause ignored the clear language of Article XIII, section 8, of the CBA. Article XIII, section 8, states:

Any employee who fails to follow prescribed safety rules and instructions shall be subject to discipline. If in the case of such violation, the Company does not deem a discharge of the employee necessary, then in such case the Company shall issue appropriate discipline in writing to the employee with a copy to the Union. The Union on its part shall use its best efforts to insure future compliance with safety rules and instructions by such and employee.

Homestake argues that

[b]ased on this contract language, and [Homestake’s] obligations to comply with MSHA regulations, Homestake clearly was authorized and even required to discipline Oberle for violation of those regulations and corresponding internal safety rules. In using industry standards to interpret good cause under the parties’ agreement, the arbitrator ignored this clear contract language, and exceeded his authority under Article XIX6. Article XIX is the provision of the agreement which sets forth the policies for the settlement of disputes and grievances. This Article covers the arbitration procedures.{fn6} of the agreement.

Homestake’s Memorandum in Support of Motion to Vacate Arbitrator’s Award at 14 [hereinafter Homestake’s Memorandum].

[¶30]  This Court disagrees with Homestake’s argument. The plain language of Article XIII, section 8, does not define just cause. Article IV, Section 1, gives Homestake the right “to discharge for just cause.” Article XIII, Section 8 deals with the discipline of the employee once a safety violation is determined by Homestake to have occurred. However, Article XVII,

Section 3, requires that an employee’s seniority can be interrupted when an employee is discharged for cause; this provision would include the discharge of employees for safety violations. The plain language of Article XIII, Section 8 does not mention anything about how Homestake is to go about determining whether they had just cause to reach the conclusion that a safety violation did occur. This Court is to broadly construe the CBA agreement and to resolve any doubts in favor of the arbitrator. The arbitrator may look to collateral sources as long as he does not amend the agreement. Keebler Co. v. Milk Drivers & Dairy Emp. Union, 80 F3d 284, 288 (8th Cir. 1996). In fact, other arbitrators have used the seven factors used by Reynolds in determining what constitutes just cause. See, e.g., Misco, 108 SCt at 368 n.5. This Court finds that the arbitrator did not ignore the plain language of the agreement by referring to the industry standard when considering whether Homestake had just cause to terminate Oberle.

II. Arbitrator’s Award Violate Public Policy?

[¶31]  Homestake urges that the arbitrator’s award in this case, reinstatement, violates public policy. That a court may refuse to enforce an arbitrator’s award on the grounds of public policy is a well-established legal principle. See W.R. Grace & Co. v. Rubber Workers, 461 US 757, 103 SCt 2177, 76 LEd2d 298 (1983). The question of whether the arbitrator’s award violates an established public policy is an issue for resolution by the courts. Daniel Constr. Co. v. Local 257, Int’l Brotherhood of Elec. Workers, AFL-CIO, 856 F2d 1174, 1181 (8th Cir. 1988), cert. denied, 489 US 1020, 109 SCt 1140, 103 LEd2d 200. This Court can overturn an arbitration award challenged on the grounds of public policy “only if it is contrary to a ‘well- defined and dominant’ policy embodie[d] in laws and judicial precedent.” PaineWebber Inc. v. Agron, 49 F3d 347 (8th Cir. 1994) (citing Misco, 108 SCt at 374). If the arbitrator’s interpretation of the CBA violates an explicit public policy, this Court is obligated to refrain from enforcing the arbitrator’s award. Iowa Elec. Light & Power Co. v. Local Union 204, 834 F2d 1424, 1427 (8th Cir. 1987). A public policy rooted within common sense is not sufficient to reverse the conclusion reached by an arbitrator. Misco, 108 SCt at 374. Even if this Court were to accept that a well defined public policy has been violated, there must also be a clear violation of the public policy in this case. Id.

[¶32]  Homestake does not clearly state the firm public policy which it believes the arbitrator has violated. In concluding that the arbitrator’s decision violates a well-defined public policy, Homestake relies on Iowa Electric. In Iowa Electric, an employee disabled an interlock door which is designed to keep the buildings at a nuclear power plant pressurized so that any leakage would remain inside the plant. Iowa Elec., 834 F3d at 1425-26. The arbitrator ordered reinstatement of an employee even though the arbitrator found that the employee knew that he was not to disable the interlock door. Id. at 1426.

[¶33]  In Iowa Electric, the Eighth Circuit concluded that this nation has a strict public policy which requires strict compliance of safety regulations at nuclear facilities. Id. at 1427. In concluding that this public policy was a well-defined policy established by precedent, the court noted that the federal government has been heavily involved in the planning, construction, and operation of nuclear plants since the enactment of the Atomic Energy Act and the creation of the Atomic Energy Commission (AEC). Id. at 1428. The court also noted that the Nuclear Regulatory Commission (NRC), the successor to the AEC, has implemented volumes of safety rules which govern all nuclear power plants. Id. In addition, each nuclear plant is then required to develop more specific regulations so that the plant may obtain and then maintain its federal license. The court also pointed to the Supreme Court’s recognition that the most critical role for the NRC is “public health, and safety.” Id. (citation omitted).

[¶34]  In reaching its conclusion that the arbitrator’s decision to reinstate the employee violated public policy, the Eighth Circuit stated,

[I]t is clear that when [the employee] breached the technical plant specification— required by the NRC, as mandated by Congress— he violated more than a simple in house procedure. Instead, he broke a safety rule that was put in place pursuant to a strict regulatory scheme devised by Congress for the protection of the public from the hazards of nuclear radiation.

Id. The court concluded that it would be a violation of public policy to reinstate the employee in Iowa Electric because his actions had jeopardized public health or safety. See also Union Pac. R.R. Co. v. United Transp. Union, 3 F3d 255, 262 (8th Cir. 1993), cert. denied, 510 US 1072, 114 SCt 881, 127 LEd2d 79 (1994) (court concluded that reinstatement of an employee violated a definite public policy when court did not determine likelihood that policy would not be violated in the future).

[¶35]  Given Homestake’s heavy reliance on Iowa Electric, this Court concludes that Homestake is urging that there is a national public policy which requires strict compliance with the safety regulations within the mining industry. For the purpose of analysis, this Court will assume that there is a well-defined public policy requiring strict compliance with safety regulations within the mining industry.7 Given this Court’s conclusion, it is not necessary for the Court to resolve at this time whether there is a well-defined public policy requiring strict compliance with the safety regulations within the mining industry.{fn7}

[¶36]  The main argument between the parties in this case stems from whether there has been a violation of public policy in this case. Unless there has been a violation of the public policy in this case, this Court cannot vacate the arbitrator’s award based upon a public policy argument. Misco, 108 SCt at 374. In determining whether there has been a violation of public policy, it is inappropriate for this Court to make inferences as to the factual findings made by the arbitrator. See id. In Misco, the Court made it clear that the fact that a reviewing court is inquiring whether there has been a violation of a public policy by an arbitrator’s decision does not create an excuse for a court to perform the duties of the arbitrator. Id. It is a well-recognized principle of law that a reviewing court may not “merely substitute [its] judgment for that of the arbitration panel, no matter how wrong we may believe the panel’s decision to be.” PaineWebber, 49 F3d at 350; Daniel Constr., 856 F2d at 1180. This Court is not allowed to make findings of fact or law even if it disagrees with the conclusions reached by the arbitrator or believes that the arbitrator’s conclusions are erroneous.

[¶37]  Defendants urge that the Court cannot conclude that reinstatement of Oberle violates a public policy because in this case the arbitrator did not find that Oberle had violated the safety regulations. Defendants argue that if a safety regulation was not violated it only naturally follows that a public policy requiring strict compliance of safety regulations could not have been violated. Defendants urge that Homestake has failed to cite a case where the employee was found not to have violated a safety regulation and the arbitrator’s decision was still vacated based on public policy.

[¶38]  In resolving the issue of whether there was a violation of public policy in this case, this Court must address two issues: (1) is this Court required to apply the arbitrator’s interpretation of the safety regulations and (2) for Reynolds’ arbitration award to be vacated must Oberle have violated the safety regulations. This Court will first address whether this Court must apply the arbitrator’s interpretation of the safety regulations. Homestake disputes the construction of the safety regulations by the arbitrator. Homestake disagrees with the interpretation by the arbitrator that regulation 57.4604 is not violated if an employee is welding near or on a container. The Court concluded above that the arbitrator did not ignore the plain language of the CBA when it construed the safety regulations. The parties in this case bargained for the arbitrator’s interpretations of the contract, and in this case, the federal safety regulations are incorporated into the contract. Even if this Court disagrees with the arbitrator’s interpretations of the safety regulations, an arbitration award is not vacated because of errors of law or misinterpretations of the CBA. See Misco, 108 SCt at 370; Stroh Container Co. v. Delphi Industries, Inc., 783 F2d 743, 750 (8th Cir. 1986) (an arbitrator’s interpretation of the law is insulated from review). Some circuits have concluded that an arbitrator’s decision may be vacated if an arbitrator exhibits “manifest disregard for the law.”8 The Eighth Circuit has not adopted manifest disregard as a basis for vacating an arbitrator’s award. Marshall v. Green Giant Co., 942 F2d 539, 550 (8th Cir. 1991). At one point, the defendants appear to be arguing that the arbitrator’s interpretation of the safety regulations is a factual finding; however, this Court would classify the construction of the regulations as a conclusion of law. Regardless of how the arbitrator’s interpretation of the regulations is characterized, the Court’s scope of review faces the same limitations.{fn8} To conclude that there was manifest disregard for the law there must be some showing that the arbitrator knew the law and expressly disregarded it. In this case, there was not any law for the arbitrator to ignore. Homestake has not cited to any precedent establishing that the arbitrator erroneously interpreted the law. Even if Homestake had made such a showing, it has not demonstrated that the arbitrator ignored such precedent. The arbitrator did not manifestly disregard the law when he construed the safety regulations. Therefore, this Court must apply the arbitrator’s interpretation of the safety regulations.

[¶39]  Second, this Court must consider whether for there to be a violation of public policy in this case, must it find that Oberle violated the safety regulations. In addressing this point, the Court must apply arbitrator’s construction of the regulations for that was the parties’ bargain. Homestake urges that there is sufficient evidence in the facts reached by the arbitrator that there was a violation of public policy in this case. Homestake relies on the following statement made by Reynolds:

There is no doubt that welding, even tack welding, is such close proximity to the barrel created hazards which could have lead to grave consequences, and could have been easily avoided. The rule, on the other hand relates to welding on a container, not welding on parts in near proximity to the container.

Arbitrator’s Opinion at 13.9 Homestake also relies on the testimony of a former MSHA inspector who testified that Oberle would have been issued a citation for his conduct. As discussed previously, there is not a transcript in this case and even if there was, the Court is not permitted to participate in fact finding; therefore, the Court must accept the facts as set forth by the arbitrator. The arbitrator does not find as Homestake urges that Oberle would have received a citation for his conduct. The arbitrator found that sanctions in the past had not been given for welding near a barrel and that there was no evidence in the record that welding near a barrel is distinguishable from welding on a barrel. {fn9}

[¶40]  In other cases where a court has concluded that reinstatement would violate public policy, the employee had violated a regulation, statute, or rule which related to the well- established public policy.10. This Court recognizes that the Eighth Circuit has stated that when concluding that an award violates public policy, it is not necessary that the court find a rule, regulation, or statute, making the award, e.g. reinstatement, illegal or not permitted. As to whether an employee must violate a rule, regulation, or statute for the Court to conclude that there was a violation of public policy in a specific case, this Court has not found an opinion directly addressing that issue.{fn10} See, e.g., Iowa Electric, 834 F2d at 1428 (based upon the arbitrator’s findings, the court of appeals concluded that employee had violated a technical plant specification which was mandated by Congress); Union Pac., 3 F3d 255, 256, 261 (8th Cir. 1993) (arbitrator determined that there was violation of rule requiring that railroad employees not use illegal substances while on duty and court; court of appeals did not address issue of whether there was a violation of the rule); Amalgamated Meat Cutters & Butcher Workmen of North America AFL-CIO, Local Union 540 v. Great W. Food Co., 712 F2d 122 (1st Cir. 1983) (arbitrator found that over-the-road truck driver was drinking while on duty, this violated the well-established drinking and driving laws in all states); SD Warren Co. v. United Paperworkers’ Int’l Union, AFL-CIO, Local 1069, 815 F2d 178, 180 (1st Cir. 1987) (arbitrator concluded that employees had violated a rule prohibiting the sale, possession, or use of intoxicants or drugs), cert. granted, judgment vacated by 484 US 983, 108 SCt 497, 98 LEd2d 496 (case vacated and remanded to the First Circuit in light of Misco).

[¶41]  This Court believes that finding a violation of public policy in this case would be contrary to the precedent which was set forth by the Supreme Court in Misco. In Misco, the Court did not reach the issue of whether the arbitrator’s award violated public policy because it concluded that the evidence was not sufficient to conclude that, even if there was an established public policy “against the operation of dangerous machinery by persons under the influence of drugs or alcohol,” the employee had not violated it. Misco, 108 SCt at 374. The Court found that the Court of Appeals inappropriately inferred that because marijuana was found in the employee’s car that the employee was under the influence of an illegal substance and had operated dangerous machinery while under the influence. Id. The Court emphasized that the parties bargained for the facts to be found by the arbitrator and not the Court. Id.

[¶42]  Based upon Reynold’s interpretation of the facts and the safety regulations, this Court finds that there is not sufficient evidence to conclude that an established public policy requiring strict compliance with the safety regulations within the mining industry was violated in this case. The Court recognizes that the arbitrator noted that he believed tack welding near or on the barrel was dangerous. However, in Reynolds’ opinion, which this Court must follow even if it disagrees with it, these dangers were not sufficient to violate the safety regulations. This Court is not willing vacate the arbitrator’s award based on public policy when there has not been a violation of the safety regulations upon which the public policy is based. This Court believes that such a conclusion would be contrary to the well-established precedent that a public policy must be “well-defined and dominant, and is to be ascertained ‘by reference to the laws and legal precedents and not from general considerations of supposed public interests.’” Misco, 108 SCt at 373 (citations omitted).

CONCLUSION

[¶43]  Based on the discussion set forth above this Court concludes that Reynolds’ award did not exceed his authority. Reynolds did not ignore the plain language of the CBA when he interpreted the safety regulations. Reynolds also did not ignore the plain language of the agreement when he determined that it was silent as to the meaning of just cause. Also, given that there was not a violation of an established public policy in this case, this Court finds that it may not vacate Reynolds’ award based upon a public policy argument.

Summary judgment is clearly an appropriate mode for the resolution of an action to enforce an arbitrator’s award. The ordinary analysis of motions under Fed. R. Civ. P. 56 is not particularly helpful, because the enforcement proceeding is by nature summary. Disputes of fact should have been resolved by the arbitrator, and may not be addressed by the district court, even if the court is convinced that the arbitrator committed serious error. See United Paperworkers International v. Misco, Inc., 484 US 29, 38, 108 SCt 364, 371, 98 LEd2d 286 (1987).

Air Line Pilots Ass’n Intern. v. Aviation Assoc. Inc., 955 F2d 90, 93 (1st Cir. 1992), cert. denied, 505 US 1222, 112 SCt 3036, 120 LEd2d 905 (1992). The court in Air Line Pilot noted that an award is not automatically entitled to enforcement. Id. An arbitration award should not be enforced if it violated public policy, if the arbitrator exceeded his authority, or if the award is tainted by fraud or corruption. Id. The later condition does not apply in this case and this Court has determined that the first two provisions have not been violated. Therefore, defendants are entitled to summary judgment as a matter of law.

[¶44]  Accordingly, it is hereby

ORDERED that defendants’ motion for summary judgment is granted and Homestake’s motion to vacate the arbitrator’s award is denied.



Johnson v. American Family Ins. Co., 1997 DSD 20

ORAL JUNE JOHNSON,

Plaintiff,

v.

AMERICAN FAMILY MUTUAL

INSURANCE GROUP,

Defendant.

[1997 DSD 20]

United States District Court

District of South Dakota - Western Division

CIV. 96-5116

MEMORANDUM OPINION AND ORDER

Opinion filed July 3, 1997

Richard H. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On December 26, 1996, plaintiff Oral June Johnson (Johnson) commenced this action in state court against defendant American Family Mutual Insurance Group (American Family) seeking coverage over and above monies collected from the liability carrier of the tortfeasor/driver of a car in which she was riding on January 25, 1995. On December 31, 1996, American Family removed the action pursuant to 28 USC §§ 1332 and 1441. On April 7, 1997, American Family filed a motion for summary judgment on the ground that there is no coverage available in this case. On April 8, 1997, Johnson filed a cross motion for partial summary judgment on the coverage issue.

FACTS

[¶2]  The facts are not in dispute. On January 25, 1995, Johnson was a passenger in a motor vehicle driven by James Beck (Beck) in Arizona. Beck’s negligence caused or contributed to an accident in which Johnson was seriously injured. Beck was insured by ITT Hartford for bodily injury liability in the sum of $100,000 per person and $300,000 per accident. ITT Hartford paid Johnson the policy limit of $100,000 in full settlement and release of Beck’s liability.

[¶3]  Johnson is now seeking to collect underinsured motorist (UIM) benefits and any other insurance coverage under her South Dakota family car policy with American Family. The policy provides potential UIM coverage to Johnson in the sum of $100,000. For purposes of this action, the parties stipulate that the injury and damages to Johnson exceed the $100,000 she received from ITT Hartford.

[¶4]  Johnson’s policy contains a UIM coverage endorsement to conform to the law of South Dakota requiring UIM coverage. South Dakota Codified Laws (SDCL) 58-11-9.5 provides as follows:

Payment to insured for portion of judgment not collected from underinsured motorist--Coverage limits. Subject to the terms and conditions of such underinsured motorist coverage, the insurance company agrees to pay its own insured for uncompensated damages as its insured may recover on account of bodily injury or death arising out of an automobile accident because the judgment recovered against the owner of the other vehicle exceeds the policy limits thereon. Coverage shall be limited to the underinsured motorist coverage limits on the vehicle of the party recovering less the amount paid by the liability insurer of the party recovered against.

See SDCL 58-11-9.5 (emphasis added).

[¶5]  The UIM coverage endorsement provides the following relevant provisions:

LIMITS OF LIABILITY

... .

The limits of liability of this coverage will be reduced by:

1. A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle

... .

OTHER INSURANCE

If there is other similar insurance on a loss covered by this endorsement, we will pay our share according to this policy’s proportion of the total limits of all similar insurance. But, any insurance provided under this endorsement for an insured person while occupying a vehicle you do not own is excess over any other similar insurance.

See Joint Stipulation of Facts, Exh. 1, at p. 1-2 (UIM Endorsement). The policy further provides the following definition for underinsured motor vehicle:

Underinsured motor vehicle means a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the limits of liability of the Underinsured Motorists coverage.

Id. at p. 1.

SUMMARY JUDGMENT STANDARD

[¶6]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶7]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶8]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083 119 LEd2d 265 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). Finally, should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Elec. Co-op., 838 F2d 268 (8th Cir. 1988), laid such thoughts to rest. He stated that,

[A] trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.

Id. at 273. See also Midwest Radio Co. v. Forum Pub. Co., 942 F2d 1294, 1296 (8th Cir. 1991).

[¶9]  Even though Fed. R. Civ. P. 56(b) specifically permits a defendant to “at any time, move with or without supporting affidavits for a summary judgment in the party’s favor as to all or any part thereof,” in most cases federal courts await the development of facts through the discovery process before considering the merits of summary judgment motions. However, the posture of this case is unique in the sense that all the facts necessary for resolution of the issue raised by the parties’ cross motions for summary judgment have been developed and stipulated to in the parties’ joint stipulation of facts. Hence, further discovery on the issues before the Court would vexatiously delay the inevitable conclusion that there is no genuine issue as to any material fact and that defendant is entitled to judgment as a matter of law.

[¶10]  Based on the foregoing, the trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing the parties’ cross motions for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).1. The trilogy of Celotex, Anderson, and Matsushita has redefined the standard for summary judgment previously annunciated in Adickes v. S.H. Kress & Co., 398 US 144, 157, 90 SCt 1598, 1608, 26 LEd 2d 142 (1970) and Poller v. Columbia Broadcasting Sys., Inc., 368 US 464, 467, 82 SCt 486, 7 LEd 2d 458, 488 (1962). Poller and Adickes run counter to the teachings of Celotex, Anderson, and Matsushita which take issue with the concept that summary judgment is to be used sparingly. See generally William W. Schwarzer, Alan Hirsch, and David J. Barrans, The Analysis and Decision of Summary Judgment Motions: A Monograph on Rule 56 of the Federal Rules of Civil Procedure, Federal Judicial Center, at 4 (1991). {fn1} Under this trilogy, it is incumbent upon the nonmoving party, based upon the showing set forth by the moving party, to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991). Plaintiff has been unable to sustain her burden in the face of defendant’s showing.

DISCUSSION

[¶11]  American Family contends that because Beck’s liability coverage of $100,000 is equal to Johnson’s $100,000 UIM coverage, Johnson is not considered an underinsured motorist under the explicit terms of the UIM coverage endorsement and established South Dakota law. Because the Court agrees with American Family’s position on the UIM coverage, it is not necessary for the Court to address American Family’s second contention that Johnson is not legally entitled to recover because she destroyed American Family’s subrogation rights in the settlement and release of Beck’s liability. In addition, the Court will not accept Johnson’s invitation to construe the “Other Insurance” clause of the UIM coverage endorsement in such a manner as to amend and supersede everything contained in said endorsement.

[¶12]   South Dakota law governs the substantive issues in this diversity case. B.B. v. Continental Ins. Co., 8 F3d 1288, 1291 (8th Cir. 1993). The South Dakota Supreme Court has spoken on the issue of whether SDC.L. § 58-11-9.5 operates to limit UIM coverage to the difference between the policy limits and the amount recovered from the tortfeasor. See Farmland Ins. Cos. of Des Moines v. Heitmann, 498 NW2d 620 (SD 1993). The Farmland court specifically held that

SDCL 58-11-9.5 applies to UIM policies sold in South Dakota... . The clear intent of the legislature was to limit the amount recovered under the UIM without any exceptions by contract ... [and] coverage is limited to the difference between the underinsured motorist coverage limits on the vehicle of the insured less the amount paid by the liability insurer of the underinsured motorist.

Id. at 625 (quoted in Winters v. Northwestern National Casualty Co., 838 FSupp 440, 444 (D.SD 1993)). As this Court noted in Winters,

South Dakota applies a “difference of the limits” standard. [Farmland Insurance, 498 NW2d at 625]. That is, the limit of the torfeasor’s liability policy (provided it is all paid to the insured) is subtracted from the victim’s underinsured motorist coverage limit to determine the amount available from his [or her] own insurer.

Winters, 838 FSupp at 444. This “difference of the limits” standard is precisely what the explicit terms of the endorsement provide. See Joint Stipulation of Facts, Exh. 1, at p. 1 (definition of underinsured motor vehicle). Accordingly, because Johnson’s $100,000 UIM coverage is equal to the $100,000 limit and amount paid to Johnson under Beck’s liability coverage, Johnson is not entitled to UIM benefits under her UIM coverage endorsement.

[¶13]  As for additional coverage under the “Other Insurance” clause, benefits under said clause are dependent upon the existence of UIM coverage. The “Other Insurance” clause specifically states that it applies only to a “loss covered by this endorsement.” Id. at Exh. 1, p. 2. Therefore, the Court will not accept Johnson’s invitation to construe the “Other Insurance” clause of the UIM endorsement in such a fashion as to expand coverage beyond the UIM itself. See generally Union Ins. Co. v. Farmland Ins. Co., 389 NW2d 820 (SD 1986); State Farm Fire & Cas. Co. v. St. Paul Fire & Marine Ins., Inc., 268 NW2d 147 (SD 1978); Cunningham v. Western Casualty & Surety Co., 243 NW2d 172 (SD 1976) (cases construing other insurance clauses to limit not expand coverage). In addition, the South Dakota Supreme Court has determined that the South Dakota Legislature’s use of the mandatory “shall” in SDC.L. § 58-11-9.5, evidences the clear intent of the legislature to limit the amount recovered under UIM coverage without any exceptions by contract. Farmland Insurance, 498 NW2d at 625. Therefore, Johnson’s contention that the “Other Insurance” clause evidences an intent to provide additional UIM coverage is contrary to South Dakota law.

CONCLUSION

[¶14]  After reviewing the arguments presented by both parties and after reviewing the facts and inferences that may be derived therefrom in a light most favorable to the nonmoving party, this Court finds that no genuine issues of material fact exist and defendant is entitled to judgment as a matter of law. Accordingly, judgment shall be issued forthwith. It is hereby

  ORDERED that defendant American Family’s motion for summary judgment (Docket #8) is granted.

  IT IS FURTHER ORDERED that plaintiff Johnson’s motion for partial summary judgment (Docket #11) is denied.



Turn Key Gaming Inc. v. Oglala Sioux Tribe, 1997 DSD 21

TURN KEY GAMING, INC.,

Plaintiff,

v.

OGLALA SIOUX TRIBE,

Defendant.

[1997 DSD 21]

United States District Court

District of South Dakota - Western Division

CIV. 96-5084

MEMORANDUM OPINION AND ORDER

GRANTING DEFENDANT’S PARTIAL MOTION

FOR SUMMARY JUDGMENT

Opinion Filed July, 1997

Richard L. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  In October of 1993, plaintiff Turn Key Gaming (hereinafter “Turn Key”) and defendant Oglala Sioux Tribe (hereinafter “Tribe”)1. The Tribe is a federally recognized Indian tribe organized under the Indian Reorganization Act of 1934, 25 USC §§ 461-79.{fn1} entered into the first of several revisions of a Management Agreement.2. Absent reference to a specific revision of the Management Agreement, all references to the Management Agreement will be to the final draft of the Management Agreement entered into by the parties on November 30, 1994, and approved by the National Indian Commission’s Chairman on December 7, 1995. See Plaintiff’s Complaint, Exh. A (Management Agreement).{fn2} Under the provisions of the Management Agreement Turn Key was to develop, finance, construct, and manage a class III3. The Indian Gaming Regulatory Act (25 USC § 2701 et seq.) (“IGRA”) divides Indian gaming into three categories: class I, class II, and class III. Class I gaming “means social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of, or in connection with, tribal ceremonies or celebrations,” 25 USC § 2703(6); class II gaming primarily consists of “the game of chance commonly known as bingo ... including ... pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo ...,” id. § 2703(7)(A); class III gaming “means all forms of gaming that are not class I gaming or class II gaming,” id. § 2703(8), and thus includes slot machine, parimutuel, and casino gaming. {fn3} gaming facility known as Prairie Wind Casino to be located within the exterior boundaries of the Pine Ridge Indian Reservation in South Dakota. On November 30, 1994, the parties entered into the final revised draft of the Management Agreement. It was then sent to the National Indian Gaming Commission (NIGC) for review and approval by its Chairman as required by section 2712(c) of the Indian Gaming Regulatory Act (25 USC § 2701 et seq.) (IGRA). The Management Agreement received the approval of the NIGC’s Chairman and became effective on December 7, 1995. While awaiting the approval, the parties entered into several interim agreements including an Employment Agreement, Rental Agreement, and Promissory Note which permitted the Tribe to operate a casino in a temporary facility without the final approval of the Management Agreement. Disagreement as to the financing of the casino resulted in a notice of termination from the Tribe to Turn Key on September 17, 1996. The events giving rise to the disagreement have emanated into three separate lawsuits.

[¶2]  On October 10, 1996, Turn Key commenced this action against the Tribe as a result of a dispute arising from the construction, financing, and operation of the Prairie Wind Casino under the provisions of the Indian Gaming Regulatory Act (25 USC § 2701 et seq.); 25 USC § 81; and the Indian Civil Rights Act (25 USC § 1302). On April 18, 1997, Turn Key amended its complaint to include a claim for declaratory and injunctive relief restraining the Oglala Sioux Tribal Court from adjudicating any rights of the parties revolving out of the construction or operation of the Prairie Wind Casino. See Docket #44 (Amended Complaint); #37 (Leave to Amend). The Tribe has filed a counterclaim alleging breach of contract in regard to the Management Agreement and breach of fiduciary duty. See Docket #47 (Amended Answer and Counterclaim); #4 (Answer and Counterclaim).

[¶3]  On November 7, 1996, the Tribe filed an action against Turn Key in Oglala Sioux Tribal Court (OSTC) seeking a judicial declaration that the Employment Agreement, Rental Agreement, and Promissory Note entered into by the parties during the interim period between submission and approval of the Management Agreement are void as a matter of law. See Docket #46 (OSTC Civ. 96-1006). The Tribe contended that the Tribal Court had jurisdiction because the Employment Agreement, Rental Agreement, and Promissory Note created issues outside the terms of the Management Agreement which contained limited waiver of sovereign immunity and choice of forum provisions. Id. On March 7, 1997, the Honorable Patrick Lee issued a memorandum opinion and order of dismissal. Id. Judge Lee concluded that prior to final approval of the Management Agreement the parties entered into a number of agreements which by their terms ended upon approval of the Management Agreement. Id. He further noted that the Management Agreement provided that all litigation would be brought in federal district court and minor disputes would be subject to binding arbitration. Id. Because the intent of the parties was clear, Judge Lee held that the OSTC lacked jurisdiction. Id. On March 19, 1997, the Tribe appealed Judge Lee’s dismissal to the Tribal Appellate Court. See Docket #46 (Notice of Appeal).

[¶4]  On December 18, 1996, Oglala Sioux Tribal President John Yellow Bird Steele (Steele) filed an action in this Court as a qui tam4. Qui tam is an abbreviation for the Latin phrase “qui tam pro domino rege quam pro se imposo sequitur.” The phrase literally means “who sues on behalf of the king as well as for himself.” Black’s Law Dictionary 1251 (6th ed. 1990). See also Bass Anglers Sportsman’s Soc’y v. United States Plywood-Champion Papers, Inc., 324 FSupp 302, 305 (SD Tex. 1971). {fn4} proceeding pursuant to 25 USC § 81. See Steele v. Turn Key Gaming, Civ. 96-5113. Although Steele is an enrolled member and President of the Tribe, the action was brought in his individual capacity and on relation of the United States. The Tribe was not a party to the proceedings. The essence of Steele’s qui tam action was that Turn Key and its president, Wayne Barber (“Barber”), who became the employee of the Tribe in the operation and management of the casino pursuant to the Employment Agreement, unlawfully received money from the Tribe pursuant to the Employment and Rental Agreements which had never been approved by the Secretary of Interior and Commissioner of Indian Affairs, a violation of 25 USC § 81. Steele sought a recovery of $1.4 million paid under the Rental Agreement and in excess of $50,000 obtained by Barber under the Employment Agreement. On March 18, 1997, after oral argument this Court issued its memorandum opinion and order dismissing the case. See United States ex rel. Steele v. Turn Key Gaming, Civ. 96-5113 (Docket #20). The Court concluded that the Tribe was an indispensable party and the equitable principles enunciated in Fed. R. Civ. P. 19 did not favor a continuation of the action independent of the Tribe as an important party to the agreements at issue in the proceedings. On March 19, 1997, Steele appealed the dismissal of the qui tam action. Id. (Docket #23).

[¶5]  On January 13, 1997, the Tribe filed a partial motion for summary judgment in the above entitled action regarding the following three issues: (1) the Management Agreement is the entirety of the agreements between the parties; (2) the only limited waiver of sovereign immunity is contained in the Management Agreement approved by the NIGC’s Chairman effective December 7, 1995; and (3) the maximum obligation owed by the Tribe to Turn Key is limited to the $4 million ceiling set forth in the Management Agreement.

SUBJECT MATTER JURISDICTION

[¶6]  Turn Key alleges that jurisdiction is predicated upon 28 USC § 13315. The Court notes that Turn Key’s jurisdiction statement makes further reference that “the matter in controversy exceeds, exclusive of interests and costs, the sum of $50,000.” Such a statement implies that Turn Key is also asserting diversity jurisdiction under 28 USC § 1332. However, Turn Key has since advised the Court that reference to the amount in controversy may be regarded as superfluous. See Plaintiff’s Supplemental Brief on Issue of Subject Matter Jurisdiction at 1 n.1 (Docket #55). In any event, the Court would not accept such an invitation under the facts and circumstances of this case because there is no diversity jurisdiction in this case based on the premise that Indian tribes are not citizens of any state for purposes of diversity jurisdiction. See Abdo v. Fort Randall Casino, 957 FSupp 1111, 1112 (D.SD 1997).{fn5} in that the action arises under the Constitution, laws, or treaties of the United States. See Amended Complaint at ¶3. Specifically, Turn Key asserts that the statutory scheme regulating the operation of gaming facilities on tribal lands contained in the Indian Gaming Regulatory Act (25 USC § 2701 et seq.), 25 USC § 81, and federal common law establish a federal question. See Amended Complaint at ¶1. The Court was initially troubled that this case may lack an independent federal jurisdictional basis. See generally Bruce H. Lien Co. v. Three Affiliated Tribes, 93 F3d 1412 (8th Cir. 1996).6. The federal district courts have always been courts of limited jurisdiction. See US Const. art. III, § 1; Marine Equip. Management Co. v. United States, 4 F3d 643, 646 (8th Cir.1993) (“Federal courts are not courts of general jurisdiction and have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.”) A federal court therefore has a duty to assure itself that the threshold requirement of subject matter jurisdiction has been met in every case. Bradley v. American Postal Workers Union, AFL-CIO, 962 F2d 800, 802 n.3 (8th Cir. 1992); Kronholm v. Federal Deposit Ins. Corp., 915 F2d 1171, 1174 (8th Cir. 1990) (citing Barclay Square Properties v. Midwest Fed. Sav. & Loan, 893 F2d 968, 969 (8th Cir. 1990)). Even where the parties fail to raise any jurisdictional issues, a federal court is obligated to raise such jurisdictional issues it may perceive. White v. Nix, 43 F3d 374, 376 (8th Cir. 1994) (quoting Lewis v. United States Farmers Home Admin., 992 F2d 767, 771 (8th Cir.1993)). Turn Key, as the party seeking to invoke the jurisdiction of this Court, has the burden of establishing that jurisdiction exists. KVOS, Inc. v. Associated Press, 299 US 269, 278, 57 SCt 197, 201, 81 LEd 183 (1936).{fn6} After oral argument held on May 22, 1997, the Court issued an order for the parties to submit legal memoranda on the issue of the Court’s subject matter jurisdiction.

[¶7]  Upon due consideration of the legal memoranda submitted by the parties, the Court finds that there is an independent federal jurisdictional basis. The Court believes that Lien is authority for the Court’s assumption of jurisdiction. It is a close question because in Lien the validity of the management agreement itself was at issue, whereas the parties to this action stipulate that the management agreement is valid as approved by the NIGC. See Bruce H. Lien Co., 93 F3d at 1417. 9. The Lien court noted that if the management contract was legally valid, its course would be simple,

The Tribes have clearly and unequivocally waived their sovereign immunity under the contract and the parties have chosen binding arbitration as a dispute resolution procedure. The District Court of North Dakota was the selected forum in which to bring an action for injunctive relief and that forum would clearly have jurisdiction to enforce the provisions of the contract. The problem is that the Tribes are challenging the legal validity of the contract itself, specifically the actions of its former Chairman leading to the execution of the contract itself, specifically the actions of its former Chairman leading to the execution of the contract. This challenge to the document itself therefore calls into question all provisions contained therein (including provisions relating to arbitration, sovereign immunity, and federal district court jurisdiction).

Bruce H. Lien Co., 93 F3d at 1416-17, 1415 n.4 (Arbitration Clause) (emphasis added). In contrast, the parties to this lawsuit have chosen this Court as the forum to litigate major disputes and have elected binding arbitration for only minor disputes. See Management Agreement at §§ 20 and 22.9. While the parties are not disputing the validity of the Management Agreement, they are disputing the force and effect of IGRA’s requirements for the Management Agreement as said requirements relate to interim and subsequent agreements. {fn9} However, the Court finds the following quote from Lien to support the Court’s assumption of jurisdiction:

[F]ederal question jurisdiction exists in the District Court. While the issue of the contract’s validity does not raise a federal question per se, certainly there are aspects of the dispute which do. Particularly where the entire association between the parties (and their various disputes) arise under IGRA, and where the management agreement at issue, once approved, remains so until disapproved by the NIGC. Further, this case is being directed to the Tribal Court and exhaustion within that system. The existence of tribal court jurisdiction itself presents a federal question within the scope of 28 USC § 1331.

Id. at 1421-22 (citations omitted). Performing an analysis of the relationship of the parties in this litigation, the issues raised in the amended complaint, and the overall focus of this dispute leads the Court to conclude that it does have federal question jurisdiction.

[¶8]  First, the relationship between the parties involves a contractual arrangement for the operation of a gaming establishment on the Reservation which is governed by IGRA and the NIGC’s regulations. Id. See also Abdo v. Fort Randall Casino, 957 FSupp 1111, 1112 (D.SD 1997) (paying recognition to the fact that the dispute involved the manager of an IGRA-regulated Indian gaming casino and an Indian tribe); Tom’s Amusement Company, Inc. v. Cuthbertson, 816 FSupp 403, 406 (W.D.N.C. 1993) (emphasizing that the issues involved a contractual arrangement for the operation of a gaming establishment governed by IGRA). Moreover, aside from the fact that the allegations of both parties to this action are permeated and inextricably intertwined with substantial references to IGRA and the regulations promulgated thereunder, the parties are asserting claims and defenses which depend upon the application and interpretation of IGRA and the NIGC’s regulations. Specifically, issues have surfaced in regard to the force and effect of IGRA’s requirement that a management agreement constitute the “entirety” of the agreements between the parties and that it contain a “ceiling” contractual obligation. See 25 CFR § 533.3(a)(2); 25 USC § 2711(b); 25 CFR § 531.1(g). See generally Abdo, 957 FSupp at 1113-14 (federal question jurisdiction existed where dispute concerned whether manager’s contract was a management contract under IGRA or an employment contract not covered by IGRA).10. In addition, Turn Key alleges that the Tribe’s termination of the Management Agreement without resorting to the mechanisms for resolution of disputes violated IGRA. See Amended Complaint at ¶31 (citing 25 USC § 2711(b)(6), 25 CFR § 531.1(j) & (k)(2)). See generally Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians of Florida, 63 F3d 1030, 1044-47 (11th Cir. 1995) (finding federal question jurisdiction where manager claimed Tribe breached the management agreement by wrongly ousting the manager and taking control of the gaming enterprise in violation of IGRA).{fn10} Additional issues stem from the force and effect of IGRA’s requirement concerning modification of the Management Agreement. See 25 CFR § 535.1.

[¶9]  Based on the foregoing, the Court will exercise its jurisdiction pursuant to 28 USC § 1331.

STATEMENT OF FACTS

[¶10]  In August of 1993, the Tribe and the State of South Dakota entered into a Gaming Compact to permit the Tribe to operate gaming activities within the exterior boundaries of the Pine Ridge Indian Reservation.11. Management Agreement (Nov. 30, 1994), Exh. B (Gaming Compact). {fn11} On October 5, 1993, Turn Key and the Tribe entered into the first of several revisions of a Management Agreement pursuant to which Turn Key was to develop, finance, construct, and manage a class III gaming facility known as Prairie Wind Casino on the Pine Ridge Indian Reservation.12. Plaintiff’s Amended Complaint at ¶7. {fn12} The lengthy process of formulating a final draft of the Management Agreement and receiving approval by the NIGC Chairman as required by section 2712(c) of IGRA gave rise to several interim agreements which permitted the Tribe to operate a casino in a temporary facility. These interim agreements included an Employment Agreement, Rental Agreement, Promissory Note, and Security Agreement.13. Plaintiff’s Complaint, Exh. B (Employment Agreement); Exh. C (Rental Agreement); Exh. E (Promissory Note); Exh F. Security Agreement). {fn13} The casino opened with temporary facilities in October of 1994.14. Plaintiff’s Amended Complaint at ¶9.{fn14}

[¶11]  On November 30, 1994, the parties ultimately entered into a final draft of the Management Agreement.15. Plaintiff’s Complaint, Exh. A (Management Agreement). {fn15} On November 30, 1994, in connection with the Management Agreement and incorporated therein, the parties also executed a final Project Construction Agreement. The Management Agreement received approval by the NIGC’s Chairman and became effective on December 7, 1995.16. Defendant’s Statement of Material Facts at ¶1 (hereinafter “DSMF at ¶ ”). {fn16} On March 27, 1996, the Tribe’s general counsel executed a document entitled “Consent and Estoppel of the Oglala Sioux Tribe.”17. See Plaintiff’s Complaint, Exh. D.{fn17} At the forefront of this contract action is the dispute concerning which of the foregoing documents control the disposition of the issues raised by Turn Key’s complaint and the Tribe’s counterclaim.

[¶12]  A.  Management Agreement

[¶13]  The Management Agreement provided that the costs of the construction and equipping of the project were to be advanced by Turn Key as its investment in the project and repaid as a construction and asset acquisition payment as further provided for in the agreement.18. See Management Agreement, Section 4, at p. 10. {fn18} The Management Agreement further provided that “[t]he parties agree that the maximum agreed ceiling for development and construction cost of all construction and equipping of the Project shall not exceed the aggregate sum of $4,000,000.”19. Id. (emphasis added). {fn19} The project was to be constructed and the calculation of the constructions costs were to be in accordance with the Project Construction Agreement attached to the Management Agreement and incorporated therein.20. Id. {fn20} The Management Agreement also contained the following limited waiver of sovereign immunity provision:

[T]he Tribe does hereby waive its immunity from suit by Manager, but only to the extent expressly provided for in this [section] and § 22.9 [Arbitration of Minor Disputes]; provided, however, that such waiver extends only to the Tribe’s specific obligations under this Agreement, and further provided that such waiver shall be only to the extent necessary to permit enforcement by Manager (and not by any governmental or other firm, person or entity whatsoever) of this Agreement... .

Nothing in this Agreement is intended to waive or shall be construed to waive the sovereign immunity of Tribe with respect to any dispute or matter outside of the terms of this Agreement, or as to any claims or demands of any person or entity not a signatory to this Agreement ... . All litigation must be brought exclusively in the United States District Court for the District of South Dakota unless such federal court properly determines in accordance with applicable law that it does not have subject matter jurisdiction and in that event such dispute, whether minor or major in nature, shall be exclusively subject to binding arbitration in accordance with § 22.9 [Arbitration of Minor Disputes].21. See Management Agreement, Section 20, at p. 52-53 (emphasis added). {fn21}

[¶14]  The Management Agreement further provided that it encompassed the entire agreement between the parties with respect to the subject matter thereof and that there were no other collateral agreements or understandings except those contained therein.22. Id. Section 22.4, at p. 54; Section 23, at p. 58 (Integration Clause). {fn22} By its terms the Agreement could not be changed orally, but only by an instrument in writing signed by both parties and submitted by the Tribe for written approval to the NIGC.23. Id. {fn23} The Agreement also provided that “at the reasonable request of any party, and without further consideration, they will execute and deliver such other documents and take such other action as may be reasonably required to carry out in all respects the transactions contemplated and intended by this Agreement.”24. Id. Section 22.8, at p. 56.{fn24} The Management Agreement ultimately received approval from the NIGC’s Chairman and became effective on December 7, 1995.

[¶15]  B.  Rental Agreement

[¶16]  On January 19, 1995, Turn Key and the Tribe entered into a Rental Agreement pursuant to which Turn Key agreed to provide certain facilities, gaming equipment, and other personal property to be utilized by the Tribe in the conduct of its gaming facility.25. See Plaintiff’s Complaint, Exh. C, (Rental Agreement). The Rental Agreement bears the notation: “Approved pursuant to 25 USC 81 and other applicable federal statutes on this 26th day of January, 1995 By Delbert Brewer, Superintendent, Bureau of Indian Affairs, Pine Ridge Agency, Pine Ridge, South Dakota.” Id. at p. 8. {fn25} The Rental Agreement recites that at the time of said Agreement, Turn Key had expended approximately $2.7 million for capital and operational costs associated with temporary and permanent facilities in anticipation of the gaming project, said amount to be repaid as set forth in the Management Agreement.26. Id. at ¶I. {fn26} The Rental Agreement also contained the following limited waiver of sovereign immunity provision:

The Tribe, independently and separately under this agreement, waives its sovereign immunity from suit to enforce the provisions of this agreement, including the removal of said facilities and equipment, in the same manner as it has waived its sovereign immunity from suit under the management agreement, currently under review, regardless of whether said management agreement is finally approved. See Section 20 [Limited Waiver of Sovereign Immunity] and 22.9 [Arbitration of Minor Disputes] of the management agreement. In addition, this agreement constitutes a security agreement in favor of TurnKey, and Tribe will execute appropriate financing statements under the Uniform Commercial Code. Any suit by either party shall be brought in the Tribal Court of the Tribe or be determined by binding arbitration as set forth in the management agreement.27. Id. at ¶IX (emphasis added).{fn27}

[¶17]  Finally, as to the duration of the Rental Agreement, it specifically provided that “if the management agreement entered into between the parties is approved by the National Indian Gaming Commission, this agreement shall end and the management agreement shall govern all rights and obligations of the parties.”28. Id. at ¶III (emphasis added).{fn28}

[¶18]  C.  Employment Agreement

[¶19]  On January 19, 1995, the Tribe also entered into an Employment Agreement with the president of Turn Key, Wayne Barber, pursuant to which the Tribe employed Barber to manage the gaming facility until approval of the Management Agreement.29. See Plaintiff’s Complaint, Exh. B. As did the Rental Agreement, the Employment Agreement bears the same approval by Brewer of the BIA pursuant to 25 USC § 81. Id. at p. 10. {fn29} The employment agreement contains no express waiver of sovereign immunity. As did the Rental Agreement, the Employment Agreement provides that it terminates upon approval of the Management Agreement.30. Id. at ¶III.{fn30}

[¶20]  D.  Promissory Note and Security Agreement

[¶21]  On November 13, 1995, pursuant to the Management Agreement31. See Management Agreement, §§4.1(a)(2), 6.4(c)(4)(S), 6.4(f), and 6.5(c)(1)(ii).{fn31} entered into on November 30, 1994, the Tribe executed the Promissory Note pursuant to which the Tribe promised to pay Turn Key from the proceeds generated under the Management Agreement the principal sum of $4 million, or, if less, the aggregate unpaid principal amount of all advances made for the casino.32. Plaintiff’s Complaint, Exh. E. Pursuant to section 6.5(a) of the Management Agreement, Turn Key also agreed to lend the Tribe the sum of $50,000 memorialized by the Tribe’s promissory note appended to the Management Agreement as Exhibit F and incorporated therein by reference. See Management Agreement, Section 6.5(a), at p. 32.{fn32} In conjunction therewith, the Tribe granted Turn Key a security interest for the amount of the Promissory Note pursuant to the Uniform Commercial Code in all furniture, equipment, supplies, inventory, and cash of the casino.33. Plaintiff’s Complaint, Exh. F.{fn33}

[¶22]  E.  Consent and Estoppel

[¶23]  On March 27, 1996, the Tribe’s general counsel executed a document entitled “Consent and Estoppel of the Oglala Sioux Tribe.”34. Plaintiff’s Complaint, Exh. D.{fn34} The document sets forth that Turn Key had requested a loan of up to $4 million from Miller & Schroeder Investments Corporation.35. Id. {fn35} As a precondition to the loan, the Tribe was required to execute a consent and estoppel.36. Id. {fn36} The Tribe’s general counsel executed the Consent and Estoppel in order to facilitate the loan and represented and warranted to Miller & Schroeder that “[n]o event of defaults exists under the Management Agreement and, to the best of the Tribe’s knowledge, no event has occurred which with the passing of time or giving of notice or both would constitute a default under the Management Agreement.”37. Id. at ¶6. {fn37} The Tribe’s general counsel further represented that the Tribe has executed the Promissory Note to the order of the manager pursuant to which the Tribe is obligated to pay the principal sum of $4 million, or so much thereof as has been advanced by the manager.38. Id. The Tribe’s general counsel also acknowledged that as of March 27, 1996, $2,648,832.89 was advanced, due, and owing under the Promissory Note for costs and expenses. Id. {fn38} As to waiver of sovereign immunity, the Consent and Estoppel provided as follows:

The Tribe acknowledges that the limited waiver of sovereign immunity set forth at Section 20 of the Management Agreement extends to the Tribe’s obligation under the [Promissory] Note. In addition, the Tribe acknowledges and agrees that the limited waiver of sovereign immunity set forth in the Management Agreement extends to assignees of the Manager, including the Lender [Miller & Schroeder], so that the Lender, as assignee of the Manager, would have the right to enforce the terms of the [Promissory] Note, and the Tribe would not have the right to assert any claim of sovereign immunity in defense of any such action.39. Id.{fn39}

[¶24]  F.  Notice of Default/Termination

[¶25]  As the expended and projected construction costs accrued to approximately $5.3 million, an amount significantly greater than the $4 million ceiling set forth in the Management Agreement, discontent concerning the parties’ respective contractual obligations arose forming the basis of this lawsuit.40. See generally Plaintiff’s Amended Complaint at ¶32.{fn40} On August 12, 1996, the Tribe sent Turn Key a Notice of Default.41. Plaintiff’s Complaint, Exh I. {fn41} On September 17, 1997, the Tribe issued its Notice of Termination of the Management Agreement whereupon the Tribe sought to operate the casino for its own account without any obligation or liability to Turn Key.42. Plaintiff’s Complaint, Exh L.{fn42} Turn Key represents that it has expended a total amount of $2,397,830.68 for the temporary and permanent gaming facility, whereas the Tribe has invested no money.43. Plaintiff’s Amended Complaint at ¶24.{fn43}

SUMMARY JUDGMENT STANDARD

[¶26]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶27]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶28]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083, 119 LEd2d 265 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). Finally, should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Electric Co-op., 838 F2d 268 (8th Cir. 1988), laid such thoughts to rest. He stated that,

[A] trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.

Id. at 273. See also Midwest Radio Co. v. Forum Pub. Co., 942 F2d 1294, 1296 (8th Cir. 1991).

[¶29]  Even though Fed. R. Civ. P. 56(b) specifically permits a defendant to “at any time, move with or without supporting affidavits for a summary judgment in the party’s favor as to all or any part thereof,” in most cases federal courts await the development of facts through the discovery process before considering the merits of summary judgment motions. However, the posture of this case is unique in the sense that all the facts necessary for resolution of the issues raised by defendant’s partial motion for summary judgment have been developed and there is no need for further discovery. Further discovery on the issues before the Court would vexatiously delay the inevitable conclusion that there is no genuine issue as to any material fact and that defendant is entitled to judgment as a matter of law on said issues.44. The Court notes that Turn Key has alluded to the fact that the Tribe filed its partial motion for summary judgment prior to the commencement of formal discovery. However, the Tribe has not set forth evidence or argument as to how additional discovery would aid its position as to the issues nor has it requested the Court to reserve ruling on said issues until the discovery process has run its course.{fn44}

[¶30]  Based on the foregoing, the trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing defendant’s partial motion for summary judgment on the issues of limited waiver of sovereign immunity, the entirety of the management agreement, and its maximum contractual obligation. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).45. The trilogy of Celotex, Anderson, and Matsushita has redefined the standard for summary judgment previously annunciated in Adickes v. S.H. Kress & Co., 398 US 144, 157, 90 SCt 1598, 1608, 26 LEd 2d 142 (1970) and Poller v. Columbia Broadcasting Sys., Inc., 368 US 464, 467, 82 SCt 486, 7 LEd 2d 458, 488 (1962). Poller and Adickes run counter to the teachings of Celotex, Anderson, and Matsushita which take issue with the concept that summary judgment is to be used sparingly. See generally William W. Schwarzer, Alan Hirsch, and David J. Barrans, The Analysis and Decision of Summary Judgment Motions: A Monograph on Rule 56 of the Federal Rules of Civil Procedure, Federal Judicial Center, at 4 (1991). {fn45} Under this trilogy, it is incumbent upon the nonmoving party (plaintiff), based upon the showing set forth by the moving party (defendant), to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991). Plaintiff has been unable to sustain its burden in the face of defendant’s showing.

DISCUSSION

[¶31]  A.  Tribe’s Position

[¶32]  The Tribe asserts that the Management Agreement constitutes the “entirety” of the agreements between the parties as is required by 25 CFR § 533.3(a)(2). It further contends that the Tribe has only waived its immunity as set forth in the Management Agreement, and it has not executed an unequivocal waiver of sovereign immunity on any other claimed agreements or matters alleged in Plaintiff’s Amended Complaint.46. Specifically, the Tribe denies its waiver of sovereign immunity extends to allegations in the amended complaint relating to other alleged agreements. See Tribe’s Motion For Partial Summary Judgment at pg. 3-5 (citing Plaintiff’s Complaint Section I at pg.1; Section III at pg. 3; Section IV, pg. 3; Section IV, ¶¶ 9, 11-12, 14-15; ¶43; ¶ 44).{fn46} Finally, the Tribe argues that its contractual obligation is limited to the $4 million ceiling which was set forth in the Management Agreement as required by 25 USC § 2711(b) and 25 CFR § 531.1(g).47. The Tribe specifically challenges Turn Key’s allegations in the complaint which assert that no maximum ceiling was agreed upon. See Tribe’s Motion For Partial Summary Judgment at pg. 16-17 (citing Plaintiff’s Complaint at ¶¶ 13, 15, 18-19, 31, 42-44).{fn47}

[¶33]  B.  Turn Key’s Position

[¶34]  Turn Key asserts that both the Rental and Employment Agreements were by their express terms merged into the Management Agreement. It contends that these interim agreements broaden the sovereign immunity waiver contained in the Management Agreement, expressly allowing actions to enforce obligations stemming from or arising out of the agreements to be commenced in federal court. Turn Key also contends that the Consent and Estoppel broadens the waiver to include the Tribe’s obligations under the Promissory Note to allow enforcement of those obligations by assignees of Turn Key. In addition, Turn Key argues that the Tribe has waived its sovereign immunity by its conduct in the three lawsuits emanating from the disagreement in regard to the financing, construction, and management of the casino. In short, Turn Key submits that genuine issues of material fact exist as to the merger of the Rental and Employment Agreements into the Management Agreement, and the expressions of the parties in all of their documents, subsidiary agreements and representations, and relevant external circumstances.

[¶35]  C.  Indian Gaming Regulatory Act (IGRA)

[¶36]  On October 17, 1988, Congress enacted the Indian Gaming Regulatory Act (IGRA). See 25 USC § 2701 et seq. IGRA is a comprehensive statute governing the operation of gaming facilities on Indian lands which provides “a statutory basis for the regulation of gaming by an Indian tribe adequate to shield it from ... corrupting influences, to ensure that the Indian tribe is the primary beneficiary of the gaming operation.” Id. at § 2702(b). See generally Bruce H. Lien Co., 93 F3d at 1417-18 (providing an in-depth discussion of IGRA and the regulations promulgated thereunder).48. Congress supported IGRA’s enactment with the following findings:

(1) numerous Indian tribes have become engaged in or have licensed gaming activities on Indian lands as a means of generating tribal governmental revenue;

(2) Federal courts have held that section 81 of [Title 25] requires Secretarial review of management contracts dealing with Indian gaming, but does not provide standards for approval of such contracts;

(3) existing Federal law does not provide clear standards or regulations for the conduct of gaming on Indian lands;

(4) a principal goal of Federal Indian policy is to promote tribal economic development, tribal self-sufficiency, and strong tribal government; and

(5) Indian tribes have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity.

25 USC § 2701. {fn48} IGRA authorizes tribes to enter into management contracts for the operation and management of tribal gaming ventures. See 25 USC § 2711(a)(1). IGRA and the regulations promulgated thereunder further prescribe essential terms and conditions which must be included in a management contract before it receives the required approval by the NIGC’s Chairman. Id. at §§ 2711(b)(1-6), 2712(c); 25 CFR § 531.1(a-n), Part 533. Approval of a management contract by the Chairman of the NIGC “entails a fairly comprehensive and exhaustive examination of the document and surrounding circumstances, in the end compliance with IGRA and the regulations is the sole focus.” Bruce H. Lien, 93 F3d at 1418.

[¶37]  At the forefront of the Tribe’s partial motion for summary judgment is the requirement that a management agreement contain “[a] representation that the contract as submitted to the Chairman is the entirety of the agreement among the parties.” See 25 CFR § 533.3(a)(2). In addition, section 2711(b)(4) specifically prohibits the Chairman from approving any management contract unless it includes “an agreed ceiling for the repayment of development and construction costs.” See also 25 CFR § 531.1(g). Finally, any modification to a management agreement requires NIGC approval. See 25 CFR § 535.1.

[¶38]  D.  Tribal Sovereign Immunity

[¶39]  The ever recurring issues of tribal jurisdiction over Indians and non-Indians regarding activities conducted within the exterior boundaries of an Indian reservation have long concerned the courts in both civil and criminal matters. It is well established that “Indian tribes are unique aggregations possessing attributes of sovereignty over both their members and their territory.” United States v. Mazurie, 419 US 544, 557, 95 SCt 710, 717, 42 LEd2d 706 (1975) (citing Worcester v. Georgia, 6 Pet. 515, 557, 31 US 515, 8 LEd483 (1832)). See also United States v. Wheeler, 435 US 313, 322, 98 SCt 1079, 1086, 55 LEd2d 303 (1978); Montana v. United States, 450 US 544, 564, 101 SCt 1245, 1257, 67 LEd2d 493 (1981). Thus, Indian tribes possess the common law immunity from suit traditionally enjoyed by sovereign powers. Rosebud Sioux v. Val-U Constr. Co., 50 F3d 560, 562 (8th Cir. 1995) (citing Santa Clara Pueblo v. Martinez, 436 US 49, 58, 98 SCt 1670, 1677, 56 LEd2d 106 (1978)). Actions against Indian tribes are therefore barred by sovereign immunity absent congressional abrogation or a clear waiver by the tribe. Calvello v. Yankton Sioux Tribe, 899 FSupp 431, 435 (D.SD 1995). To be sure, a waiver of sovereign immunity “‘cannot be implied but must be unequivocally expressed.’” Santa Clara Pueblo, 436 US at 59-60, 98 SCt at 1677 (quoting United States v. Testan, 424 US 392, 399, 96 SCt 948, 953, 47 LEd2d 114 (1976) (citations omitted)). The Court will address the issues raised by Turn Key’s motion adhering to these established Indian law principles.

[¶40]  E.  Entirety of the Management Agreement

[¶41]  The Management Agreement at issue in this case clearly provided that it constituted the entire agreement between the parties with respect to the subject matter thereof and that there were no other oral or collateral agreements or understandings except those contained therein. See Management Agreement, Section 22.4, at p. 54; Section 23, at p. 58 (Integration Clause); 25 CFR § 533.3(a)(2). Both the Rental and Employment Agreements are consistent with this abstraction in that both Agreements by their express terms terminate upon approval of the Management Agreement. See Plaintiff’s Complaint, Exh. C, at ¶III (Rental Agreement); Exh. B at ¶III (Employment Agreement). The Management Agreement was approved by the Chairman on December 7, 1995; hence, the Rental and Employment Agreements terminated by their own terms. There is no provision from which an inference could be drawn that said Agreements merged as suggested by Turn Key. In addition, there is no evidence that either the Rental or Employment Agreements constituted a modification to the Management Agreement receiving the required approval by the NIGC’s Chairman. See 25 CFR § 535.1.

[¶42]  Turn Key’s contention that the Consent and Estoppel executed by the Tribe’s general counsel49. The Tribe’s assertion that the Consent and Estoppel is not binding since its general counsel lacked the requisite authority to execute said instrument is clearly an issue of fact which does not control the disposition of this matter on summary judgment.{fn49} modifies the provisions of the Management Agreement and in effect broadens the extent of this Court’s jurisdiction to include the Tribe’s obligations under the Promissory Note is misplaced. The effect of the Consent and Estoppel with respect to third parties is irrelevant to the disposition of the issues presented in the Tribe’s motion for partial summary judgment in that third party lender Miller & Schroeder is not a party to this action.50. On May 29, 1997, Miller & Schroeder filed a motion to intervene as a plaintiff pursuant to Fed. R. Civ. P. 24(a). See Docket #56. However, the motion has been denied based on the grounds set forth in this Court’s separate order issued this same date.{fn50} However, of more significance is the recurring notion that there is no evidence that the Consent and Estoppel constituted a modification to the Management Agreement receiving the required approval of the NIGC’s Chairman. Id.

[¶43]  The Court declines Turn Key’s invitation to apply Missouri Savings Ass’n v. Home Savings of America, 862 F2d 1323 (8th Cir. 1988), for the proposition that the parties’ intent regarding the number of documents constituting a contract and the meaning of the contract must be determined from the entire instrument or instruments, subsidiary agreements, and relevant external circumstances. Id. at 1326. Gaming contracts require certain provisions pursuant to the mandates of IGRA and its regulations. One such mandate is that a management agreement must constitute the entire agreement between the parties with respect to the subject matter thereof. See 25 CFR § 533.3(a)(2). This is precisely what the Management Agreement in this case expressly provided. See Management Agreement, Section 22.4, at p. 54; Section 23, at p. 58. Furthermore, any modification to a management agreement requires approval by the NIGC’s Chairman. See 25 CFR § 535.1. Based on the foregoing, the Court concludes that the Management Agreement and the documents appended thereto constitute the entire agreement between the parties with respect to the subject matter thereof which encompasses the development, financing, construction, and management of the Prairie Wind Casino.

[¶44]  F.  Waiver of Sovereign Immunity

[¶45]  Turn Key contends that the Tribe has waived its sovereign immunity as follows: (1) contractually via the Management Agreement and that said waiver was broadened by the interim agreements, as well as the Consent and Estoppel; (2) by way of its conduct in the three lawsuits emanating from the disagreement in regard to the financing, construction, and management of the casino. Based upon the previous discussion, the only contractual waiver by the Tribe is set forth in section 20 of the Management Agreement which encompasses the Tribe’s specific obligations under the Management Agreement to the extent necessary to permit enforcement by the Manager. See Management Agreement, Section 20, at p. 52-53.

[¶46]  As for any congressional abrogation of immunity, the Tribe, by entering into the gaming arena, has only waived its sovereign immunity for the narrow purpose of determining the Tribe’s compliance with the statutory provisions of IGRA. See Montgomery v. Flandreau Santee Sioux Tribe, 905 FSupp 740, 745 (D.SD 1995) (citing Maxam v. Lower Sioux Indian Community of Minnesota, 829 FSupp 277, 281 (D. Minn. 1993)). Federal courts have construed such waivers to the extent and for the narrow purpose of enforcing the provisions of IGRA where prospective injunctive relief as opposed to monetary relief is sought. Calvello, 899 FSupp at 437-38 (citing Ross v. Flandreau Santee Sioux Tribe, 809 FSupp 738; Rita, Inc. v. Flandreau Santee Sioux Tribe, 798 FSupp 586 (D.SD 1992); Maxam, 829 FSupp 277). See generally Tamiami Partners v. Miccosukee Tribe of Indians, 63 F3d 1030, 1048 (11th Cir. 1995).

[¶47]  Turn Key’s assertion that the Tribe waived its sovereign immunity by way of its conduct in the three lawsuits emanating from the disagreement in regard to the financing, construction, and management of the casino lacks merit. While the Tribe’s initiation of suit in tribal court (OSTC Civ. 96-1006) may very well affect the Tribal Court’s jurisdiction, it does not constitute a waiver of the Tribe’s sovereign immunity in federal court. As for Steele’s qui tam proceeding filed in this Court pursuant to 25 USC § 81, it was brought in Steele’s individual capacity and on relation of the United States. The Tribe did not unequivocally waive its immunity in that proceeding, particularly in light of the fact that it was not even a party to the proceeding. Finally, the Tribe’s filing of a compulsory counterclaim51. Fed. R. Civ. P. 13(a) provides that:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action, or (2) the opposing party brought suit upon the claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim, and the pleader is not stating any counterclaim under this Rule 13.

It is well established that failure to plead a compulsory counterclaim while litigation is pending bars the party from raising the claim. Law Offices of Jerris Leonard v. Mideast Sys., Ltd., 111 F.R.D. 359, 361 (D.D.C. 1986) (citations omitted). {fn51} in this action does not equate to an unequivocally expressed waiver of sovereign immunity. See Santa Clara Pueblo, 436 US at 59-60, 98 SCt at 1677. In conclusion, the Tribe has only waived its sovereign immunity as set forth in section 20 of the Management Agreement.

[¶48]  G.  Tribe’s Maximum Obligation

[¶49]  IGRA specifically prohibits the NIGC’s Chairman from approving any management contract unless it includes “an agreed ceiling for the repayment of development and construction costs.” See 25 USC § 2711(b)(4). See also 25 CFR § 531.1(g). In compliance with said statutory mandate, the Management Agreement specifically set forth that “[t]he parties agree that the maximum agreed ceiling for development and construction cost of all construction and equipping of the Project shall not exceed the aggregate sum of $4,000,000.” See Management Agreement, Section 4, at p.10. Furthermore, there is no evidence that the NIGC Chairman approved any modification to the Management Agreement in regard to the set maximum ceiling. See 25 CFR § 535.1. Accordingly, the Tribe’s obligation under the Management Agreement is limited to $4 million.

CONCLUSION

[¶50]  After viewing the arguments presented by both parties and after reviewing the facts and inferences that may be derived therefrom in a light most favorable to Turn Key, this Court concludes that there is no genuine issue as to any material fact and that the Tribe is entitled to judgment as a matter of law on the three issues raised by the Tribe’s partial motion for summary judgment. The Management Agreement and the documents appended thereto constitute the entire agreement between the parties with respect to the subject matter thereof which includes the development, financing, construction, and management of the Prairie Wind Casino. The Tribe has waived its sovereign immunity to the extent set forth in section 20 of the Management Agreement which encompasses the Tribe’s specific obligations under the Management Agreement to the extent necessary to permit enforcement by the Manager. Finally, the Tribe’s obligation under the Management Agreement is limited to $4 million. Accordingly, it is hereby

  ORDERED that defendant’s partial motion for summary judgment (Docket #12) is granted.



Sparagon v. Callahan, 1997 DSD 22

CHERYL A. SPARAGON,

Plaintiff,

v.

JOHN J. CALLAHAN,

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 22]

United States District Court

District of South Dakota - Western Division

CIV 96-5111

MEMORANDUM OPINION AND ORDER

Opinion Filed July, 1997

Richard H. Battey, Chief Judge

PROCEDURAL HISTORY

[¶1]  On December 17, 1996, plaintiff/claimant Cheryl A. Sparagon (Sparagon) filed a complaint seeking review of the decision denying her social security benefits. On April 29, 1997, Sparagon filed a motion requesting that the Commissioner’s decision be reversed or in the alternative that the case be remanded. On May 16, 1997, Acting Commissioner of Social Security, John J. Callahan (Commissioner), responded to Sparagon’s motion requesting that the Commissioner’s decision be affirmed on the ground that no genuine issue as to any material fact exists and that the Commissioner is entitled to summary judgment as a matter of law. On June 6, 1997, Sparagon filed her reply.

[¶2]  Sparagon has filed the necessary applications for Title II disability benefits under Title II of the Social Security Act (the Act), 42 USC §§ 401-33. She claims that the onset date of her disability was October 15, 1985. Sparagon claims that she was disabled prior to the expiration of her Title II disability benefits which occurred on December 31, 1989. Initially, her applications were denied. She filed a Request for Reconsideration which was also denied.

[¶3]  Sparagon then requested a hearing before the Administrative Law Judge (ALJ). A hearing was held on this matter by ALJ James W. Olson. Following the hearing, ALJ Olson issued an opinion which denied Sparagon benefits. The ALJ determined that Sparagon had not been engaged in substantial gainful activity since the alleged onset of her disability and that claimant has a severe impairment. (AR 15).1. The ALJ must have considered multiple sclerosis to be a severe impairment (Step 2) because the claimant went on to conclude that “claimant had no impairment or combination of impairments severe enough to warrant a finding of disability based on medical considerations alone on or prior to her date last insured.” This finding is based upon the requirements under Step 3. For the steps which the ALJ must follow, see infra note 2. As to whether Sparagon’s Graves Disease and hypothyroid condition which followed her treatment were severe, the ALJ stated that these impairments “have not been severe during the period under consideration.” Sparagon did not object to this conclusion by the ALJ. The ALJ also rejected the conclusion that Sparagon’s combination of impairments were significant enough to warrant a conclusion that based upon the medical evidence alone that she was disabled. {fn1} The ALJ also found that Sparagon was not considered disabled based upon medical evidence alone. (AR 15). Finally, the ALJ concluded that Sparagon could perform her past relevant work as either a proof operator or a key punch operator. In addition, the ALJ noted that even if Sparagon could not perform her past relevant jobs there are significant numbers of jobs existing in the national economy which she could perform. (AR 17).

[¶4]  Sparagon requested review by the Appeals Council of the ALJ’s decision and the Appeals Council declined to review the ALJ’s decision. When the Appeals Council denies review, the decision of the ALJ then becomes the decision of the Commissioner. 20 CFR § 404.981 (1996). Sparagon next requested judicial review by this Court. This Court has jurisdiction pursuant to 42 USC § 405(g).

FACTS

[¶5]  On her disability report which was dated May 13, 1994, Sparagon stated that her disabling conditions were multiple sclerosis and osteoarthritis in both knees. (AR 91). On August 24, 1994, Sparagon’s attorney filled out a reconsideration disability report. The report listed the following impairments: multiple sclerosis, hyperthyroidism, depression, arthritis in knees, and chronic strain of ankles. (AR 99-106). In October of 1994, Sparagon filled out an application requesting a hearing by an ALJ. In this application, she stated that she suffered from multiple sclerosis, a thyroid condition, and musculoskeletal impairments. (AR 86). Sparagon alleges that her condition prevented her from working because she has problems walking or standing and that her left hand becomes numb and weak and that her eyes often feel tired. (AR 91).

[¶6]  Sparagon was last employed for any type of wage in September of 1984. She worked as a proof operator for Norwest Bank in Hot Springs, South Dakota, from 1982 to 1984. (AR 32). As a proof operator Sparagon’s duties included processing checks through the proof machine, answering telephones, filing checks, processing reports, and placing new accounts on the computer. (AR 32). Working as a proof operator Sparagon testified that most of her work was sitting down. (AR 32, 96). She did not have to carry weight since it was difficult for her. (AR 33). Prior to her job with Norwest, Sparagon worked as a keypunch operator from 1977 to 1982. (AR 95).

[¶7]  Sparagon testified that she had problems going up and down stairs because sometimes her knees would lock. (AR 33). Prior to 1990, she stated that she could sit for 45 minutes before she would have to move around. (AR 53). Sparagon told the ALJ that she could not bend over and touch her toes, that she could touch her knees from a standing position, that she could move her arms forward and backward, that she could move her fingers but the left hand would tire faster. She stated that she could pick up a pencil prior to 1990. During the time frame,2. The relevant time frame refers to the period of time from October 15, 1985, the date which Sparagon alleges was the onset date of her disability, to December 31, 1989, the expiration of Sparagon’s Title II disability benefits.{fn2} she testified she could stand for 30 minutes. (AR 38). She usually stood with the assistance of either an object or person. (AR 38).

[¶8]  She also testified that she was having trouble at times with her left arm. (AR 40). Sparagon stated that when she used her left hand for a long time that her fourth and fifth fingers would become numb. (AR 42). She first noticed she was unable to use her hand when writing Christmas cards in 1988. (AR 43). She also had difficulty cutting the children’s meat. (AR 44).

[¶9]  Prior to 1990, Sparagon was still involved in some of the household chores and the care of her children. She would not vacuum very often because vacuuming would cause her to lose her balance. She would go to the grocery store once a week. (AR 50). She did the dishes, the dusting, the laundry, and cared for her children. Sparagon stated that she would only drive in Hot Springs, where she lived, because she did not trust herself to drive out of town. (AR 45). Sparagon stated that she had difficulty getting in and out of the car. (AR 49). In the morning, she would dress her son Joe for preschool. (AR 48). Until her children could walk, she would carry her twins one at a time. (AR 40).

[¶10]  Sparagon also testified to difficulties with her eyes. She stated that she would have difficulty reading because her eyes would get blurry and that reading would give her a headache. (AR 44-45). Sparagon also stated that prior to 1990 she suffered from mood swings. (AR 46).

[¶11]  In October of 1985, Sparagon was diagnosed with multiple sclerosis. Her treating neurologist was J.D. Sabow, M.D. Sparagon testified that she would practice her balance for her visits to Dr. Sabow’s office and that Dr. Sabow was always very encouraging. (AR 51-52). She also stated that Dr. Sabow’s office visits did not test her for endurance and that “she could do about anything the first five minutes, and then after that, it became harder to do.”

[¶12]  At the hearing the ALJ also heard testimony from Sparagon’s husband, Judd Sparagon, D.P.M., a podiatrist at Hot Springs VAMC (AR 56-64), and Robert Peregrin, the vocational expert (AR 64-70).

STANDARD OF REVIEW

[¶13]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994), cert. denied, 573 US 1076, 115 SCt 722, 130 LEd2d 627 (1995)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). See also Onstead v. Sullivan, 962 F2d 803 (8th Cir. 1992) (quoting Whitehouse v. Sullivan, 949 F2d 1005, 1007 (8th Cir. 1991)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991).

[¶14]  However, the Court’s role under section 405(g) is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to reweigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))). The Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith v. Sullivan, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980). As long as the ALJ’s decision is supported by substantial evidence, then this Court cannot reverse the decision of the ALJ even if the Court would have decided it differently. Smith v. Shalala, 987 F2d at 1374.

DISCUSSION

[¶15]  For Sparagon to be eligible for disability insurance benefits, she must be under a disability at the time she was insured for disability insurance benefits. See 42 USC § 423(a)(1)(A)-(D). A disability is defined as

inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

Id. § 423(d)(1). In determining when a disability has occurred in a case, the ALJ must follow five prescribed steps.3. The steps are summarized as follows:

(1) First, a determination is made whether claimant is currently engaged in substantial gainful activity; if so, she must be found not disabled.

(2) If claimant is not engaged in substantial gainful activity, the next question is whether she is suffering from a severe impairment, defined as one that significantly limits the ability to perform basic work-related functions. If a severe impairment is not found, claimant must be found not disabled.

(3) If there is a severe impairment, and it is one listed in Appendix 1 to Subpart P, claimant is found disabled on the medical evidence alone. [ See Appendix 1 to Subpart P of Part 404, 20 CFR §§ 404.1501 et seq. (1996)].

(4) If the impairment is not listed in Appendix 1, the next inquiry is whether claimant can perform relevant past work. If she can, a finding of no disability is required.

(5) Finally, if claimant cannot perform relevant past work, the question then becomes whether she can nevertheless do other jobs that exist in the national economy, despite her having a severe impairment that prevents return to her previous work.

McCoy v. Schweiker, 683 F2d 1138, 1141-42 (8th Cir. 1982). See also 20 CFR § 404.1520; 1 Harvey L. McCormick, Social Security Claims and Procedures § 410, at 346 (4th ed. 1991). {fn3} See Evaluation of Disability Rule, 20 CFR § 404.1520 (1996). Sparagon urges that the ALJ’s finding—that she could have performed past relevant jobs prior to the expiration of her Title II benefits—was not supported by substantial evidence. In order for Sparagon to be eligible for benefits, she was required to show that she was unable to perform any substantial gainful activity for at least twelve consecutive months prior to her date-last-insured. Specifically, Sparagon has stated three objections to the ALJ’s conclusion: (1) that the ALJ’s failure to consider the affidavits in the record of family and friends constitutes reversible error; (2) that the ALJ misinterpreted the neurologist’s notes and disregarded his opinion; and (3) that a finding of disability was mandated by Social Security Ruling (SSR) 96-9p.4. In Sparagon’s reply brief she raises the issue for the first time that the ALJ did not appropriately apply Polaski v. Heckler because the ALJ failed to give weight to the witness statements and claimant’s daily activities. First, this Court has already concluded it was not reversible error for the ALJ to not comment on the affidavits of Sparagon’s friends and husband. In addition, Sparagon’s statement that the ALJ failed to consider her daily activities was an incorrect representation to this Court. See AR 18. {fn4} The issue for this Court is whether the ALJ had substantial evidence to establish that Sparagon was not disabled prior to the expiration of her insured status on December 31, 1989.

I.

[¶16]  This Court will first consider the issue of whether the ALJ’s failure to discuss in his decision the affidavits of Sparagon’s husband, Judd Sparagon, and Sparagon’s friends, Pam Monroe and Harold Monroe, Barbara Wilson, and Rhonda Seline constituted reversible error. (AR 214-15, 239-244, 248). The Eighth Circuit has emphasized the importance of testimony offered by lay witnesses. In urging that the ALJ’s failure constitutes reversible error, Sparagon relied on Smith v. Heckler, 735 F2d 312, 316-17 (8th Cir. 1984). In Heckler, the court stated:

We have frequently criticized the failure of the Secretary to consider subjective testimony of the family and others. We have held that a failure to make credibility determinations concerning such evidence requires a reversal and remand. Basinger v. Heckler, 725 F2d 1166-67 (8th Cir. 1984); see also Simonson v. Schweiker, 699 F2d 426, 429 (8th Cir. 1983) (failure to consider subjective testimony about pain). If the ALJ is to reject such testimony, it must be specifically discussed and credibility determinations expressed. Because the ALJ failed to consider this evidence properly, his decision, and those of the Appeals Council and of the district court that were based upon it, must be reversed.

In Basinger v. Heckler, 725 F2d 1166, 1169-70 (8th Cir. 1984), the court noted that when proof of a disability depends substantially on subjective evidence a credibility determination is critical to the Secretary’s5. The title of the position which is now held by the Commissioner of Social Security used to be held by the Secretary of Social Security (Secretary). The name of the position was changed from Secretary to Commissioner. At the time of Basinger, the position was entitled Secretary. {fn5} decision. Id. at 1170. In Basinger, the case was remanded for the ALJ to consider the subjective evidence which he failed to consider, which included the testimony and affidavits of the claimant’s wife and others, and if this testimony is to be discredited to make a specific finding to that effect. Id.

[¶17]  The government argues that Smith and Basinger are not applicable in this case. The government urges this Court to apply Turley v. Sullivan, 939 F2d 524 (8th Cir. 1991). The court in Turley reviewed their decisions in both Smith and Basinger. The court found that Smith and Basinger

were concerned with a situation wherein the ALJ apparently ignored substantially uncontroverted subjective testimony of family member and others. Under those circumstances, we held that the ALJ must indicate on the record why he or she rejects such testimony to establish, at the least, proof that he or she gave such testimony adequate consideration.

Turley, 939 F2d at 528. The Eighth Circuit found in Turley that the ALJ was not required to make a credibility finding on the record of the documentary evidence, in this case letters, because “proof of disability did not depend substantially upon subjective evidence.” Id. The court pointed out that the ALJ heard testimony from a professional vocational evaluator which directly contradicted the letters which the ALJ had failed to mention. In Turley, the court also found that the ALJ had considered the letters because he stated “‘neither the objective nor the subjective evidence of record shows an impairment or combination of impairments that meets/equals the level of severity of the Listing of Impairments.’” Id.

[¶18]  This Court must consider whether proof of Sparagon’s disability depended substantially on subjective evidence. In this case, the ALJ, like the ALJ in Turley, heard testimony from a Vocational Expert Robert Peregrin who testified that Sparagon could perform sedentary jobs which were available within the national economy. The affidavits which the ALJ did not mention in his decision all concluded that they did not believe that based upon their observations claimant was capable of performing substantial gainful activity during the relevant time frame. However, these conclusions contradict those offered by the vocational expert. These conclusions also contradict the notes taken by Sparagon’s treating neurologist Dr. Sabow. See (AR 177-187). Given that the ALJ did not fail to make a credibility findings on uncontroverted subjective testimony, this Court finds that proof of Sparagon’s disability did not depend substantially on subjective evidence. Therefore, it was not reversible error for the ALJ to fail to make credibility findings as to the affidavits of Sparagon’s spouse and friends.

II.

[¶19]  Sparagon’s second objection is that the ALJ misinterpreted the neurologist’s notes and disregarded his opinion. Sparagon objects to the ALJ’s statement that “[i]t is clear that prior to the claimant’s date last insured, her multiple sclerosis was in its very early stages.” Sparagon urges that this contradicts the conclusions reached by Dr. Sabow. Following the decision of the ALJ, a letter from Dr. Sabow was presented to the ALJ on Sparagon’s motion to reconsider. (AR 258). In Dr. Sabow’s opinion, Sparagon was disabled before December of 1989. However, in reaching his conclusion which is now objected to, the ALJ relied in part on the Dr. Sabow’s medical notes on Sparagon. (AR 15, 177-187). The ALJ was not ignoring the medical diagnosis of Dr. Sabow. In making his comment, the ALJ was considering if the evidence in the record was sufficient to justify that Sparagon’s multiple sclerosis prevented her from performing substantial gainful employment prior to her date last insured. It is the ALJ’s responsibility to make the ultimate determination of whether a claimant is disabled. See 20 CFR § 404.1527(e) (“A statement by a medical source that you are ‘disabled’ or ‘unable to work’ does not mean that we will determine you are disabled.”); 20 CFR § 416.927(e).

[¶20]  Sparagon also objects that the ALJ placed undue emphasis on specific statements which were made by Dr. Sabow in his notes documenting the treatment of Sparagon. Sparagon urges that these statements were made by the doctor give her encouragement. In a letter from Dr. Sabow to Sparagon’s attorney after the decision by the ALJ, the doctor stated:

One should not misjudge my statements “Cheryl is doing nicely”, “She hasn’t really changed too much”, “She is doing quite well”. These statements are very very relative and have to be taken in context. The most important portion of my dictation is always my examination and my descriptions are more encouraging than they are objective.

(AR 258).6. This letter was submitted as evidence with claimant’s motion for reconsideration.{fn6} In considering the evidence in the record by Dr. Sabow, the ALJ stated:

By early 1986 the claimant’s treating neurologist, Dr. J.D. Sabow, was able to report that the claimant was doing nicely (Exhibit 16 p. 8). The claimant had improved significantly in terms of lower extremity incoordination since her examinations in the fall of 1985 and her gait was almost normal. Neither in October 1985 when the claimant was hospitalized, nor during 1986 when the claimant saw Dr. Sabow as an outpatient, were there any other significant neurologic findings. The claimant did not have disturbance of motor function or reproducible muscle fatigue. Dr. Sabow noted in March 1986 that the claimant had excellent strength in her upper and lower extremities and that her reflexes were normal. The claimant also had excellent coordination of the upper extremities without any tremors. Dr. Sabow stopped the claimant’s steroid treatment and she continued doing well. By May 1986 Dr. Sabow’s treatment notes indicate that the claimant was doing “beautifully” and that she was walking perfectly normally. She was able to walk with a tandem gait and her sensation, coordination, reflexes and motor srength remained normal.

It is clear from the ALJ’s decision that he did not rely solely on the “encouraging” comments by Dr. Sabow which Dr. Sabow said must be taken in context. In addition, the ALJ’s decision reveals that these comments were taken in context. For example, in Dr. Sabow’s notes on Sparagon from March 10, 1986, he states, “Cheryl is doing really nicely. Her exam today, like last time, is so much improved from that first exam that it is very encouraging. Her gait is almost normal. Cranial nerves normal. Excellent strength in upper and lowers ... .” Considering the ALJ’s conclusion, he relied on Dr. Sabow’s comment that Sparagon was doing nicely and also on the facts which her exam revealed, for example, that her gait was almost normal. When reviewing Dr. Sabow’s notes this Court finds that his “encouraging” comments tended to coincide with positive improvements.

[¶21]  Sparagon relies on Gude v. Sullivan, 956 F2d 791 (8th Cir. 1992). In that case, the court found that the ALJ had taken statements in a letter by a treating physician out of context. Id. at 793. The letter contained statements that the claimant was in remission and had stabilized. Id. The court found that such statements did not mean that the claimant’s “symptoms ha[d] gone away or that they d[id] not exist.” Id. This Court finds that this case is not comparable. In examining Dr. Sabow’s treatment notes of Sparagon, the Court does not agree that these statements were solely offered for encouragement. For when the doctor made a positive or encouraging statement about Sparagon’s condition, this statement was followed by the improvements the patient had made. The Court finds that the ALJ did not rely solely on the positive statements of Dr. Sabow but also relied on the medical findings of the doctor.

III.

[¶22]  Sparagon’s third argument is that she was unable to perform a full range of sedentary work and that she could not perform her past relevant work. In making this argument, Sparagon urges that SSR 96-9p “sets out an irrebuttable legal presumption, that in case of ‘significant erosion’ of the unskilled sedentary occupational base, a finding of disability applies.” See Plaintiff’s Brief (relying on SSR 96-9p, 1996 WL 374185 (July 2, 1996)). Even if an occupational base is eroded, an ALJ may still make a finding that there is work within the national economy which a claimant may perform. According to SSR 96-9p:

[T]he mere inability to perform substantially all sedentary unskilled occupations does not equate with a finding of disability. There may be a number of occupations from the approximately 200 occupations administratively noticed, and jobs that exist in significant numbers, that an individual may still be able to perform even with a sedentary occupational base that has been eroded.

SSR 96-9p, 1996 WL 374185 at *4. The record does not represent circumstances which have eroded Sparagon’s sedentary occupational base to the extent that she cannot perform work within the national economy. There was substantial evidence for the ALJ to conclude that Sparagon could perform past relevant work or in the alternative that work existed within the national economy. See Murrell v. Shalala, 43 F3d 1388 (10th Cir. 1994) (affirming conclusions by the ALJ in the alternative) (citing Householder v. Bowen, 861 F2d 191, 191-92 (8th Cir. 1988) (affirming the alternative holding by the ALJ)).

[¶23]  When considering the medical records, Sparagon’s testimony and written activity statements, and her medication and treatment, the ALJ concluded that Sparagon could perform prior sedentary jobs. During the relevant time frame, this Court agrees with the ALJ’s conclusion that Sparagon could have performed her past relevant jobs as either a key punch operator or a data entry clerk.

[¶24]  When considering the notes of Dr. Sabow prior to 1990, there is substantial evidence to support the ALJ’s conclusion. The following information was revealed by reviewing Dr. Sabow’s notes:

1. On October 10, 1989, Dr. Sabow stated that not much had changed. At this time, she still had a spastic ataxic gait. Her cranial nerves looked good and she had good strength in both her upper and lowers extremities. Dr. Sabow noted that sensation looked good and that her coordination in her uppers was good. (AR 181).

2. On April 24, 1989, Dr. Sabow reported that Sparagon was doing well. She had a little jerkiness in her gait; however, her cranial nerves were normal and she had good strength in both her upper and lowers. The doctor also found that her sensation throughout her uppers was intact. (AR 181).

3. On November 7, 1988, Dr. Sabow reported that Sparagon had not had a flare up for six to seven months, that her reflexes were normal, and that she had good strength in her uppers and lowers. The doctor’s notes also indicated that “[o]cular movements are full without nystagmus, and not evidence of lid lag or thyroid ophthalmoplegia. The rest of the cranial nerves are normal ... .” (AR 182).

4. On May 9, 1988, the doctor’s notes revealed that Sparagon was doing nicely. He didn’t see any optic atrophy. The cranial nerve exam was normal and she had good strength in her uppers and lowers. The doctor also stated that she had a slight clumsiness in her right leg, but that she had good coordination in her uppers. (AR 182).

5. On December 14, 1987, Dr. Sabow reported she was doing well and that there was a little heaviness in her left leg. (AR 182).

6. On June 8, 1987, Dr. Sabow stated that Sparagon’s exam showed definite improvement. Her cranial nerves 2 through 12 were normal. She had good strength in her uppers and lowers and normal coordination of uppers and lowers. The doctor reported that her sensory examination was normal. (AR 182).

7. On March 9, 1987, Sparagon reported that she could not see anything. On Tuesday, she awoke with a cloudiness in her left eye’s vision. By Thursday, she could not see anything. On Saturday, she started taking 100 mg of Prednisone. Dr. Sabow did note that Sparagon did not have any other complaints and that she was walking better than ever. She did have an inflamed optic nerve head and a slight pinkness to the left disk. She also had full strength in her upper and lower extremities.

Dr. Sabow next saw Sparagon almost three weeks later on March 23, 1987. At this visit the inflammation in the left optic disk had improved and her peripheral vision was excellent. She was measured at 20/70 which was a major improvement. Sparagon was now on 50 mg of Prednisone and her dosage was gradually being decreased. (AR 183).

8. On September 15, 1986, Dr. Sabow stated that Sparagon was doing nicely. He reported that “[s]he has virtually no complaints except for some occasional heaviness of the right lower extremity.” At this time, her gait was normal. She could stand on either leg alone with some sway. The doctor also reported that she had good strength in her upper and lower extremities. (AR 184).

9. On May 19, 1986, Dr. Sabow commented that Sparagon “is doing beautifully.” He stated that she was walking “perfectly normal.” He noted that she had a little sway but that it was not overwhelming. The doctor encouraged Sparagon to continue her activities and noted that she had been relatively active with an exercise program. (AR 184).

10. On March 10, 1986, the doctor stated that Sparagon was doing excellent and that her gait was almost normal. She also had excellent strength in upper and lowers and excellent coordination in her upper extremities. (AR 184).

11. On January 27, 1986, Dr. Sabow felt that Sparagon was doing quite well. He stated that she had been complaining of weakness in her back. He noted that her cranial nerves looked normal and that she had good strength and sensation. She had the mildest of an intention tremor in her right upper extremity. (AR 185).

12. On November 25, 1985, the doctor reported that Sparagon was doing well from a neurological standpoint. She had normal cranial nerves and excellent strength in her upper and lower extremities. The sensory examination was normal and she had excellent coordination in her upper extremities and lower extremities had good coordination. (AR 185).

The notes by Dr. Sabow which were contained in the administrative record provide substantial evidence for the ALJ’s conclusion that Sparagon could perform her past work as a proof operator or a key punch operator or that in the alternative there was work in the national economy which she could perform.

[¶25]  When considering all evidence contained within the record, there is substantial evidence to support the ALJ’s conclusion. Sparagon testified that while working as a data entry clerk that she was sitting the majority of the time. The vocational expert testified that both the past relevant positions were semi-skilled and sedentary. (AR 66). The notes of Dr. Sabow reflect that Sparagon had good upper extremity motor strength and coordination prior to the expiration of her insured status. The ALJ also had information in the record that Sparagon would perform such daily activities as assisting in the care of her children, doing the dishes, dusting, driving within Hot Springs, and doing the laundry. The record also reveals that the vision problems which Sparagon complained of improved during the relevant time frame. (AR 146, 152-176).

[¶26]  When considering the unfavorable evidence present in the record, the vocational expert testified that the problems with Sparagon’s arms, specifically with her left arm and fourth finger, that she would be unable to work as a data entry clerk or proof machine operator (key punch operator). But during the relevant time frame, the record does not contain medical evidence of such complaints, and when assessing Sparagon’s credibility there are contradictions between how she said she felt prior to the expiration of her insured status and how Dr. Sabow viewed her condition. Prior to the expiration of her insured status, Sparagon did not complain of weakness, fatigue, or of numbness in her hand to Dr. Sabow. Based upon Sparagon’s impairments, the vocational expert testified that Sparagon would be capable of performing the job of surveillance system monitor which is a sedentary job listed in the national economy. Given the substantial evidence presented in the record that Sparagon was capable of performing past relevant work or in the alternative work within the national economy, 20 CFR § 404.1520(e) requires that Sparagon be found disabled.

[¶27]  The Court recognizes that during the relevant time frame, Dr. Sabow reported that Sparagon may have been in remission. However, the issue for the ALJ was not whether she had an impairment, but whether the impairment which she had was disabling during the relevant time frame, meaning was Sparagon unable “to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” Even when considering the evidence which detracts from the record, this Court finds that there is substantial evidence to support the ALJ’s conclusion that during the relevant time frame Sparagon could perform prior relevant work or in the alternative there was work available in the national economy.

[¶28]  Accordingly, it is hereby

ORDERED that Sparagon’s motion to remand (Docket #8) is denied.

[¶29]  IT IS FURTHER ORDERED that the decision of the ALJ is affirmed and the Commissioner’s motion for summary judgment (Docket #10) is granted.



State Farm Mut. Ins. Co. v. American Concept Ins. Co., 1997 DSD 23

STATE FARM MUTUAL AUTOMOBILE INS. CO.,

Plaintiff,

v.

AMERICAN CONCEPT INS. CO.,

a South Dakota corporation; Colonial Ins. Co. of California, a California corporation;

Carolyn M. Sanders; Robert L. Sanders; and Jesse W. Ulmer,

Defendants.

[1997 DSD 23]

United States District Court

District of South Dakota - Western Division

CIV. 96-5078

MEMORANDUM OPINION AND ORDER

Opinion Filed July, 1997

Richard H. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On September 24, 1996, plaintiff State Farm Mutual Automobile Insurance Company [hereinafter “State Farm”] commenced this declaratory judgment action to determine the rights and obligations of the various parties as per the terms of respective insurance policies. The coverage issues stem from a two-vehicle accident between defendants Robert L. Sanders [hereinafter “Robert Sanders”] and Jesse Ulmer [hereinafter “Ulmer”] occurring on April 2, 1995, in Rapid City, South Dakota. Robert Sanders was driving a vehicle owned by his mother, Carolyn M. Sanders [hereinafter “Carolyn Sanders”] and allegedly insured by defendant American Concept Ins. Co. [hereinafter “American Concept”].1. American Concept contends that its insurance policy issued to Carolyn Sanders was not valid based on its assertion that she fraudulently misrepresented material information on the application for automobile insurance on June 2, 1995. See Docket #21. Carolyn Sanders has filed a cross-claim against American Concept in regard to property damage and liability coverage issues. See Docket #28 (Amended Answer and Cross-Claim).{fn1} At the time of the accident, Colonial Insurance Company [hereinafter “Colonial”] had in effect a policy of liability insurance for a 1978 Nissan pickup issued to Robert Sanders. State Farm had issued uninsured motorist coverage to Ulmer at the time of the accident. On May 6, 1997, defendant Colonial filed a motion for summary judgment on the ground that there is no coverage under its liability insurance policy for a 1978 Nissan pickup issued to Robert Sanders. See Docket #31.2. On May 21, 1997, Carolyn Sanders filed a response to Colonial’s motion for summary judgment which did not include a statement of material facts required by D.SD LR 56.1(C-D). See Docket #37. On May 28, 1997, State Farm filed a response joining in Carolyn Sanders’ response. See Docket #38. On that same date, American Concept filed its response to Colonial’s motion for summary judgment which was accompanied by a statement of material facts. See Docket ##39, 40. Colonial filed its reply on June 2, 1997. See Docket #44.{fn2}

[¶2]  The Court has jurisdiction pursuant to 28 USC §§ 1332.

FACTS

[¶3]  The following facts are not in dispute. Robert Sanders and Ulmer were involved in a two-vehicle accident on April 2, 1995. See Defendant Colonial’s Statement of Material Facts at ¶1 [hereinafter “C-SMF at ¶ ”]; Defendant American Concept’s Response to Colonial’s Statement of Material Facts at ¶1 [hereinafter “AC-RSMF at ¶ ”]. At the time of the accident, Robert Sanders was driving a 1990 Mitsubishi Galant owned by his mother Carolyn Sanders. See C-SMF at ¶¶ 2, 4; AC-RSMF at ¶1. Furthermore, at the time of the accident Robert Sanders was living in the same household as Carolyn Sanders. See C-SMF at ¶¶ 3; AC-RSMF at ¶1.

[¶4]  In its complaint, State Farm specifically requests declaratory judgment regarding the following policies of insurance:

(1)  American Concept Insurance Company, Policy No. PA 103483, issued to Carolyn M. Sanders, which insured a 1990 Mitsubishi Galant and provided liability insurance;

(2)  Colonial Insurance Company of California, Policy No. 403001423, issued to Robert L. Sanders, which insured a 1978 Nissan Datsun and provided liability insurance; and

(3)  State Farm Mutual Automobile Insurance Company, Policy No. 1026- 275-41A issued to Jesse and Ingrid Ulmer, which provided Uninsured liability limits of $50,000 per person/$100,000 per accident.

See Plaintiff’s Complaint at ¶III. Colonial’s policy no. 403001423 issued to Robert Sanders provides coverage for a 1978 Nissan standard bed pick-up with a VIN of HL620333545. See C- SMF at ¶5 (citing Affidavit of Dennis Simms at ¶2, Exh. 1 (Colonial Policy No. 403001423)) [hereinafter “Colonial Policy No. 403001423”]; AC-RSMF at Exh. 1.

[¶5]  The “Liability Coverage” section of the policy states:

We will pay damages which any insured person is legally liable because of bodily injury and property damage arising out of the ownership, maintenance or use of your insured car.

... .

(1)  Your insured car means:

(a)  any car described in the Declarations.

(b)  any car you replace it with provided you notify us within 30 days of the acquisition of the replacement.

(c)  any additional car which you purchase during the policy period, provided we insured all cars owned by you for this coverage on the date of purchase and you notify us within 30 days following the date of purchase; but the insurance with respect to the newly purchased car does not apply to any accident if you have other collectible insurance. You must pay any additional cost required if the insurance applies to any newly purchased car.

(d)  any utility trailer you own which is designed for use with a car covered under this Part.

(e)  any car or utility trailer you use, that is not owned by or furnished or available for the regular use of you, a resident, or relative. But no car shall be considered as your insured car unless such use is with the permission of the owner.

(f)  any substitute car or utility trailer not owned by you, a relative, or resident, being temporarily used as a substitute for any other car provided under this Part, because of its withdrawal from normal use due to breakdown, repair, servicing, loss or destruction.

See Colonial Policy No. 403001423 at p. 3-4. The policy contains the following relevant definitions:

(2)  You and your mean the Policyholder named in the Declarations and spouse if living in the same household;

... .

(8)  Relative means a person living in your household, related to you by blood, marriage or adoption, including a ward or foster child.

Id. p. 2-3.

SUMMARY JUDGMENT STANDARD

[¶6]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶7]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶8]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083 119 LEd2d 265 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). Finally, should there remain any doubt as to whether the courts continue to harbor any antagonistic feeling toward resolution of summary judgment motions, Chief Judge Arnold in City of Mt. Pleasant, Iowa v. Associated Elec. Co-op., 838 F2d 268 (8th Cir. 1988), laid such thoughts to rest. He stated that,

[A] trilogy of recent Supreme Court opinions demonstrates that we should be somewhat more hospitable to summary judgment than in the past. The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts’ trial time for those cases that really do raise genuine issues of material fact.

Id. at 273. See also Midwest Radio Co. v. Forum Pub. Co., 942 F2d 1294, 1296 (8th Cir. 1991).

[¶9]  Even though Fed. R. Civ. P. 56(b) specifically permits a defendant to “at any time, move with or without supporting affidavits for a summary judgment in the party’s favor as to all or any part thereof,” in most cases federal courts await the development of facts through the discovery process before considering the merits of summary judgment motions. See generally Fed. R. Civ. P. 56(f). However, the posture of this case is unique in the sense that all the facts necessary for resolution of the issue raised by Colonial’s motion for summary judgment have been developed and set forth in the record. Hence, further discovery on the issues raised by Colonial’s motion would vexatiously delay the inevitable conclusion that there is no genuine issue as to any material fact and that Colonial is entitled to judgment as a matter of law.

[¶10]  Based on the foregoing, the trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing Colonial’s motion for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).3. The trilogy of Celotex, Anderson, and Matsushita has redefined the standard for summary judgment previously annunciated in Adickes v. S.H. Kress & Co., 398 US 144, 157, 90 SCt 1598, 1608, 26 LEd 2d 142 (1970) and Poller v. Columbia Broadcasting Sys., Inc., 368 US 464, 467, 82 SCt 486, 7 LEd 2d 458, 488 (1962). Poller and Adickes run counter to the teachings of Celotex, Anderson, and Matsushita which take issue with the concept that summary judgment is to be used sparingly. See generally William W. Schwarzer, Alan Hirsch, and David J. Barrans, The Analysis and Decision of Summary Judgment Motions: A Monograph on Rule 56 of the Federal Rules of Civil Procedure, Federal Judicial Center, at 4 (1991). {fn3} Under this trilogy, it is incumbent upon the nonmoving parties, based upon the showing set forth by Colonial as the moving party, to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991). The nonmoving parties have been unable to sustain their burden in the face of Colonial’s showing.

DISCUSSION

[¶11]  South Dakota law governs the substantive issues in this diversity case. B.B. v. Continental Ins. Co., 8 F3d 1288, 1291 (8th Cir. 1993); Erie R.R. v. Tompkins, 304 US 64, 58 SCt 817, 82 LEd2d 1188 (1938). See generally Meredith v. City of Winter Haven, 320 US 228, 64 SCt 7, 88 LEd9 (1943) (holding that difficulty ascertaining what a state supreme court may subsequently determine state law to be is not by itself a sufficient ground for a federal court to decline to decide a case properly within diversity jurisdiction). Colonial contends that it is entitled to summary judgment on the coverage issue because it is undisputed that Robert Sanders was not using a vehicle insured by its policy based on the fact that he was driving a vehicle owned by his mother who is a “relative” living in the same “household.” The parties opposing summary judgment assert that genuine issues of material fact exist in regard to the following: (1) whether Robert Sanders owned two or more vehicles and whether there were two or more policies of insurance issued by Colonial; and (2) whether the insurance policy language is ambiguous with respect to subparts (e) and (f) based in part on the term “your household” as it is used in the definition of “relative.”

[¶12]  A.  COLONIAL POLICY NO. 403001423

[¶13]  The contention that Robert Sanders may have owned two or more vehicles or that there may have been two or more policies issued by Colonial to Robert Sanders stems from an interview of Robert Sanders conducted by American Concept. See Defendant American Concept’s Statement of Material Facts at ¶5 [hereinafter “AC-SMF at ¶ ”]; AC-SMF at Exh. 2 (Affidavit of Pamala Crawford); AC-SMF at Exh. 3 (Interview Notes). In the interview, Robert Sanders indicated that he was operating a 1991 Mitsubishi Galant owned by his mother, Carolyn Sanders, at the time of the accident. See AC-SMF at ¶5 (citing AC-SMF at Exh. 3, p. 2). He stated that his liability carrier was Colonial which insured a 1978 Dodge pick-up. Id. at ¶8 (citing AC-SMF at Exh. 3, p. 3).

[¶14]  At issue in this declaratory judgment action is Colonial policy no. 403001423. See Plaintiff’s Complaint at ¶III. In addition, Robert Sanders specifically stated in the interview with American Concept that the Colonial policy number was 403001423. See AC-SMF at Exh. 3, p. 2. Furthermore, whether Colonial policy no. 403001423 insured a 1978 Nissan or a 1978 Dodge is irrelevant because it is undisputed that Robert Sanders was operating his mother’s 1991 Mitsubishi Galant at the time of the accident.

[¶15]  B.  AMBIGUOUS CONTRACT

[¶16]  Whether Colonial’s policy is ambiguous with respect to the definition of “insured car” is a question of law. See De Smet Ins. Co. of South Dakota v. Gibson, 552 NW2d 98, 99 (SD 1996); Sunshine Ins. Co. v. Sprung, 452 NW2d 782, 784 (SD 1990); Butterfield v. Citibank of South Dakota, 437 NW2d 857, 858 (SD 1989) (“whether ambiguity exists in a contract is a question of law for the court”). An insurance policy is considered to be ambiguous when it is fairly susceptible to two constructions. Sprung, 452 NW2d at 784 (quoting McGriff v. US Fire Ins. Co., 436 NW2d 859, 862 (SD 1989)). The parties opposing summary judgment assert that subpart (e) of the definition of “your insured car” is ambiguous for the reason that it apparently excludes coverage for the vehicle owned by Robert Sanders and listed on the declarations page of Colonial policy no. 403001423.

[¶17]  As set forth above, part (e) provides that “your insured car” means “any car ... you use, that is not owned by or furnished or available for the regular use of you, a resident, or relative. But no car shall be considered as your insured car unless such use is with the permission of the owner.” See Colonial Policy No. 403001423 at p. 4. However, under well- settled South Dakota law, “ambiguity in an insurance policy is determined with reference to the policy as a whole and the plain meaning and effect of the words in the policy.” Sprung, 452 NW2d at 784 (citing McGriff, 436 NW2d at 862). Viewing the whole definition of “your insured car,” in particular subpart (a), makes it clear that the vehicle owned by Robert Sanders was covered under Colonial’s policy. Accordingly, after viewing the policy and definition of “your insured car” as a whole and giving the policy language its plain meaning and effect according to terms defined within the policy, this Court finds it clear that there is no ambiguity.

[¶18]  The parties opposing summary judgment further argue that the policy is ambiguous in regard to the definition of “relative” which is defined as “a person living in your household, related to you by blood, marriage or adoption, including a ward or foster child.” See Colonial Policy No. 403001423 at p. 3 (additional emphasis added). They further assert that because the definition of “relative” is ambiguous, there is a genuine issue of material fact as to whether subpart (f) of the definition of “your insured car” concerning substitute vehicle is applicable. The Court disagrees.

[¶19]  American Concept focuses on the definition of relative as a “person living in your household,” and asserts that for this definition to apply to Carolyn Sanders, the “household” has to be owned by the insured Robert Sanders. It is undisputed by the parties that Carolyn Sanders is a member of the same household as Robert Sanders. Whether the Court turns to Black’s Law Dictionary, Webster, or Words and Phrases it clear that the term household is synonymous with family. See Black’s Law Dictionary 740 (6th ed. 1990); Webster’s Collegiate Dictionary 584 (9th ed. 1987); 19A Words and Phrases, Household 485-489 (1970). To be sure, “household” is defined for insurance purposes as synonymous with “family” and as including those who dwell together as a family under the same roof. Van Overbeke v. State Farm Mut. Auto. Ins. Co., 227 NW2d 807, 810 (Minn. 1975) (citing Tomlyanovich v. Tomlyanovich, 58 NW2d 855 (Minn. 1953); Bartholet v. Berkness, 189 NW2d 410 (Minn. 1971)). See generally Gibson, 552 NW2d at 99; Cimarron Ins. Co. v. Croyle, 479 NW2d 881, 884 (SD 1992);4. In 1992, the South Dakota Supreme Court pronounced “household exclusions” in automobile liability policies invalid as violative of public policy. Cimarron Ins. Co. v. Croyle, 479 NW2d 881, 884 (SD 1992). The South Dakota Legislature immediately responded by amending South Dakota’s financial responsibility law to allow insurers to issue motor vehicle

liability policies with resident family member exclusions. Isaac v. State Farm Mut. Auto. Ins. Co., 522 NW2d 752, 756 n.1 (SD 1994); SDCL § 32-35-70.{fn4} In re Weide’s Estate, 44 NW2d 208, 210 (SD 1950). Moreover, SDCL 32-35-70 (Supp. 1997) specifically permits an owner’s policy to “exclude or limit coverage for a relative residing in the named insured’s household”) (emphasis added). Thus, Carolyn Sanders is a “relative” of Robert Sanders as defined by the policy language. Accordingly, subpart (f) of the definition of “your insured car” concerning substitute vehicle does not apply because the 1991 Mitsubishi Galant was owned by a “relative.”

CONCLUSION

[¶20]  After reviewing the arguments presented by both parties and after reviewing the facts and inferences that may be derived therefrom in a light most favorable to the nonmoving parties, this Court finds that no genuine issues of material fact exist and defendant Colonial is entitled to judgment as a matter of law. Accordingly, it is hereby

ORDERED that defendant Colonial’s motion for summary judgment (Docket #31) is granted. Judgment in favor of Colonial shall be issued forthwith.



Satter v. Class, 1997 DSD 24

STEVEN ALLAN SATTER,

Petitioner,

v.

JOSEPH CLASS,

Warden, South Dakota State Penitentiary; and

Mark Barnett, Attorney General, State of South Dakota,

Respondents.

[1997 DSD 24]

United States District Court

District of South Dakota - Northern Division

Civ. No. 96-1020

Report and Recommendations for Disposition

Filed May 23, 1997

Mark A. Moreno, United States Magistrate Judge

INTRODUCTION

[¶1]  The above-captioned matter was referred to this Court by the District Court1. The Honorable Charles B. Kornmann, United States District Judge, presiding. {fn1} pursuant to 28 USC § 636(b)(1)(B) for the purpose of appointing counsel and holding an evidentiary hearing, if deemed necessary, and for the submission to the latter court of proposed findings of fact and recommendations for disposition of the matter. R.17.

[¶2]  After careful review of the records on file, including the state court filings and transcripts in Codington County Crim. No. 73-1014, and based on the totality of the circumstances before this Court, the Court does now make the following findings of fact and report and report and recommendations for disposition in accordance with the District Court’s referral order.

[¶3]  For convenience, petitioner, Steven Allan Satter, will be referred to herein as “Satter” and respondents, Joseph Class and Mark Barnett, will be referred to as “State”. References to the federal and state court records and the transcript of the November 1-9, 1993 jury trial will be made using the letters “R.”, “St. R.” and “T.Tr.” followed by the appropriate page number in the record or transcript.

PROCEDURAL HISTORY

[¶4]  Satter was found guilty by a Codington County jury of two counts of murder on May 10, 1974 and thereafter sentenced to serve two concurrent life terms without the possibility of parole. His conviction was affirmed on direct appeal. State v. Satter, 90 SD 485, 486, 492, 242 NW2d 149, 150, 153 (1976) (Satter I). In his direct appeal, Satter contended, among other things, that the State had failed to prove that his acts evinced the requisite “depraved mind” to convict him of murder and that there was insufficient evidence to counter his self-defense claim. 90 SD at 489-90, 242 NW2d at 152. The South Dakota Supreme Court, however, rejected Satter’s contention and concluded that “[f]rom the evidence presented the jury could reasonably find [Satter] guilty of the two counts of murder.” 90 SD at 480, 242 NW2d at 152.

[¶5]  In 1986, Satter filed a petition for post-conviction relief in South Dakota state court, raising three issues, namely:

1. That his statements to the Codington County Sheriff were involuntary;

2. That he received ineffective assistance of counsel; and

3. That two jury instructions given were inadequate.

R.12 at 3. The state habeas court denied his petition, but the South Dakota Supreme Court later reversed, holding that Satter’s statements to the sheriff were involuntary and should have been suppressed. Satter v. Solem, 422 NW2d 425, 428 (SD 1988) (Satter II). The State then sought and obtained a rehearing before the Supreme Court on the limited issues of whether Satter’s statements were voluntary and therefore admissible and whether he was denied effective assistance of counsel because of his trial counsel’s failure to object to the admission into evidence of two exhibits. Satter v. Solem, 434 NW2d 725 (SD 1989), cert. denied, 490 US 1091 (1989) (Satter III). After reexamining the issue, the Supreme Court found that Satter’s statements were involuntary and remanded the case to the habeas court for further consideration of the statements in light of the “fruit of the poisonous tree doctrine” announced in Wong Sun v. United States, 371 US 471 (1963). Satter III, 434 NW2d at 728. On remand, the habeas court denied relief but the Supreme Court again reversed. Satter v. Solem, 458 NW2d 762, 764 (SD 1990) (Satter IV). The Supreme Court held that Satter was entitled to a new trial and accordingly vacated his conviction and remanded with instructions to grant the writ of habeas corpus. 458 NW2d at 770.

[¶6]  In the meantime, Satter filed a petition in federal court seeking habeas relief under 28 USC § 2254. Satter v. Leapley, 977 F2d 1259, 1260 (8th Cir. 1992) (Satter V). In his habeas petition, Satter claimed that there was insufficient evidence to prove a depraved mind element of the murder charges and insufficient evidence to negate his self-defense assertion. 977 F2d at 1261. The habeas court2. The Honorable Donald J. Porter, then Chief United States District Judge, presiding.{fn2} found that his claim was procedurally barred and the Eighth Circuit affirmed. Id. at 1261, 1263. In doing so, the Court agreed with the habeas court that Satter had procedurally defaulted his deficiency of the evidence claim by failing to pursue the same in state post-conviction proceedings. Id. at 1262-63. The Court also noted that Satter’s underlying claim, even if not procedurally barred, did not entitled him to habeas relief because the Double Jeopardy Clause did not preclude him from being retried. Id. at 1263-64.

[¶7]  In accordance with the South Dakota Supreme Court’s directives in Satter IV and following the Eighth Circuit’s decision in Satter V, the State filed an Amended Information charging Satter with two counts of “depraved mind” murder in violation of SDCL 22-16-7 (1972). St.R. 486-88. Subsequently, Satter was arraigned on the Amended Information and tried by a jury in Watertown, South Dakota. St.R. 695-98; T.Tr. 2-995. On November 9, 1993, a Codington County jury found Satter guilty of both “depraved mind” murder charges. St.R. 693-94; T.Tr. 993-95. That same day,3. Immediately following the publication of the jury verdict, Satter advised the trial court that he desired to waive his statutory right to a 48-hour waiting period before the imposition of sentence. T.Tr. 995.{fn3} Satter was sentenced to serve two concurrent life imprisonment terms. St.R. 695-98; T.Tr. 995-96.

[¶8]  Satter appealed, and the South Dakota Supreme Court affirmed, in a unanimous decision handed down on January 31, 1996. State v. Satter, 1996 SD 9, 543 NW2d 249, (Satter VI). Satter then filed a pro se petition under § 2254 for a writ of habeas corpus and supporting memorandum in federal court, alleging, inter alia, that he had been denied “due process under the 5th and 14th Amendments to the US Constitution” because of “[l]ack of notice of the crime charged.”4. Because Satter’s petition was filed on April 10, 1996, R. 1, two weeks before the President signed into law the Anti-Terrorism and Effective Death Penalty Act of 1996 (AEDPA), Pub.L. 104 132, 110 Stat. 1214, this Court has analyzed the petition under the prior version of, rather than the new amendments to, 28 USC. § 2254.{fn4} R. 1. The District Court granted Satter leave to proceed in forma pauperis, denied his motion for appointment of counsel and then referred the matter to this Court for handling. R. 10, 17.

FACTS

[¶9]  A detailed version of the facts leading up to and resulting in Satter’s 1974 convictions is set forth in Satter I, 90 SD at 486-89, 242 NW2d at 150-52. The following is a synopsized rendition of the facts surrounding Satter’s 1993 convictions and is offered to provide an appropriate backdrop for his habeas claim.

[¶10]  On August 20, 1972, Satter went to a trailer house occupied by Kent Harold Engle and Jerry Wayne Bowling, located on Pelican Lake, in Codington County, South Dakota. T.Tr. 859-63, 890-91. He took with him a .22 caliber revolver and nude photographs of his sister, Marianne Satter, which he had earlier found in Engle’s car. Id. at 855-63, 890-91, 894-95, 897. Upon reaching the trailer, he entered without knocking and shot Engle, his sister’s boyfriend, and Engle’s cousin, Bowling, multiple times, killing both of them. Id. at 685-89, 692, 722-23, 859-68, 898-99, 901-06. After doing so, he ran out the front door but returned the following afternoon to clean up, put Engle’s and Bowling’s bodies in the bathroom of the trailer and hide their guns. Id. at 868-69, 874-75, 908. Later that same evening, he again returned to the trailer, retrieved the two bodies, put them into his car and then disposed of them in a rock pile south of Kranzburg, South Dakota. Id. at 875-76, 908-09.

[¶11]  Approximately seven and one-half months later, on April 2, 1973, the decomposed bodies of Engle and Bowling were discovered by law enforcement officials, based in part on certain information the Codington County Sheriff received from an anonymous caller. Id. at 499-523, 594. On April 11 and 12, 1973, Satter signed statements admitting that he shot Engle and Bowling after they drew their guns. Id. at 567-688 & Exs. 13, 14, 878-880, 89294, 906.

[¶12]  At trial, Satter claimed he acted in self defense. Id. at 863-68, 880, 900-01, 904-05. He testified that he shot Engle when Engle pointed a gun at him in the living room of the trailer. Id. at 864-65, 900-03. He also testified that he shot Bowling when Bowling came out of a bedroom with a drawn revolver. Id. at 865-66, 904-05.

[¶13]  Following the return of guilty verdicts at his new trial, Satter was again convicted of two counts of “depraved mind” murder and sentenced to two concurrent life sentences. St.R. 693-98.

DISCUSSION

I. APPOINTMENT OF COUNSEL.

[¶14]  Satter filed a motion requesting that counsel be appointed for him pursuant to 18 USC § 3006A. R.4. In his motion, Satter states that he has been one of two law clerks in the prison law library since 1985 and that as a result of the retirement of the other clerk, he has been left the entire work load of the library and forced to take on additional duties, all of which has been a “strain” on him. Id. He asserts that because of the extra work load and duties he has had to undertake and assume, he does not believe he can “do an adequate job” on his and others’ cases. Id.

[¶15]  The District Court denied Satter’s Motion, R.10, but subsequently referred the matter to this Court for, among other things, “the purpose[] of appointment of counsel ...”, R.17. Although Satter has not filed another motion seeking to have counsel appointed under the Criminal Justice Act, 18 USC § 3006A, in light of the District Court’s referral order, this Court feels compelled to decide whether Satter is entitled to the appointment of counsel in this instance.

[¶16]  Initially, it must be observed that there is no constitutional right to counsel in habeas actions. Nachtigall v. Class, 48 F3d 1076, 1081 (8th Cir. 1995); Hoggard v. Purkett, 29 F3d 469, 471 (8th Cir. 1994). A habeas corpus proceeding is civil in nature and “the Sixth Amendment’s right to counsel afforded for criminal proceedings does not apply.” Hoggard, 29 F3d at 471 (quoting Boyd v. Groose, 4 F3d 669, 671 (8th Cir. 1993))

[¶17]  A court, however, may appoint counsel for a prisoner seeking habeas relief when “the interests of justice so require.” Hoggard, 29 F3d at 471; see also, 18 USC § 3006A(a)(2)(B). If the court conducts an evidentiary hearing, the interests of justice require the court to appoint counsel. Hoggard, 29 F3d at 471; Rule 8(c) of the Rules Governing § 2254 Cases. If no evidentiary hearing is necessary, the appointment of counsel is discretionary. Hoggard, 29 F3d at 471.

[¶18]  In exercising its discretion, a court should first determine whether a pro se habeas prisoner has presented a nonfrivolous claim. Abdullah v. Norris, 18 F3d 571, 573 (8th Cir.), cert. denied, 513 US 857 (1994). If the prisoner has presented only claims that are frivolous or clearly without merit, the court should dismiss the case on the merits without appointing counsel. Id.; Rule 4 of the Rules Governing § 2254 Cases. If the prisoner has presented a non-frivolous claim, the court should then determine whether, given the particular circumstances of the case, the appointment of counsel would benefit the prisoner and the court to such an extent that “the interests of justice so require” it. Nachtigall, 48 F3d at 1081; Abdullah, 18 F3d at 573; 18 USC § 3006A(a)(2)(B). In determining whether appointment of counsel is required for prisoners seeking habeas relief with non-frivolous claims, the court should consider the factual and legal complexities of the case, the prisoner’s ability to investigate and present clams, the existence of conflicting testimony, and any other relevant factors. Nachtigall, 48 F3d at 1081-82; Hoggard, 29 F3d at 471; Abdullah, 18 F3d at 573.

[¶19]  Applying these factors to the case at hand, this Court concludes that the interests of justice do not require the appointment of counsel. The due process claim Satter raises in his petition, while not frivolous or plainly devoid of any colorable merit on its face, see Bouie v. City of Columbia, 378 US 347, 349-63 (1964); Davis v. Nebraska, 958 F2d 831, 833-36 (8th Cir. 1992); Moore v. Wyrick, 766 F2d 1253, 1254-61 (8th Cir. 1985), cert. denied, 475 US 1032 (1986), nonetheless, is not one that involves complex legal or factual issues or one that arises out of conflicted testimony or requires further fact investigation. Nachtigall, 48 F3d at 1082; Hoggard, 29 F3d at 472. It is evident that Satter, a law clerk himself who assists others in preparing legal documents, understands the issues involved and is capable of presenting his claim and responding to the State’s arguments. Id. His petition and accompanying memorandum are well written and contain proper citations to applicable legal authorities so as to enable this Court to determine whether habeas relief is warranted. Nachtigall, 48 F3d at 1082. Finally, Satter’s claim, as well as the attendant issues generated by it, can easily be resolved on the basis of the state court record. Hoggard, 29 F3d at 472. For these reasons, and those previously articulated by the District Court on this issue, see R.10, the Court finds it unnecessary to appoint counsel for Satter and declines to do so.

II. EVIDENTIARY HEARING.

[¶20]  The District Court, in its referral order, implicitly requested that this Court determine whether an evidentiary hearing was required on Satter’s petition. R.17 (“the above-entitled action is hereby referred ... for the purpose[ ] of ... conducting any necessary hearings, including evidentiary hearings ...”) (emphasis added). Satter has not requested an evidentiary hearing or in any way suggested that such a hearing is necessary before his petition can be properly disposed of. Even so, this Court is duty bound under Rule 8 of the Rules Governing § 2254 cases, to decide if an evidentiary hearing is mandated or otherwise called for here.

[¶21]  Under applicable law and the rules promulgated thereunder, federal habeas corpus hearings are required if three conditions are met:

1.  A petition alleges facts that, if proved, entitle the prisoner to relief, see Hill v. Lockhart, 474 US 52, 60 (1985); Blackledge v. Allison, 431 US 63, 82-83 (1977); Townsend v. Sain, 372 US 293, 312 (1963); Pennsylvania ex rel. Herman v. Claudy, 350 US 116, 120-21 (1956); see also, Houston v. Lockhart, 982 F2d 1246, 1250-53 (8th Cir. 1993) (en banc) (district court erred in denying hearing to prisoner who had alleged sufficient grounds for release);

2.  The fact-based claims are not “palpably incredible” or “patently frivolous or false”, and thus survive the summary dismissal standards in habeas corpus proceedings, see Blackledge, 431 US at 75-76 (quoting Machibroda v. United States, 368 US 487, 495 (1962)); Claudy, 350 US at 119; Houston, 982 F2d at 1250-53 (evidentiary hearing required where allegations were “not palpably incredible, and were never subject to a hearing in state court”); see also, O'Blasney v. Solem, 774 F2d 925, 926 (8th Cir. 1985) (“[i]f the petition is not frivolous and alleges facts which, even though unlikely, would justify granting the writ, then the petitioner is entitled to have his allegations fairly tested”); and

3.  For reasons beyond the control of the prisoner and his/her counsel (assuming, of course, counsel rendered constitutionally effective assistance), the factual claims were not previously the subject of a full and fair hearing in state court or, if a full and fair state court hearing was held, it did not result in fact findings that resolved all of the relevant factual issues in the case, see Townsend, 372 US at 313; 28 USC § 2254(d)(1)-(8)(1994); Keeney v. Tamayo-Reyes, 504 US 9, 11-12 (1992); see generally, 1 J. Liebman & R. Hertz, Federal Habeas Corpus Practice & Procedure, §§ 20.la, 20.2-20.4 (2d Ed.1994).5.The AEDPA changed, to some extent, the method by which federal courts process facts in 28 USC § 2254 actions. The changes involve modifications in the standards for according the presumption of correctness to state fact findings and the right to an evidentiary hearing. Section 2254(e)(2) created a specific evidentiary hearing provision, which had not existed in the pre-1996 version ofthe statute, and § 2254(e)(1) changed prior law. Although not crystal clear, it appears that the Act’s amendments to the presumption of correctness (with one possible exception) do, but that its modifications of the right to a hearing do not, apply to cases filed before April 24, 1996. See generally, J. Liebman & R. Hertz, § 20.1 d at 136-46 (1996 Supp.)

{fn5}

[¶22]  This Court has scrutinized Satter’s petition and memorandum in light of the criteria/standards imposed by applicable statutory and case law at the time6. Since the enactment of the AEDPA in 1996, the criteria/standards regarding the availability of an evidentiary hearing have changed. Compare 28 USC. § 2254(d) (1994) with 28 USC. § 2254(e) (1996); see also, J. Liebman & R. Hertz, § 20.1d at 142-46 (1996 Supp.).{fn6} , see 28 USC § 2254(d)(1)(8); Townsend, 372 US at 313-22; Keeney, 504 US at 5-13, and concludes that an evidentiary hearing is not obligatory or necessary. Accordingly, no evidentiary hearing shall be held and the Court shall proceed to recommend “such disposition of the petition as [it believes] justice ... require[s].” Rule 8(a) of the Rules Governing § 2254 Cases.

III. EXHAUSTION.

[¶23]  The State maintains that Satter’s petition is subject to dismissal for failure to exhaust his state court remedies. R.12 at 5-9, 13 at 12-15. According to the State, Satter did not present his federal claim on direct appeal, as he maintains, so as to afford the South Dakota Supreme Court a meaningful opportunity to consider his allegations of legal error. Id. In response, Satter asserts that he properly presented his federal claim to the Supreme Court by referring to:

1. His due process right to notice and “to know the nature and cause of the accusation[s] against him";

2. The Fifth and Fourteenth Amendments to the United States Constitution; and

3. Three federal cases that passed on the notice issue and were decided on federal constitutional grounds.

R.2 at 1-2, 15 at 1-2.

[¶24]  Before a state prisoner is entitled to federal habeas corpus relief, he must exhaust the remedies available to him in state court. 28 USC § 2254(b)(c) (1994). As a general rule, the exhaustion requirement is satisfied if the prisoner presents a federal claim to the appropriate state courts in the manner required by state law and thereby provides the state courts with the “opportunity to pass upon and correct” the claim for which federal review is sought. Duncan v. Henry, 513 US 364, , 115 SCt 887, 888 (1995) (per curiam); Vasquez v. Hillary, 474 US 254, 257 (1986); see also, Keeney, 504 US at 9-10. Once the prisoner has raised a claim on direct appeal to the state’s highest court, he has exhausted the claim and need not pursue other state court remedies even if the same are available to him. Ylst v. Nunnemaker, 501 US 797, 805 (1991); Castille v. Peoples, 489 US 346, 349-50 (1989). After the prisoner has properly availed himself of his state court remedies, the only question that remains for purposes of exhaustion is whether he presented his federal claim in a manner that adequately apprised the relevant state courts of the claim and gave them “an opportunity to apply controlling legal principles to the facts bearing upon [the] constitutional claim.” Picard v. Connor, 404 US 270, 277 (1971). The guiding rule is that the prisoner must “fairly present” the “substance” of his claim to the state courts. Anderson v. Harless, 459 US 4, 6 (1982); see also, Vasquez, 474 US at 258; Picard, 404 US at 276. In this circuit, to satisfy the “fairly presented” requirement, [the prisoner is] required to ‘refer to a specific federal constitutional right, a particular constitutional provision, a federal constitutional case, or a state case raising a pertinent federal constitutional issue’ in ... state court.” Abdullah v. Groose, 75 F3d 408, 411-12 (8th Cir.) (en banc), (quoting Ashker v. Leapley, 5 F3d 1178, 1179 (8th Cir. 1993)), cert. denied, 116 SCt 1838 (1996). The legal basis for a claim presented in state court must be “the substantial equivalent” of that relied upon in the federal petition. Picard, 404 US at 278; see also, Schneider v. Delo, 85 F3d 335, 339 (8th Cir.) (rejecting state’s argument that prisoner’s state court pleading should be strictly construed as challenging effectiveness of counsel at sentencing and not guilt stage of proceedings; “the requirement that federal habeas claims must have been presented in state court is not meant to trap a [prisoner] who has poor drafting skills. Mistakes in habeas cases are too high for a game of legal ‘gotcha"'), cert. denied, 117 SCt 530 (1996). A claim presented to state courts that is merely “similar” to a federal claim is insufficient to satisfy the “fairly presented” component of the exhaustion requirement. Abdullah, 75 F3d at 412, (citing Duncan, 513 US at , 115 SCt at 888); see also, Gray v. Netherland, 116 SCt 2074, 2081-83 (1996) (state court litigation of due process claim of inadequate notice of prosecution’s sentencing evidence was insufficient to present conceptually and legally distinct due process claim that state misrepresented evidence it intended to use at sentencing).

[¶25]  On direct appeal to the South Dakota Supreme Court, Satter argued in his opening brief that “his right to notice, a fundamental part of the constitutional due process guarantee” deprived him of “his right to know the nature and cause of the accusation against him, and what [he was] to defend against.” R.12, App. C at 17. In support of this argument, Satter cited both Art. VI, § 7 of the South Dakota Constitution7. This constitutional provision states in pertinent part as follows:

In all criminal prosecutions the accused shall have the right ... to demand the nature and cause of the accusation against him.... {fn7} and the Fifth and Fourteenth Amendments to the United States Constitution. Id. Later, in his reply brief, Satter cited a number of federal and state cases8. Among the cases cited by Satter were the following four federal decisions:

Collins v. Youngblood, 497 US 37 (1990);

Sheppard v. Rees, 909 F2d 1234 (9th Cir. 1989);

Plunkett v. Estelle, 709 F2d 1004 (5th Cir. 1983); and

Watson v. Jago, 558 F2d 330 (6th Cir. 1977).

R. 12,App.Dat 9, 13.{fn8} in support of his due process “notice” claim. R.12, App. D at 2-6, 9, 12-13. Satter recognized in both his briefs that no objection had been made at trial to preserve his claim for appeal but asked the Supreme Court to review the claim under the “plain error” rule.9. Under this rule, “[p]lain errors or defects affecting substantial rights may be noticed although they were not brought to the attention of a court.” SDCL 23A-44-15. See State v. Brammer, 304 NW2d 111, 114 (SD 1981).{fn9} R.12 App. C at 13-15, App. D at 6-7, 13.

[¶26]  Despite explicitly acknowledging that such a rule “must be applied cautiously and only in exceptional circumstances”, the South Dakota Supreme Court went on to address the merits of Satter’s claim. Satter VI, 1996 SD 9, ¶¶ 11-19, 543 NW2d at 251-53. In fact, the Supreme Court identified and made direct reference to Satter’s “constitutional error” claim in its opinion and reached the merits of the same. 1996 SD 9, ¶¶ 15-24, 543 NW2d at 252-54.

[¶27]  A close examination of Satter’s appellate briefs and the South Dakota Supreme Court’s decision reveals that Satter has “fairly presented” his federal due process claim under Duncan, Vasquez, Harless, Picard, Abdullah and other applicable precedent. Satter apprised the Supreme Court of his notice claim and the constitutional basis for the same. He cited federal cases which analyzed and decided notice claims, like his, under the Constitution, including the Fourteenth Amendment thereof.10. See e.g., Plunkett, 709 F2d at 1009-10; Watson, 558 F2d at 338-39. {fn10} More importantly, the Supreme Court’s characterization of Satter’s claim as “constitutional error” and its decision to reach the merits of the claim, even though the same had not been objected to and preserved for appeal, demonstrates that the Court was afforded a full and fair opportunity to pass on the “substance” of Satter’s federal claim.11. The Supreme Court’s reference to and subsequent discussion of Satter’s “constitutional error” claim in light of"the statute and the cases cited by [him]” and its holding that “no error” occurred in the charging process, see Satter VI, 1996 SD 9, ¶¶ 18-19, 543 NW2d at 252-53, lends further support to the conclusion that “fair presentment” of the “notice” issue was made in state court. See Rust v. Hopkins, 984 F2d 1486, 1490-91 (8th Cir.), cert. denied, 508 US 967 (1993) (prisoner fairly presented claim to state court by referring to due process and citing state cases employing constitutional analysis); see also, Graham v. Solem, 728 F2d 1533, 1536 & n.4 (8th Cir.) (references to constitutional issue of"guilt by association” and the right to “cross examination” and of “compulsory process” sufficient to exhaust claims), cert. denied, 469 US 842 (1984); see also, Williams v. Lord, 996 F2d 1481, 1483 (2d Cir. 1993) (reference to “constitutional right to present a defense” sufficiently particular to “call to mind a specific right protected by the Constitution”), cert. denied, 510 US 1120 (1994); Verdin v. O'Leary, 972 F2d 1467, 1478, 1481 (7th Cir. 1992) (references to accused’s “right ‘to be present at critical stages of his trial’ and his right to ‘a fair trial"’ were “particular enough to call to mind” underlying Sixth and Fourteenth Amendment rights); Evans v. Court of Common Pleas, 959 F2d 1227, 1231-33 (3d Cir. 1992), cert. dismissed, 506 US 1089 (1993) (insufficiency of evidence claim, even if framed in state law rather than federal constitutional terms, “necessarily implicates federal due process rights”); c.f., Ford v. Georgia, 498 US 411, 418-20 (1991) (no procedural default on equal protection claim even though prisoner’s “pre-trial motion made no mention of the Equal Protection Clause, and the later motion for a new trial cited the Sixth Amendment, not the Fourteenth,” because the prisoner’s challenge to “pattern of excluding black persons from juries ‘over a long period of time’ could reasonably have been intended and interpreted to raise a claim under the Equal Protection Clause”). {fn11} Under these circumstances, this Court has little trouble in concluding that Satter has overcome the legal and factual roadblocks described in both statutory and judge-made law 12. See § 2254(b)(c) (1994); Duncan, 513 US at , 115 SCt at 888; Castille, 489 US at 349-51; Vasquez, 474 US at 254-60; Harless, 459 US at 6-8; Picard, 404 US at 175-78; Kelly v. Trickey, 844 F2d 557, 558-59 (8th Cir. 1988); Laws v. Armontrout, 834 F2d 1401, 1412 (8th Cir. 1987), aff’d on rehrg, 863 F2d 1377 (8th Cir. 1988) (en banc), cert. denied, 490 US 1040 (1989); Martin v. Solem, 801 F2d 324, 330-31 (8th Cir. 1986).{fn12} necessary to exhaust his claim.

IV. MERITS OF THE NOTICE CLAIN.

[¶28]  Having determined that Satter has exhausted his notice claim in state court, this Court must now turn its attention to the merits of the claim. Satter contends that the South Dakota Supreme Court’s interpretation of SDCL 22-16-7 (1972) was so radical and unexpected that it violated the Due Process Clause of the Fourteenth Amendment and his “right to know the nature and accusation against him.” R.2 at 4-6, 15 at 3-4. Specifically, he argues that the Supreme Court’s decision in Satter VI was a “distinct departure” from its holdings in State v. Lyerla, 424 NW2d 908 (SD 1988), cert. denied, 488 US 999 (1989) and State v. Burtzlaff, 493 NW2d 1 (SD 1992) and was therefore unforeseeable. R.2 at 4, 15 at 4.

[¶29]  Initially, it must be recognized that a state’s highest court has final authority to interpret state statutes and that a federal court is bound by the state court’s construction of a state penal statute. Missouri v. Hunter, 459 US 359, 368 (1983); Davis, 958 F2d at 833. A federal court, however, is free to review de novo the state court’s adjudication of federal due process rights based on the application of federal constitutional principles. Hagan v. Caspari, 50 F3d 542, 544-45 (8th Cir. 1995); Davis, 958 F2d at 833. Thus, whether a judicial interpretation of a criminal statute was an unforeseeable change in state law, and as such a deprivation of due process, is a question of federal law subject to independent review by a federal court. Hagan, 50 F3d at 545; Moore, 766 F2d at 1255. To establish a denial of due process, a prisoner “must prove that the asserted error was so ‘gross’, ‘conspicuously prejudicial’, or otherwise of such magnitude that it ... failed to afford [the prisoner] fundamental fairness which is the essence of due process.” Davis, 958 F2d at 833 (guoting Maggitt v. Wyrick, 533 F2d 383, 385 (8th Cir.), cert. denied, 429 US 898 (1976)).

[¶30]  As a general rule, the retroactive application of an unforeseeable interpretation of a criminal statute, if detrimental to a defendant, violates the “fair warning” component of the due process clause. Hagan, 50 F3d at 545; Davis, 958 F2d at 833; Moore, 766 F2d at 1254-55. As the Supreme Court observed in Bouie:

“[A]n unforeseeable judicial enlargement of a criminal statute, applied retroactively, operates precisely like an ex post facto law, such as Article I, § 10, of the Constitution forbids ... . If a state legislature is barred by the Ex Post Facto Clause from passing such a law, it must follow that a state supreme court is barred by the Due Process Clause from achieving precisely the same result by judicial construction.

...

The fundamental principle that “the required criminal law must have existed when the conduct in issue occurred” must apply to bar retroactive criminal prohibitions emanating from courts as well as from legislatures. If a judicial construction of a criminal statute is “unexpected and indefensible by reference to the law which had been expressed prior to the conduct in issue,” it must not be given retroactive effect.

...

When a state court overrules a consistent line of procedural decisions with the retroactive effect of denying a litigant a hearing in a pending case, it therefore deprives him of due process of law “in its primary sense of an opportunity to be heard and to defend [his] substantive right.” When a similarly unforeseeable state court construction of a criminal statute is applied retroactively to subject a person to criminal liability for past conduct, the effect is to deprive him of due process of law in the sense of fair warning that his contemplated conduct constitutes a crime.

378 US at 354-55 (citations omitted); see also, Marks v. United States, 430 US 188, 191-92 (1977); Rabe v. Washington, 405 US 313, 315-16; (1972), United States v. St. John, 92 F3d 761, 764 (8th Cir. 1996).

[¶31]  Not every retroactive application of a judicial construction of law, however, violates the Due Process Clause; it does so only if it “punishes as a crime an act previously committed, which was innocent when done; ... makes more burdensome the punishment for a crime, after its commission; or ... deprives one charged with a crime of any defense available according to the law at the time when the act was committed... .” Collins, 497 US at 42 (quoting Beazell v. Ohio, 269 US 167, 169 (1925)); see also, United States v. Lanier, 117 SCt 1219, 1225 (1997).

[¶32]  Because SDCL 22-16-7 (1972) was in effect before Satter killed Engle and Bowling, the Bouie tests are only met if the South Dakota Supreme Court’s interpretation of the statute in Satter VI was unforeseeable. The real issue here, therefore, is whether a reasonable person could have foreseen the interpretation given to § 22-16-7 by the Supreme Court. For the reasons discussed below, this Court concludes that the Supreme Court’s construction of the statute was eminently foreseeable and did not violate Satter’s due process rights.

[¶33]  At the time of the two homicides, SDCL 22-16-7, the depraved mind murder statute, read as follows:

Homicide is murder when perpetrated by an act imminently dangerous to others and evincing a depraved mind, regardless of human life, although without any premeditated design to effect the death of any particular individual.

(emphasis added). The South Dakota Supreme Court, relying on a 1986 Wyoming Supreme Court decision,13. See Cheatham v. State, 719 P2d 612(Wyo 1986).{fn13} determined that the words “although without any premeditated design” in the statute were used simply to distinguish depraved mind murder from premeditated murder. Satter VI, 1996 SD 9, ¶ 16, 543 NW2d at 252. According to the Supreme Court, the word “although” was included in the statute to make clear that a defendant could be convicted of murder “even though” there was no evidence of premeditation, not “because” there was evidence of no premeditation. 1996 SD 9, ¶ 15, 543 NW2d at 252, n.2. The Court also emphasized that Satter’s claim -- that the absence of intent to kill was an affirmative element of depraved mind murder -- was not supported by the “plain language of the statute” or by any controlling precedent. 1996 SD 9, ¶¶ 15-17, 543 NW2d at 252, n.2.

[¶34]  Contrary to Satter’s assertions, neither the South Dakota Supreme Court’s interpretation of the depraved mind murder statute nor its ultimate holding in Satter VI are at odds with Lyerla, 424 NW2d 908 or Burtzlaff, 493 NW2d 1. In Lyerla, the Supreme Court reversed two of the defendant’s three convictions, holding that the crime of attempted second degree murder did not exist in South Dakota. 424 NW2d at 912-13. In doing so, the Court stated that:

To commit murder, one need not intend to take life; but to be guilty of an attempted murder, he must so intend. It is not sufficient that his act, had it proved fatal, would have been murder.

424 NW2d at 913 (quoting Merritt v. Commonwealth, 164 Va. 653, 661, 180 S.E. 395, 399 (1935)). Significantly, the Court “did not distinguish between or even discuss premeditated and depraved mind murder.” Satter VI, 1996 SD 9, ¶ 15, 543 NW2d at 252.

[¶35]  In Burtzlaff, the defendant was charged with first degree murder and first degree manslaughter14. The manslaughter offense was charged under SDCL 22-16-15(3) (1990) which “require[d] the perpetrator to be without design to effect death.” 493 NW2d at 4.{fn14} but was convicted only of the latter offense. 493 NW2d at 2. On appeal, and with an ironic twist, the defendant argued that she acted with a “design to effect death” in an attempt to show that she did not satisfy one of the elements of the manslaughter charge and therefore could not be convicted of it. Id. at 4. Satter erroneously points out what he believes to be a discussion by the Burtzlaff Court of an “element” of lack of premeditated attempt to kill found in the first degree manslaughter offense. A review of the Burtzlaff decision, however, plainly shows that the “element” Satter refers to, and which the Supreme Court discussed, was one of four ways a defendant could commit manslaughter in the first degree, to-wit: “without a design to effect death, but by means of a dangerous weapon.” SDCL 22-16-15(3)(1990). Satter VI, 1996 SD 9, ¶ 15, 543 NW2d at 252; Burtzlaff, 493 NW2d at 4. It was not an additional element of the offense for the State to prove.

[¶36]  In contrast to other cases finding a Due Process Clause violation, the South Dakota Supreme Court’s interpretation of SDCL 22-16-7 (1972) in Satter VI is not “clearly at variance with the statutory language” and did not judicially expand the scope of the statute or repudiate a prior, more narrow construction of the statute. Fogie v. Thorn Americas, Inc., 95 F3d 645, 651 (8th Cir. 1996), cert. denied, 117 SCt 1427 (1997); St. John, 92 F3d at 764-65; compare, Bouie, 78 US 350-63; Marks, 430 US at 191-97; Rabe, 405 US at 314-16; Davis, 958 F2d at 83436; Moore, 766 F2d at 1254-61. Instead, the Supreme Court “simply [gave] a common-sense interpretation to a phrase that was in the statute all along.” Knutson v. Brewer, 619 F2d 747, 751 (8th Cir. 1980); see also, Fogie, 95 F3d at 651; compare, Moore, 766 F2d at 1257-58. The Court did not overrule or undermine prior precedent or deviate from its holdings, including those in Lyerla and Burtzlaff.15. In fact, the Supreme Court’s decision appears to be entirely consistent with its decisions in other prior second degree murder cases. See e.g., State v. Jenner, 451 NW2d 710, 723 (SD 1990); State v. Primeaux, 328 NW2d 256, 258 (SD 1982); see also, Lyerla, 424 NW2d at 913 (Sabers, J. dissenting) (to commit second degree murder, “one must intend to have a criminally reckless state of mind, i.e., perpetrating an imminently dangerous act while evincing a depraved mind, regardless of human life, but without a design to kill any particular person"; SDCL 22-16-7 does not “contain[] an element of specific intent ... but simply requires an act ... [that is] dangerous to others (or stupid) under South Dakota law” (emphasis added)). {fn15} Fogie, 95 F3d at 651; Hagan, 50 F3d at 546-47; Knutson, 619 F2d at 749-51; compare, Davis, 958 F2d at 834-36; Moore, 766 F2d at 1257-59.

[¶37]  In addition, cases in other jurisdictions, at least one of which was relied on by the Satter VI Court, gave ample reason to expect that the depraved mind murder statute might well be given the construction ultimately accorded to it by the South Dakota Supreme Court. See e.g., State v. Moore, 438 NW2d 101, 108 (Minn. 1989); Cheatham, 719 P2d at 622; State v. Weso, 60 Wis 2d 404, 408-12, 210 NW2d 442, 444-46 (Wis. 1973); see also, State v. Netland, 535 NW2d 328, 331-33 (Minn. 1995) (Tomljanovich, J. concurring). Significantly, the United States Supreme Court has made it clear that a state criminal statute may be validly applied to conduct never before expressly held to be within its terms, when cases in other jurisdictions, decided before the conduct charged, support such a construction. Rose v. Locke, 423 US 48, 53 (1975) (per curiam).

[¶38]  This Court’s task is not to decide how it would have interpreted SDCL 22-16-7 (1972), if called upon to do so, but rather whether the construction given the statute was foreseeable. See Knutson, 619 F2d at 751. The Court believes that it was. The fact that the statutory language in question had never been previously construed merely underscores this belief and provides credence to it. Compare, Moore, 766 F2d at 1258 (“had the Missouri statute been previously unconstrued, the state’s argument might have merit”).

[¶39]  Given these factors, this Court can only conclude that the South Dakota Supreme Court did not apply an overly-novel construction of SDCL 22-16-7 (1972) to conduct that neither the statute nor any prior judicial decision had fairly disclosed to be within its scope. Accordingly, the Supreme Court’s decision in Satter VI, including its interpretation of § 22-16-7 and application of the statute to Satter’s case, was foreseeable and did not offend his federal due process rights. See Osborne v. Ohio, 495 US 103, 116-17 (1990); Splawn v. California, 431 US 595, 597-601 (1977); Rose, 423 US at 49-53; Fogie, 95 F3d at 761; St. John, 92 F3d at 764-65; Hagan, 50 F3d at 544-47; see also, Welton v. Nix, 719 F2d 969, 970-71 (8th Cir. 1983); Rolling v. Grammar, 665 FSupp 780, 785-87 (D.Neb. 1987), aff'd, 845 F2d 1028 (8th Cir.), cert. denied, 486 US 1034 (1988); compare, Bouie, 378 US at 349-63; Davis, 958 F2d at 834-36; Moore, 766 F2d at 1255-59.

CONCLUSION

[¶40]  Based on the foregoing findings, conclusions and discussion, this Court believes that Satter is not entitled to appointment of counsel, to an evidentiary hearing and, most importantly, to habeas relief. Therefore, in accordance with 28 USC § 636(b)(1), Rule 8(b) of the Rules Governing § 2254 Cases and the District Court’s referral order, R.17, the Court recommends that Satter’s petition for a writ of habeas corpus under 28 USC § 2254, Docket No. 1, be DENIED in all respects, on the merits and with prejudice.



Pierce v. Callahan, 1997 DSD 25

JOHN D. PIERCE,

Plaintiff,

v.

JOHN J. CALLAHAN,

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 25]

United States District Court

District of South Dakota - Western Division

CIV. 97-5030

MEMORANDUM OPINION AND ORDER

Opinion Filed Sep 22, 1997

Richard H. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Pending are cross-motions for summary judgment by both parties in this case. Plaintiff protectively filed for supplemental security income on September 27, 1994 and for disability insurance benefits on October 18, 1994. After being denied through the reconsideration level, he timely requested a hearing which was held before an Administrative Law Judge (ALJ) on April 4, 1996. (A.R. 84-113). At the hearing, Robinson was represented by counsel, Catherine R. Enyeart. (A.R. 86). Robinson and vocational expert Earl Houston provided testimony at the hearing. (A.R. 84-113).

[¶2]  On July 16, 1996, the ALJ issued his decision denying the claim. (A.R. 65-78). The ALJ determined that Robinson was not disabled because he retained the residual functional capacity to perform “jobs that exist in significant numbers in the national and regional economies. Examples of such jobs are: dispatcher, order clerk and gate guard.” (A.R. 75 (Findings 8, 9)). On March 14, 1997, the Appeals Council declined review of the ALJ’s determination. (A.R. 3-4). On April 15, 1997, Pierce commenced this action to review the Commissioner’s final decision denying his claim. See Docket #1.

[¶3]  This Court has jurisdiction under 42 USC § 405(g) and 42 USC § 1383(c)(3).

FACTS

[¶4]  Pierce was born in 1947 and has passed the high school equivalency exam, or GED. (A.R. 19). He worked as an over the road truck driver throughout several western states for twenty-six years prior to moving to South Dakota approximately seven years ago. (A.R. 50-51). From 1991 to 1994, Pierce worked intermittently as a ranch hand, highway construction, and feed store employee. (A.R. 116). Pierce alleged his current ailments preclude him from performing any of his prior jobs. (A.R. 15, 37, 59).

[¶5]  A.  MEDICAL EVIDENCE

[¶6]  On February 14, 1994, Pierce was admitted to Rapid City Regional Hospital after complaining of acute chest pains. He was diagnosed with chest pain, hypertension, hiatal hernia, acute inferior wall myocardial infarction, coronary artery disease, and diabetes mellitus. (A.R. 18). Pierce underwent successful cardiac catheterization on February 16, 1994, and was discharged four days later. (A.R. 18, 134).

[¶7]  In March of 1994 Pierce was examined by Dr. Jose M. Teixeira of Cardiology Associates, P.C. after complaining of two episodes of chest pain. (A.R. 155). He underwent an exercise stress test to assess his condition on April 6, 1994. Pierce went seven minutes on the treadmill. The results of this test were unremarkable. (A.R. 156). He did experience some discomfort and shortness of breath following the test. Id.

[¶8]  On February 8, 1995, Pierce made a consultative visit to Dr. Daniel Rey, at Rapid City Medical Center, upon the request of Disability Determination Services (DSS). (A.R. 170-173). Dr. Rey noted that Pierce complained of several incidents of chest pain since the February 1994 operation and was not taking the prescribed medications or altering his diet. (A.R. 170). Pierce underwent a treadmill test but was only able to complete five minutes and twenty-two seconds. Dr. Rey noted that the test was “abnormal, but not dramatically so.” (A.R. 172). Following examination, Dr. Rey recommended Pierce undergo dramatic lifestyle changes, including: 1) change in diet; 2) increased exercise up to limits of cardiac condition; 3) quit smoking; and 4) resume medication. Id.

[¶9]  Pierce was examined by his usual treating physician, Dr. Victoria Andersen, on July 20, 1995. Dr. Andersen’s report indicates nothing unusual about Pierce’s condition at the time of her exam and that he “didn’t look too terribly uncomfortable.” (A.R. 191). Dr. Andersen noted that Pierce should apply for SSI so he could continue taking his medicine. Id. She asserted that Pierce should not do any type of work at that time. Id.

[¶10]  B.  ALJ DECISION

[¶11]  In evaluating Pierce’s claim, the ALJ applied the five-step sequence specified in 20 CFR §§ 404.1520 (Title II), 416.920 (Title XVI). (A.R. 13-23).1. The determination of whether a claimant is entitled to Title II disability insurance benefits or Title XVI supplemental security income benefits must be made according to the following five-step sequential evaluation. See 20 CFR § 404.1520 (Title II); 20 CFR § 416.920 (Title XVI). Step One: The ALJ must determine if the claimant is engaged in “substantial gainful activity.” If so, the claimant cannot be found disabled. Step Two: If the claimant is not engaged in substantial gainful activity, the ALJ must determine if the claimant suffers from a “severe impairment.” Step Three: If the claimant does have a severe impairment, the ALJ must next determine if this impairment meets or equals an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. If the claimant has a listed impairment, then the claimant must be found to be disabled. Step Four: If the claimant does not have a listed impairment, the ALJ must determine whether the claimant can return to his or her past relevant work. If the claimant can return to past relevant work, he or she is not entitled to benefits. Step Five: If the claimant cannot return to past relevant work, then the burden shifts to the Commissioner to demonstrate that the claimant can do some other work which exists in substantial numbers in the national economy. If the Commissioner does not carry this burden, the claimant must be found to be disabled. {fn1} The ALJ first determined that Pierce has not engaged in substantial gainful activity since February 1994. (A.R. 14; A.R. 21 (Finding 1)). In step two of the sequential evaluation, he determined that Pierce has a “severe” impairment. (A.R. 14). However, the ALJ concluded in step three of the sequential evaluation that although Pierce’s impairments may be considered to be “severe,” they are not impairments which meet or equal an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. (A.R. 14; A.R. 9 (Finding 2)).

[¶12]  In step four of the sequential evaluation, the ALJ determined that based on the medical evidence and testimony, Pierce would be unable to return to his past relevant work as a truck driver, construction laborer, ranch hand, or feed store laborer because of the exertional requirements involved in these occupations. (A.R. 22 (Finding 5)). Therefore, under step five of the sequential evaluation, the ALJ acknowledged that the Commissioner had the burden of proving that a significant number of jobs existed in the national economy which Pierce could still perform considering his combined medically determinable impairments, functional limitations, age, education, and past work experience. (A.R. 20).

[¶13]  The ALJ made a determination that Pierce’s allegations about his condition and limitations were not credible based in part on the medical evidence showing no necessity for Pierce’s current sedentary lifestyle and his lack of compliance with any of the physician-recommended lifestyle changes, such as quitting smoking, eating right, and moderate exercise. (A.R. 17, A.R. 21 (Finding 3)). The ALJ concluded that Pierce has the residual functional capacity to perform the physical exertional and nonexertional requirements of a full range of light work within the following parameters: 1) lift no more than ten pounds frequently; 2) lift more than twenty pounds only occasionally; 3) avoid exposure to extreme cold temperatures; 4) no sitting and standing/walking more than six hours each in an eight-hour day. (A.R. 21-22 (Finding 4, 6)).

[¶14]  Based in part on the testimony of Robert Peregrine, a vocational expert, the ALJ found Pierce to have some transferable work skills and that jobs exist in significant numbers in the national and regional economy which Pierce is capable of performing. (A.R. 22 (Findings 9, 12)).2. In his assessment, the ALJ took into account the fact that Pierce was 49 years old and had passed the GED (A.R. 22 (Findings 8-9)).{fn2} An example of such occupations as identified by the vocational expert includes a street sweeper, of which there are 509,432 positions nationally. (A.R. 21; A.R. 22 (Finding 9)). Therefore, the ALJ concluded Pierce cannot be found disabled as defined by the Social Security Act. (A.R. 22 (Finding 11)) (citing 20 CFR § 416.920(f)).

STANDARD OF REVIEW

[¶15]  The decision of the ALJ must be upheld if it is supported by substantial evidence on the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991). However, the Court’s role is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to re-weigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))).

[¶16]  In addition to reviewing the Commissioner’s decision to determine if it is supported by substantial evidence in the record as a whole, the Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980).

DISCUSSION

[¶17]  In support of his motion to remand, Pierce contends the ALJ’s decision was in error for the following reasons: (1) failure to develop the record; (2) failure to give proper weight to Pierce’s testimony; and (3) finding that Pierce retained the residual functional capacity for the full range of light work.

[¶18]  A.   FAILURE TO ADEQUATELY DEVELOP THE RECORD

[¶19]  Pierce contends that the ALJ, at a minimum, should have ordered further examinations to resolve the depression issue. Memorandum of Points and Authorities In Support of Plaintiff’s Motion to Remand (Plaintiff’s Brief) at 12. Plaintiff further contends that the ALJ failed to follow proper procedure when faced with a mental impairment by not completing the Psychiatric Review Technique Form (PRTF) properly, and by failing to undertake a supplemental evaluation, in addition to the five-step process outlined above. Plaintiff’s Brief at 12-15.

[¶20]  1.   Further Examination

[¶21]  It is well established that the ALJ has a duty to fully and fairly develop the record. Boyd v. Sullivan, 960 F2d 733, 736 (8th Cir. 1992) (quoting Warner v. Heckler, 722 F2d 428, 431 (8th Cir. 1983)). The duty to develop the record may include ordering a consultative examination in appropriate cases. Dozier v. Heckler, 754 F2d 274, 276 (8th Cir. 1985). However, the regulations do not require the ALJ to order a consultative evaluation of every alleged impairment. See 20 CFR § 416.919a; Matthews v. Bowen, 879 F2d 422, 424 (8th Cir. 1989). The regulations require a consultive examination “when the evidence as a whole, both medical and nonmedical, is not sufficient to support a decision on [a] claim.” 20 CFR § 416.919a(b). Additionally, as with physical impairments, to establish a mental impairment “there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment.” Brown v. Shalala, 15 F3d 97, 98 (8th 1994); See 42 USC § 423(d)(5)(A); See also, 20 CFR § 404.1508, § 404.1512(b)(1), § 404.1527(a)(1).

[¶22]  In this case, the record reveals that every reference to depression in the record is initiated by Pierce in conclusory terms with no medical or nonmedical evidence that his mental condition significantly impacted his lifestyle. (A.R. 47, 55, 99, 120, 171). Pierce first mentions his depression in the Reconsideration Disability Report dated March 22, 1995, in response to a question asking if conditions have worsened since the original claim was filed. (A.R. 120). The only time depression is mentioned in any of the medical records is in the notes of Dr. Rey pursuant to a visit on February 8, 1995, where Dr. Rey notes “[H]e does admit to some depression.” (A.R. 171). Interestingly, no further exam was made into this condition by Dr. Rey nor was any anti-depressant medication prescribed. Finally, depression was mentioned in the hearing before the ALJ where the following dialogue took place:

Q.  Do you have any difficulty with your memory or concentration?

A.  I don’t think so. I — my wife says I do, but —

Q.  Okay.

A.  — I don’t know.

Q.  All right. Do you have good days and bad days during the week?

A.  Yes.

Q.  Okay. How many days out of a typical week would you say are bad days? And if you could describe —

A.  I don’t know what you mean by good or bad. I mean I have days where I don’t think I should be here. I have days that are — I don’t know.

(A.R. 47). The following exchange took place later in the hearing:

Q.  All right. In your testimony and some of the questions of Counsel, there was some maybe a little hint around the issue of possible depression.

  Do you have any history of depression?

A.  I don’t have a history. But I know I’m in now.

(A. R. 55). From this evidence the ALJ concluded that:

From a mental standpoint, claimant alleges depression (Exhibit 11) and complained to a physician about this (Exhibit 17), but there is no record of evaluation, diagnosis, or treatment for any mental impairment. No referral has been made. Claimant does not describe significant symptoms interfering with his activities, relationships, concentration, etc. He has not sought mental health treatment and no physician has recommended he do so. There is nothing that would indicate a psychological consultative examination is required, and no medically determinable mental impairment has been established that would interfere with claimant’s ability to perform the mental demands of work.

(A.R. 18).

[¶23]  Pierce presented no objective evidence of his depression. His regular treating physician failed to note any symptoms or signs of depression as late as July 20, 1995. (A.R. 191). Given the paucity of medical evidence supporting plaintiff’s claim of depression, this Court concludes that there existed substantial evidence to support the ALJ in concluding that further examination was not warranted.

[¶24]  2.   Supplemental Procedure and Psychiatric Review Technique Form (PRTF)

[¶25]  Plaintiff contends that the ALJ was in error by not following the proper procedure when faced with a mental impairment as called for by 20 CFR § 416.920a. Plaintiff’s Brief at 13-14. Specifically, plaintiff contests the lack of inquiry into the severity of Pierce’s mental impairment. Id. at 14 (indicating that section (c)(1) of 20 CFR § 416.920a “answers the question of when an ALJ is permitted to conclude that a mental impairment is ‘not severe’”). Plaintiff’s argument, however, incorrectly presupposes a finding that there was a mental impairment involved in this case. Russell v. Sullivan, 950 F2d 542, 544 (8th Cir. 1991) (indicating that the special procedure of 20 CFR 416.920a is unnecessary if there is no finding of a “medically determinable mental disorder”). Pierce testified that he possibly suffered from some depression as indicated above. (A.R. 55). The ALJ acknowledged the evidence and testimony in which Pierce indicated bouts with depression and concluded that “no medically determinable mental impairment has been established that would interfere with claimant’s ability to perform the mental demands of work.” (A.R. 18, 21 (Finding #3)). Because there is substantial evidence in the record indicating that Pierce did not have a medically determinable impairment attributable to mental problems, the ALJ was not required to undertake the special procedure of 20 CFR § 416.920a. See Russell, 950 F2d at 544.

[¶26]  Plaintiff also asserts that the ALJ erred by not fully completing the Psychiatric Review Technique Form (PRTA). Plaintiff’s Brief at 14-15. Plaintiff cites Eighth Circuit law which held that an ALJ’s failure to complete the PRTA was grounds for a remand. Montgomery v. Shalala, 30 F3d 98, 100 (8th Cir. 1994). However, the holding of that case was based upon a well-documented and developed history of depression and mental illness. Id. (noting that the consultation sheet indicated two treatments for depression and a suicide attempt as well as hospital records that noted a “history of depression”). In this case there was no evidence presented which indicated a history of depression. The ALJ completed as much as the PRTF as he felt was necessary based upon the lack of medical evidence supporting a mental impairment claim. Failure to fully complete the form was harmless error as the ALJ properly considered the scant evidence and testimony relating to this subject and concluded no mental infirmity existed. See Fountain v. Railroad Retirement Bd., 88 F3d 528, 532-33 (8th Cir. 1996) (holding that a failure to complete the PRTF was harmless error where all the evidence was properly considered by the ALJ).  

[¶27]  B.   PIERCE’S CREDIBILITY

[¶28]  The ALJ, after hearing all the evidence, concluded that Pierce’s testimony was not entirely credible. (A.R. 17, 21). The ALJ further noted that “claimant’s activities of daily living have not been significantly reduced due to physician [sic] limitations” and that Pierce had been noncompliant with physician recommended changes in diet, physical activity, medication, and smoking habits. (A.R. 17).

[¶29]  An ALJ has the discretion to discredit claimant’s subjective assertions of pain and suffering if not supported by medical evidence. Cruse v. Bowen, 867 F2d 1183 (8th Cir. 1989). In this case the ALJ outlined his responsibility to evaluate the subjective assertions of Pierce according to the five-step standard from Polaski v. Heckler, 739 F2d 1320, 1322, supplemented, 751 F2d 943 (8th Cir.), vacated, 476 US 1167, 106 SCt 2885, 90 LEd 2d 974 (1986), adhered to on remand, 804 F2d 456 (8th Cir. 1986), cert. denied, 482 US 927, 107 SCt 3211, 96 LEd 2d 698 (1987). After reviewing the evidence pursuant to the Polaski procedure, the ALJ rejected Pierce’s testimony as it was not substantiated by any medical evidence in the record. (A.R. 17). He further noted that Pierce’s sedentary lifestyle was not at the behest of physician recommendations and was in fact counter to the direction of Dr. Rey who recommended increased activity. Id.

[¶30]  After reviewing the entire record, this Court believes that the weight given to Pierce’s testimony is supported by substantial evidence. The ALJ did not neglect to consider the testimony of Pierce, but in fact found it “generally sincere.” Id. However, none of the medical evidence supports Pierce’s claims of severe, debilitating pain which would restrict his ability to work. To the contrary, Dr. Rey suggested that increased activity would be beneficial to Pierce’s condition. (A.R. 170). The discrepancy between Pierce’s complaints and the medical reports is sufficient basis to discount his subjective complaints of pain.

[¶31]  C.   RESIDUAL FUNCTIONAL CAPACITY (RFC)

[¶32]   Pierce contends that the ALJ erred in determining that Pierce had the residual capacity to perform a full range of light work by failing to properly consider Dr. Andersen’s recommendations as his treating physician and by failing to pose adequate hypothetical questions to the vocational expert (VE). Plaintiff’s Brief at 10-11, 18-20.

[¶33]  The ALJ considered the report from Dr. Andersen dated July 20, 1995, noting that she didn’t think Pierce was fit to do any type of work. (A.R. 17-18). The ALJ gave little weight to this opinion since it was not substantiated by any medically acceptable clinical or diagnostic data. (A.R. 18); see Matthews v. Bowen, 879 F2d 422, 424 (8th Cir. 1989) (noting that conclusory opinions by the treating physician are entitled to greater weight than a consultative physician but are not conclusive if not supported by clinical or diagnostic data). This Court finds that there was substantial evidence to support the ALJ’s finding on this matter.

[¶34]  Pierce next asserts that the Commissioner failed to carry his burden of proof at step five of the sequential evaluation because the VE’s testimony was based on the ALJ’s inadequate hypothetical question which did not include all of Pierce’s conditions. Plaintiff’s Reply Brief at 2. The Court disagrees. The ALJ’s hypothetical question accurately reflected all of Pierce’s pain and impairments which the ALJ found credible. Roe v. Chater, 92 F3d 672, 675 (8th Cir. 1996) (the hypothetical question need only include those impairments that the ALJ finds are substantially supported by the record as a whole); Totz v. Sullivan, 961 F2d 727, 730 (8th Cir. 1992); Penn v. Sullivan, 896 F2d 313, 317 (8th Cir. 1990). Pierce has not shown that the ALJ failed to accurately describe his conditions.

[¶35]  The VE listened to all the testimony at the administrative hearing, including Pierce’s allegations about his condition and pain, in order to aid in his assessment of Pierce’s ability to perform jobs which exist in significant numbers in the regional and national economies. (A.R. 21, 67). See generally Jenkins v. Bowen, 861 F2d 1083, 1086-87 (8th Cir. 1988) (noting the significance of the fact that the VE sat in on the entire hearing and listened to all the testimony). In posing the hypothetical question to the VE, the ALJ told the VE to assume that the hypothetical person had Pierce’s background, work experience, and transferrable skills and to consider the limitations testified to at the hearing. (A.R. 67-73). Such limitations included: (1) no lifting and carrying more than 20 pounds occasionally and 10 pounds frequently; (2) standing and/or walking with normal breaks for about six hours of an eight-hour day; and (3) avoidance of exposure to cold. Id. Because the hypothetical question reflected an accurate account of Pierce’s limitations, the ALJ was entitled to consider the opinion of the VE as reliable evidence of the existence of other work Pierce could perform. See Onstad v. Shalala, 999 F2d 1232, 1234 (8th Cir. 1993).

CONCLUSION

[¶36]  The Commissioner’s decision that Pierce is not disabled because he has the residual functional capacity to perform the physical exertional and nonexertional requirements of a full range of light work of which a substantial number exist in the national and regional economies is supported by substantial evidence in the record as a whole. Accordingly, it is hereby

[¶37]  ORDERED that Pierce’s motion for remand (Docket #9) is denied.

[¶38]  IT IS FURTHER ORDERED that the Commissioner’s motion for summary judgment (Docket #11) is granted. The Commissioner shall have judgment against Pierce.



US West Comm., Inc. v. Burg, 1997 DSD 26

US WEST COMMUNICATIONS, INC.,

a Colorado corporation,

Plaintiff,

v.

JAMES A. BURG, PAM NELSON, LASKA SCHOENFELDER,

Commissioners of the Public Utilities Commission for the State of South Dakota,

AT&T Communications of the Midwest, Inc.,

an Iowa corporation,

Defendant.

[1997 DSD 26]

United States District Court

District of South Dakota - Central Division

CIV 97-3017

MEMORANDUM OPINION AND

ORDER GRANTING MOTION TO DISMISS

Opinion Filed August 1997

Richard H. Battey, Chief Judge

[¶1]  I.  PROCEDURAL HISTORY

[¶2]  Plaintiff US West Communications, Inc. (“US West”) has filed this lawsuit against defendants appealing an order which was issued by the Commissioners of the Public Utilities Commission (“Commission”) pursuant to the Telecommunications Act of 1996 (“the Act”), 47 USC § 153 et seq.. The Commissioners, James A. Burg, Pam Nelson, and Laska Schoenfelder (“Commissioners”), have jointly filed a motion to dismiss. AT&T Communications of the Midwest, Inc. (“AT&T”) has independently filed a motion to dismiss. All defendants allege that US West’s cause of action lacks subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and that the controversy is not ripe for review.

[¶3]  AT&T also alleges that US West’s claim fails to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) and that US West’s request for declaratory and injunctive relief would disrupt the ongoing proceedings before the South Dakota Public Utilities Commission and would not settle the entire controversy. In addition, the Commissioners allege that US West’s takings claim is premature because it has not sought and been denied adequate compensation through state procedures and that declaratory relief is improper because it would preempt the resolution of issues which Congress has reserved to the state Commissioners.

[¶4]  US West has also filed a motion for an order staying this matter until thirty days following the approval or rejection by the South Dakota Public Utilities Commission (“the Commission”) of an interconnection agreement between US West and AT&T. The Commissioners and AT&T have filed motions in opposition to US West’s motion to stay this action pending approval or rejection of an interconnection agreement.

[¶5]  II.  OVERVIEW OF THE TELECOMMUNICATIONS ACT OF 1996

[¶6]  The Act was created in part “to erode the monopolistic nature of the local telephone service industry by obligating the current providers of local phone service (known as ‘incumbent local exchange carriers’ or ‘incumbent LECs’) to facilitate the entry of competing companies into local telephone service markets across the country.” Iowa Utilities Board v. Federal Communications Commission, No. 96-3321, slip op. at 96, 1997 WL 403401 (8th Cir. July 18, 1997). Through the Act Congress sought “‘to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.’” Id. at 97 (quoting Telecommunications Act of 1996, Pub. L. No. 104-104, purpose statement, 110 Stat. 56, 56 (1996)).

Specifically, the Act forces an incumbent LEC (1) to permit a requesting new entrant in the incumbent LEC’s local market to interconnect with the incumbent LEC’s existing local network and thereby use the incumbent LEC’s network to compete with the incumbent LEC in providing telephone services (interconnection); (2) to provide its competing telecommunications carriers with access to individual elements of the incumbent LEC’s own network on an unbundled basis (unbundled access); and (3) to sell to its competing telecommunications carriers, at wholesale rates, any telecommunications service that the incumbent LEC provides to its customers at retail rates, in order to allow the competing carriers to resell the services (resale). 47 USCA § 215(c)(2)-(4) (West Supp. 1997).

Iowa Utilities Board, slip op. at 96-97. A company wishing to enter the local telephone market may request that an incumbent LEC provide it with one of these three services or a combination of these three services. Id. at 97.

[¶7]  Section 251(c) of the Act places a duty upon the incumbent LECs to negotiate in good faith to fulfill the duties set forth in subsections 251(b)(1)-(5). Section 252 sets forth the procedures for negotiation or in the alternative arbitration. Subsection 252(a)(1) provides in pertinent part:

(1) Voluntary negotiations

Upon receiving a request for interconnection, services, or network elements pursuant to section 251 of this title, an incumbent local exchange carrier may negotiate and enter into a binding agreement with the requesting telecommunications carrier or carriers ... . The agreement shall include a detailed schedule of itemized charges for interconnection and each service or network element included in the agreement.

47 USC § 252(a)(1). In the event that the parties cannot arrive at an interconnection agreement through voluntary negotiation, the parties are permitted to petition a state commission1. The Act defines state commission as follows: “The term ‘State commission’ means the commission, board, or official (by whatever name designated) which under the laws of any State has regulatory jurisdiction with respect to intrastate operations of carriers.” 47 USC § 153(41). In South Dakota the state commission is the Public Utilities Commission of the State of South Dakota.{fn1} to arbitrate the unresolved issues. 47 USC § 252(b)(1). A request for arbitration must be made “from the 135th to the 160th day (inclusive) after the date on which an incumbent local exchange carrier receives a request for negotiation.” Id. Section 252(c) of the Act sets forth the standards for arbitration for the state commission. Once an interconnection agreement is adopted through either negotiation or arbitration it “shall be submitted for approval to the State commission.” 47 USC § 252(e)(1). The agreement is submitted to a state commission which is required to either approve or reject the agreement. 47 USC § 252(e)(1). See also 47 USC § 252(e)(2) (setting forth grounds upon which state commission may reject interconnection agreement). The agreement may be approved by express ratification or inaction. Id. at 252(e)(1), 252(e)(5).

[¶8]  The Act also contains a provision for review by the district court. Subsection 252(e)(6) sets forth the provision for review of a state commission’s actions:

In a case in which a State fails to act as described in paragraph (5), the proceeding by the Commission under such paragraph and any judicial review of the Commission’s actions shall be the exclusive remedies for a State commission’s failure to act. In any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title and this section.

47 USC § 252(e)(6). This is the provision of the Act which is at issue in defendant’s motion to dismiss.

[¶9]  III.  FACTS

[¶10]  US West is an incumbent LEC. The parties are in agreement that as of the filing date of US West’s complaint the Commissioners had not formally approved an interconnection agreement between US West and AT& T. Plaintiff’s Complaint at 5. On or about June 20, 1996, US West received a request from AT&T to negotiate the prices, terms, and conditions for interconnection services and network elements in South Dakota. The parties entered into negotiation on interconnection, access to unbundled network elements, and resale services; however, the parties were unable to agree on all issues. On November 20, 1996, AT&T filed a petition for arbitration with the Commission. AT&T’s petition was heard by the petitioners in a hearing held on February 3, 1997, to February 7, 1997. On March 20, 1997, the Commissioners issued their Findings of Fact and Conclusions of Law [hereinafter “arbitration order” or “order”]. See Exhibit A to Complaint. In the Commission’s order dated March 20, 1997, the Commission ordered US West and AT&T to file an agreement with the Commission which incorporates the Commission’s findings of fact. Exhibit A to Complaint at 35. The order also stated that the agreement was to include both the negotiated and the arbitrated provisions. Id. US West has filed four general objections to the Commissioners’ decision and several specific objections. US West prays for injunctive and declaratory relief pursuant to the Declaratory Judgment Act, 28 USC §§ 2201-02. US West alleges that this Court has jurisdiction pursuant to 28 USC § 1331, 47 USC § 252(e)(6), and 28 USC §§ 2201-02.

[¶11]  IV.  DISCUSSION

[¶12]  A.  Motion to Dismiss

[¶13]  The first issue in this case for resolution is whether for this Court to have jurisdiction pursuant to subsection 252(e)(6) of the Act, AT&T and US West needed to have an approved or rejected interconnection agreement when US West filed its complaint. Defendants allege that this Court does not have jurisdiction pursuant to Rule 12(b)(1) because under subsection 252(e)(6) of the Act the parties must have an approved or rejected interconnection agreement before a district court has jurisdiction. US West argues that only a “determination” is required by a state commission and that section 251 sets forth several duties upon which a commission may make a determination.

[¶14]  1.   Relevant Case Law

[¶15]  No appellate court has directly addressed this issue. However, the district courts which have addressed this issue have concluded that for a federal district court to have jurisdiction pursuant to subsection 252(e)(6) of the Act the parties must have an approved or rejected interconnection agreement. See GTE South Inc. v. Morrison, 957 FSupp 800 (E.D. Va. 1997); GTE Florida Inc. v. Johnson, 964 FSupp 333 (ND Fla. 1997) (holding that cause of action by incumbent LEC pursuant to subsection 252(e)(6) lacked subject matter jurisdiction because the parties had not yet submitted an agreement to the state commission); GTE South, Inc. v. Breathitt, 963 FSupp 610 (E.D. Ky. 1997) (holding that subsection 252(e)(6) requires review of district court to a decision accepting or rejecting an interconnection agreement); Citizens’ Utility Ratepayer Board v. McKee, 946 FSupp 893, 895 (D. Kan. 1996) (holding that “section 252(e)(6) limits the type of action that the court may hear to only those actions in which an aggrieved party seeks a determination of whether an agreement between the interconnecting service provider and the local exchange carrier satisfies the requirements of sections 251 and 252”); GTE Southwest Inc. v. Wood, Civ. M-97-003 (SD Tex. March 27, 1997) (court dismissed similar cause of action based upon oral conclusions on the record);2. See AT&T’s Motion to Dismiss Exhibit 5.{fn2} GTE Northwest Inc. v. Hamilton, Civ. No. 97-6021-TC (D. Or. March 28, 1997);3. See AT&T’s Motion to Dismiss Exhibit 6.{fn3} Contel of Minnesota, Inc., d/b/a GTE Minnesota v. Jacobs, Civ. No. 97-169, 97-366 (D. Minn. May 30, 1997);4. See AT&T’s Reply in Support of Its Motion to Dismiss Exhibit 1.{fn4} GTE Southwest Inc. v. Graves, No. CIV-97-0078-C (W.D. Ok. June 5, 1997) (holding that “agreement” contained in subsection 252(e)(6) means a final agreement which has been approved or rejected by the state commission and that until such an agreement is reached a district court does not have subject matter jurisdiction to proceed);5. See AT&T’s Reply in Support of Its Motion to Dismiss Exhibit 3.{fn5} GTE Northwest, Inc. v. Nelson, No. C96-1991WD (W.D. Wash. March 31, 1997).6. See AT&T’s Motion to Dismiss Exhibit 7. {fn6}

[¶16]  Courts have relied on the Eastern District of Virginia court’s construction of subsection 252(e)(6) which is discussed in GTE South Inc. v. Morrison. See, e.g., Breathitt, 963 FSupp at 612; Hamilton, Civ. No. 97-6021-TC. The district court in Morrison held that it did not have subject matter jurisdiction to proceed over the incumbent LEC’s (GTE South, Inc.) cause of action against the Commissioners of the Virginia State Corporation Commission in their official capacity and AT&T Communications of Virginia, Inc.7. Additional defendants were also named in the lawsuit.{fn7} The facts in Morrison are similar to the facts presented in this case. AT&T made a request for interconnection, network elements, and services. Morrison, 957 FSupp at 802. AT&T then filed a petition for arbitration with the Virginia State Corporation Commission (“SCC”) for resolution of the unresolved issues. Id. Following the presentation of evidence to the full commission, the SCC entered two separate orders. One order required the resolution of specific issues. The other order was an order resolving non-pricing arbitration issues and an order requiring the filing of an interconnection agreement. Id. The latter order required the parties to file by February 10, 1997, an interconnection agreement which incorporated the applicable findings of the Commission as well as the stipulations reached by the parties. Id. Without filing an interconnection agreement, GTE then filed a cause of action alleging that the Commission’s order violated sections 251 and 252 of the Act. Id. GTE made specific objections to the Commission’s arbitration decisions. Id. Defendants filed a motion to dismiss which alleged in part that GTE had failed to establish subject matter jurisdiction pursuant to Rule 12(b)(1). Id. at 803.

[¶17]  In Morrison, the issue was also whether subsection 252(e)(6) of the Act authorized jurisdiction when the parties did not have an approved or rejected interconnection agreement. The Morrison court proceeded to construe subsection 252(e)(6). Subsection 252(e)(6) states, “In any case in which a State commission makes a determination under [section 252], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title and section.” GTE urges that the order issued by the Commission was a “determination” by the SCC and that therefore the district court had jurisdiction to proceed. Morrison, 957 FSupp at 804. Defendants in Morrison, like the defendants in the above-entitled action, argue that the district court only has jurisdiction to determine whether an agreement meets the requirement of the Act and that since there has not been an agreement by the parties the Court did not have jurisdiction to proceed. Id.

[¶18]  In analyzing the statute as a whole, the Morrison court held that an interconnection agreement was required for the district court to have jurisdiction. The court in Morrison admitted that “determination” in its plain meaning as used in some parts of section 252, for example 252(d)(1), may include orders such as the one issued by the SCC. Id. However, the Court stated that subsection 252(e)(6)

clarifies that the Federal district court determines whether the agreement, which was arguably dictated by the orders or determinations of the SCC, is within the boundaries of the Act. Hence, when reading the entire paragraph, the language clearly indicates that the Court will review the decisions of the SCC based on whether the agreement entered into by the parties pursuant to the arbitration decisions is in compliance with the Act. Since the parties do not dispute, and the Complaint explains, that there was no agreement between AT&T and GTE when the Complaint was filed, the Court does not have subject matter jurisdiction under the Act.

Id. The court in Morrison also concluded that the structure of the statute also supports its conclusion. The Morrison court found that section 252 sets forth the following four-stage approach to establishing an interconnection agreement:

[1]  Voluntary negotiations for the first 135 days;

[2]  arbitration of the unresolved issues commencing during the 135th and 160th day and concluded by the State commission within nine months of the first interconnection agreement request, § 252(b);8. Nine-month deadline does not specifically apply to the approval or rejection of the interconnection agreement. Morrison, 957 FSupp at 805 (citing 47 USC § 252(e)(1)-(4)). See also 47 USC § 252(b)(4)(C). {fn8}

[3]  approval or rejection by the State commission, § 252(e)(1)-(4); and

[4]  review of State commission actions, § 252(e)(6).

The parties in Morrison had not yet completed step three, and the court found that “[t]he accelerated timetables and paragraph structure within § 252 require the completion of SCC action prior to district court review so as not to ‘disrupt[] the review scheme Congress intended.’” Id. at 805 (quoting Thunder Basin Coal Co. v. Reich, 510 US 200, 114 SCt 771, 776, 127 LEd2d 29 (1994)).

[¶19]  2. Application of Law to Facts in this Case

[¶20]  Subject matter jurisdiction is a threshold issue which must be assured in every federal action. Kronholm v. Federal Deposit Ins. Corp., 915 F2d 1171, 1174 (8th Cir. 1990) (citing Barclay Square Properties v. Midwest Fed. Sav. & Loan, 893 F2d 968, 969 (8th Cir. 1990)). A motion to dismiss pursuant to Rule 12(b)(1) may be either a facial or factual attack on the complaint. According to the Eighth Circuit Court of Appeals,

A court deciding a motion under Rule 12(b)(1) must distinguish between a “facial attack” and a “factual attack.” In the first instance, the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6). The general rule is that a complaint should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.

Osborn v. United States, 918 F2d 724, 729-30 n.6 (8th Cir. 1990) (citations omitted). In this case, the defendants’ motion is a facial attack. Defendants allege that the facts in the complaint fail to allege a basis for subject matter jurisdiction. For purposes of a motion to dismiss for failure to state a claim, all well-pleaded factual allegations contained in a plaintiff’s complaint are taken as true. McCormack v. Citibank, N.A., 979 F2d 643, 646 (8th Cir. 1992); Murphy v. Lancaster, 960 F2d 746, 748 (8th Cir. 1992). Plaintiff, the party asserting jurisdiction, bears the burden of establishing that jurisdiction is properly before the court. Moog World Trade Corp. v. Bancomer, S.A., 90 F3d 1382, 1384 (8th Cir. 1996); Morrison, 957 FSupp at 803 (citing McNutt v. General Motors Acceptance Corp., 298 US 178, 189, 56 SCt 780, 785, 80 LEd1135 (1936)). In construing whether a federal statute authorizes federal subject matter jurisdiction, any doubts must be resolved against federal jurisdiction. United States v. Koch Indus., Inc., 971 F2d 548, 552 (8th Cir. 1992), cert. denied, 507 US 951, 113 SCt 1364, 122 LEd2d 742 (1993); Citizens, 946 FSupp at 895. “A finding that Congress intended to preclude review ‘prevents a district court from exercising subject-matter jurisdiction.’” Morrison, 957 FSupp at 803-04 (quoting Thunder Basin, 114 SCt at 774). “Whether a statute is intended to preclude initial judicial review is determined from the statute’s language, structure, and purpose, its legislative history, and whether claims can be afforded meaningful review.” Id. at 804 (quoting Thunder Basin, 114 SCt at 776).

[¶21]  US West filed suit in this case prior to the approval or disapproval of the interconnection agreement. Other courts which have agreed with the holding in Morrison have noted that it is unlikely that Congress intended federal district courts to review day-to-day “determinations” made by a state commission. Johnson, 964 FSupp at 334-35; Breathitt, 963 FSupp at 612.

[¶22]  US West has not cited to any cases which have reached a conclusion contrary to the one reached in Morrison. This Court also agrees with the construction of subsection 252(e)(6) as set forth by the court in Morrison. This Court finds that the plain language of subsection 252(e)(6) indicates that the “decision” the district court will review is whether the agreement is in compliance with the Act. This Court also agrees with the Morrison court’s conclusion that the structure of the Act supports the conclusion that the district court does not have jurisdiction under the Act until an agreement has been approved or rejected. US West must satisfy step 3, approval or rejection by a state commission, before proceeding to step 4, review of the state commission’s actions. For this Court to have jurisdiction to proceed pursuant to subsection 252(e)(6), the Commission must first approve or reject an interconnection agreement. Based upon this Court’s holding that an agreement must either be approved or rejected before a district court has jurisdiction, this Court holds that it does not have subject matter jurisdiction to proceed over this cause of action. In addition, given the Court’s conclusion, it is unnecessary for the Court to address the parties’ remaining arguments in support of their motions to dismiss.

[¶23]  B.  Takings Cause of Action Ripe

[¶24]  US West has also alleged that this Court has jurisdiction over its constitutional claims pursuant to 28 USC § 1331. US West alleges that the access which it is required to provide to AT&T results in a taking of private property for public use without just compensation in violation of the Fifth and Fourteenth Amendments of the United States Constitution. As a result, US West alleges that it is entitled to injunctive and declaratory relief under 42 USC § 1983.

[¶25]  The issue is whether US West’s constitutional causes of action may be ripe for adjudication despite the fact that pursuant to subsection 252(e)(6) this Court does not have jurisdiction to review US West’s objections to the Commission’s order dated March 20, 1997. US West alleges that the recently-decided case by the Eighth Circuit, Iowa Utilities Board, supports its conclusion that this Court has jurisdiction over its takings claim. In Iowa Utilities Board, the petitioners alleged that the rules established by the FCC interpreting the Telecommunications Act “provide competing carriers with such extensive access and use of the incumbent LECs’ networks that they effect unconstitutional takings of the incumbent LECs’ property.” In considering whether the incumbent LECs will receive just compensation for providing competing carriers with access to their networks, the court in Iowa Utilities Board stated:

[W]e cannot, as of yet, determine whether the incumbent LECs are receiving or will receive just compensation for providing competing carriers with access to their networks. When a state or the federal government provides an adequate procedure for obtaining compensation, a takings claim is not ripe for review until the litigant has used the procedure and has been denied just compensation. See Williamson County Reg’l Planning Comm’n v. Hamilton Bank, 473 US 172, 195 (1985); McKenzie v. City of White Hall, 112 F3d 313, 317 (8th Cir. 1997). Under the [Telecommunications] Act, if an incumbent LEC and a requesting carrier fail to negotiate the rates for unbundled access on their own, a state commission will determine the amount of compensation that the requesting carrier must pay to the incumbent LEC for such access in an arbitration proceeding. See 47 USC § 252(c)(2). Because the petitioners have not demonstrated that they have participated in such state arbitration proceedings and have been denied just compensation, we find that their takings claim is not ripe for review. We note that such a claim could be presented to a federal district court under the review provisions of subsection 252(e)(6).

Iowa Utilities Board, slip op. at 150-51.

[¶26]  Relying on the following language set forth above, US West believes that its takings claims are ripe for review. Based upon this language, US West argues that since it has participated in arbitration that the claim is ripe for review. The Eighth Circuit did note that a takings claim may be presented to a federal district court under subsection 252(e)(6); however, Iowa Utilities Board did not consider the issue of whether an agreement is necessary for a district court to have subject matter jurisdiction pursuant to subsection 252(e)(6). Given this Court’s construction of subsection 252(e)(6), this Court finds that the takings claims are not ripe under this subsection until the Commission has approved or rejected AT&T’s and US West’s agreement. However, US West has alleged that this Court has jurisdiction over its constitutional claims pursuant to 28 USC § 1331. Therefore, the Court will consider if the Court has independent jurisdiction pursuant to 28 USC § 1331.

[¶27]  The parties arguments focus around whether pursuant to McKenzie v. City of White Hall, 112 F3d 313 (8th Cir. 1997), and Williamson County Reg. Planning Comm’n v. Hamilton Bank, 473 US 172, 186, 105 SCt 3108, 3116, 87 LEd2d 126 (1985),9. Based on the Court’s conclusion that US West’s alternative bases for jurisdiction are not applicable, the Court does not need to determine the issue of whether Williamson would apply despite the provision set forth in subsection 252(e)(4). The Commissioners argue that US West’s takings claim is not ripe for adjudication because US West has not sought just compensation from the state. In Williamson, the Court also held that respondent’s takings claim was not ripe because respondent had failed to seek compensation through the available state procedures. Williamson, 105 SCt at 3120-21. The Court stated, “if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” Id. at 3121. To the extent that there are state procedures for seeking just compensation, US West believes that those procedures would not apply to the Act. US West relied on subsection 252(e)(4) which states in part, “No state court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement under this section.” {fn9} the requirements for a ripe takings claim have been established. However, this Court finds that it may not proceed under US West’s alternative bases for jurisdiction, 28 USC § 1331 and 28 USC §§ 2201-02,10. Plaintiff must allege a basis for jurisdiction independent of the Declaratory Judgment Act, 28 USC § 2201-02. Based upon this Court’s conclusions, US West has failed to do so in this case.{fn10} because the alternative bases for jurisdiction invoked by US West are inapplicable. Compare Nelson, No. C96-1991WD at 4.11. See US West’s Motion to Dismiss Exhibit 7.{fn11}

[¶28]  In GTE Northwest, Inc. v. Nelson, the United States District Court for the Western District of Washington dismissed incumbent LEC’s (plaintiff) cause of action for lack of subject matter jurisdiction because the state commission had not yet issued a decision approving or rejecting the agreement. Id. at 2.12. The parties had submitted the agreement to the state commission but that was not sufficient to satisfy subsection 252(e)(6).{fn12} The court held that for the district court to have jurisdiction pursuant to subsection 252(e)(6) the state commission must have approved or rejected the agreement. Id. at 2-3. The court stated, “Review of determinations that have not been made part of a final agreement would only delay and complicate the tightly regulated process established by the Act.” Id. at 3.

[¶29]  In Nelson, like in this case, the plaintiff also relied on jurisdiction pursuant to 28 USC § 1331.13. In Nelson, plaintiff also alleged jurisdiction pursuant to 28 USC § 1337.{fn13} Id. at 2. The court held that the plaintiff’s independent bases for jurisdiction were inapplicable. The court stated, “Where Congress has provided a procedure to obtain review of agency action, that procedure must be followed.” Id. at 3 (citing Louisville & Nashville R.R. Co. v. Donovan, 713 F2d 1243, 1245 (6th Cir. 1983); Compensation Dept. of Dist. Five United Farm Workers of America v. Marshall, 667 F2d 336, 340 (3d Cir. 1981)). See also Memphis Trust Co. v. Board of Governors of the Federal Reserve Sys., 584 F2d 921 (6th Cir. 1978) (court held that “where Congress has provided an adequate procedure to obtain judicial review of an agency action, the statutory provision is the exclusive means of obtaining judicial review in those situation to which it applies” and that therefore 28 USC § 1331 did not provide a basis for jurisdiction).

[¶30]  Accordingly, given that subsection 252(e)(6) does provide jurisdiction for US West’s takings claim once the Commission has rejected or approved the parties’ agreement, this Court holds that US West’s alternative bases for jurisdiction are not applicable. See Iowa Utilities Board, slip op. at 151 (stating that district court review authorized under subsection 252(e)(6) would permit takings cause of action) .

[¶31]  C.  Motion for Stay

[¶32]  Decision whether to grant or deny a stay is within the sound discretion of the district court and will be overturned on appeal only upon a clear showing of abuse of discretion. Webb v. R. Roland & Co., Inc., 800 F2d 803, 808 (8th Cir. 1986). In Breathitt, the court also addressed the issue of whether the plaintiff, incumbent LEC, should be granted a stay until an interconnection agreement is reached. Breathitt, 963 FSupp at 612. The court concluded that Federal Rule of Civil Procedure 12(h)(3) prohibited a stay. Rule 12(h)(3) states, “Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” Therefore, the court concluded that a stay would be inappropriate. Even if the Court was not required to apply Rule 12(h)(3), US West has not presented a persuasive argument as to why Rule 12(h)(3) should not be applied in this case.

[¶33]  US West argues that it filed its cause of action when it did because the Act is unclear about the limitation period in which an appeal to the district court must be filed. US West urges that since the federal statute does not does not provide a limitation period the state statute must apply. US West believes that the applicable statutes are SDCL 49-1-19 and 1-26-31. SDCL 49-1-19 states that “[a]ll appeals from any determination, decision or order of the public utilities commission shall be conducted in the manner prescribed by chapter 1-26.” Under the South Dakota Administrative Procedure Act, the limitations period for appealing a final agency decision is thirty days. SDCL 1-26-31. In its brief in support of its motion for stay, US West stated, “Because it is unclear what triggers judicial review under § 252 or when the limitations period expires, US West filed the instant complaint as a protective measure to preserve its position on the Commission’s arbitration decision.” Plaintiff’s Motion for Stay at 3. Even if SDCL 1-26-31 is the applicable statute of limitations, the order issued by the Commissioners in this case is arguably not a “final agency decision.”

[¶34]  The Commission’s order on the issues submitted for arbitration stated:

37. AT&T and US West shall comply with the procedures set forth for arbitration and approval of arbitrated agreements found in Docket TC96-082, In the Matter of the Request for Comments Concerning Sections 252(a) and 252(b) of the Telecommunications Act of 1996. AT&T and US West shall submit a complete Agreement to the Commission for approval within 30 days after this Order... .

It is therefore ORDERED, that AT&T and US West shall incorporate the Commission’s Findings of Fact in its Agreement and shall submit the completed Agreement with both the negotiated and arbitrated provisions to the Commission for approval within 30 days from the date of this Order.

Plaintiff’s Complaint, Exhibit A at 35. The interconnection agreement would be the final agency decision which would implement the arbitration order issued by the Commissioners. This order required that the Commission’s arbitration decision be incorporated into the parties agreement. Therefore, those provisions of the Commission’s order which are currently under dispute are required to be incorporated into the agreement and the agreement is clearly a “decision” which is reviewable by the district court. Even if the statute of limitations does apply, it would appear that it has not yet been tolled.14. This Court does not make any findings as to the applicable statute of limitations.{fn14}

[¶35]  This Court finds the reasoning of the court in Johnson to be helpful in clarifying why the Commission’s arbitration order was not a final decision. The court in Johnson stated:

As [the incumbent LEC] acknowledges, however, there is no “agreement” between the parties. Nor is there any order specifying the precise terms of any “agreement” to be entered. There is handwriting on the wall, but that handwriting is not yet so clear that anyone knows for certain just what it says. This is an area far too complex to assume that the written order to be entered, and the agreement to be entered pursuant thereto, will include precisely those provisions, and only those provisions, that either side may now expect.

It would indeed be remarkable if Congress had directed the federal district courts to undertake day-by-day review of each inchoate “determination” entered by a state commission as part of an ongoing process.

Johnson, 964 FSupp at 335. Based upon the requirement that the findings within the arbitration order are to be incorporated into the agreement and that the agreement is “handwriting on the wall, but that handwriting is not yet so clear that anyone knows for certain just what it says,” this Court finds that the arbitration order issued by the Commission was not a final decision.

[¶36]  V.  CONCLUSION

[¶37]  This Court holds that a state commission must have approved or rejected an agreement before a district court has jurisdiction pursuant to subsection 252(e)(6) of the Telecommunications Act. Also, US West has not presented a persuasive argument that if this case is dismissed without prejudice for lack of subject matter jurisdiction, US West will be in danger of being unable to comply with the statute of limitations if it chooses to refile after jurisdiction has been established. The Court shall dismiss plaintiff’s causes of action pursuant to Rule 12(h)(3).

[¶38]  Accordingly, it is hereby

[¶39]  ORDERED that defendants’ motions to dismiss (Dockets #5, #12) are granted.

[¶40]  IT IS FURTHER ORDERED that this action shall be dismissed without prejudice.

[¶41]  IT IS FURTHER ORDERED that US West’s motion to stay (Docket #14) is denied.



South Dakota Mining Ass’n v. Lawrence Co., 1997 DSD 27

SOUTH DAKOTA MINING ASS'N;

Homestake Mining Company of California;

Wharf Resources, a Montana General Partnership;

Golden Reward Mining Company Limited Partnership;

Naneco Minerals, Inc.; and Fred J. Gali and Iwalana I. Gali;

Plaintiffs,

v.

LAWRENCE COUNTY,

a Political Subdivision of the State of South Dakota,

Defendant,

v.

Jack Cole,

Intervenor.

[1997 DSD 27]

-------------------

State of South Dakota and

Action for the Environment,

Amicus Curiae.

United States District Court

District of South Dakota - Western Division

CIV. 97-5013

MEMORANDUM OPINION AND ORDER

Opinion filed Sep 26, 1997

Richard H. Battey, Chief Judge

I. PROCEDURAL HISTORY

[¶1]  On November 5, 1996, an initiated ordinance amending ordinance Number 1 of section 5.11 of the Lawrence County Zoning Ordinance was approved by 51 percent of the electorate of Lawrence County. Plaintiffs—South Dakota Mining Association (SDMA), Homestake Mining Company of California (“Homestake”), Wharf Resources (“Wharf”), Golden Reward Mining Company Limited Partnership (“Golden Reward”), Naneco Minerals, Inc. (“Naneco”) and Fred and Iwalana Gali (“Galis”)—have filed a complaint for declaratory judgment pursuant to 28 USC § 2201-02. The complaint alleges in part that this ordinance preempts state and federal law because the ordinance conflicts with federal and state mining laws (Count I). Plaintiffs have filed a motion for partial summary judgment as to Count I of their complaint.1. If plaintiffs prevail as to Count I, they have stated that they will not be seeking relief as to Count II.{fn1}

[¶2]  The State of South Dakota (“the State”) and Action for the Environment (“Action”) both were granted leave to file an amicus curiae brief as to Count I of plaintiffs’ complaint. The State has filed a brief in support of plaintiffs’ motion for partial summary judgment. Action has filed a brief opposing plaintiffs’ motion for partial summary judgment. Jack Cole intervened asserting his interest as a property owner affected by the ordinance. Cole joined in Action’s brief opposing the plaintiffs’ motion for partial summary judgment. All parties have responded to plaintiffs’ motion for partial summary judgment.

II. FACTS

[¶3]  Ordinance section 5.11 added the following language to section 6 of the Lawrence County Zoning Ordinance, Ordinance Number 1:

No new permits or amendments to existing permits may be issued for surface metal mining extractive industry projects in the Spearfish Canyon Area.

The ordinance defined “Spearfish Canyon” by legal description.2. For the purposes of 5.11,6-B, 3) Section 1 the Spearfish Canyon Area within Lawrence County is described as follows: Township 6 North, Range 2 East: All of sections 27, 28, 29, 32, 33, 34, and those portions of sections 30 and 31 east of Forest Road 134; Township 5 North, Range 2 East: all of sections 3, 4, 5, 7, 8, 9, 10, 16, 17, 18, 19, 20, 21, 28, 29, 30, 31, 32 and the portion of section 6 east of Forest Road 134; Township 5 North, Range 1 East: All of sections 13, 22, 23, 24, 25, 26, 27, 28, 33, 34, 35, 36 and portions of sections 1, 11, 12, and 14 east of Forest Road 134; Township 4 North, Range 1 East: All of sections 1, 2, 3, 4, 9, 10, 11 and 12; Township 4 North, Range 2 East: all of sections 4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30, 31, 32, 33, 34, and 35. See Sample General Election Ballot, Exhibit to Affidavit of Richard Fort. {fn2} The area of land defined as “Spearfish Canyon” (“Spearfish Canyon” or “prohibited area”) includes approximately 40,000 acres of Lawrence County extending from one to four miles east and west of Spearfish Canyon, encompassing approximately 10 percent of the total land area of Lawrence County. See Affidavits of Vernon Baker,3. Employed as a general manager for Homestake Mine, Lead, South Dakota.{fn3} Carol Jean Miller,4. An exploration geologist employed by Naneco Minerals, Inc.{fn4} and John Begeman.5. Employed by Wharf Resources as the general manager for Wharf mine.{fn5}

[¶4]  Approximately 90 percent of the land defined as Spearfish Canyon is within the Black Hills National Forest and under the control and supervision of the United States Department of Agriculture, Forest Service, and the United States Department of Interior, Bureau of Land Management. This land contains unpatented mining claims or properties which are open to the public for mineral development. The other 10 percent contains privately owned patented mining claims. See Affidavits of Begeman, C.J. Miller, and Donald Murray.6. Forester with the United States Department of Agriculture, United States Forest Service, who works primarily in the Spearfish/Nemo District Ranger’s office and is responsible for the supervision of the Black Hills National Forest.{fn6} Spearfish Canyon consists of some of the most beautiful land in the Black Hills.

[¶5]  The land contained in the prohibited area may be classified into the following three categories:

(1) lands within the Black Hills National Forest that are open to mineral location and development; (2) unpatented mining claims within the Black Hills National Forest which are held by mining companies and other private parties; and (3) privately owned lands which consist mostly of patented mining claims.

Plaintiffs’ Statement of Facts (Docket #13); Affidavit of Murray. The third category includes:

(1) lands that are part of an active mining operation under local, state, and federal permits (e.g., the Wharf Mine); (2) lands with a state mine permit that are not currently being mined (e.g., Naneco’s Johnson Gulch property); and (3) lands owned by individuals who lease their mineral rights to mining companies while retaining mineral royalty rights (e.g. Galis’ mining claims).

Plaintiffs’ Statement of Facts; Affidavit of Murray.

[¶6]  During the past fifteen years, five mining companies have had active surface mining operations within Lawrence County. Two of the plaintiffs, Wharf and Golden Reward, either had or currently have active surface mining operations only. See Affidavit of Begeman. Both Wharf and Golden Reward have properties within the prohibited area in the form of patented and unpatented mining claims. Id. Currently, Wharf’s and Golden Reward’s unpatented mineral properties within the “Spearfish Canyon” area are undergoing active mineral exploration pursuant to state and federal law. Id. Some of Wharf’s privately owned patented mining claims within the prohibited area are also part of Wharf’s active surface mining operation which is operating under federal, state, and local laws. Id.

[¶7]  Two members of the SDMA who are not plaintiffs, LAC Minerals (U.S.A.) Inc. (“LAC Minerals”), and Brohm Mining Corp. (“Brohm”), also either had, or currently have, surface mining operations only. See Affidavit of Ronald D. Everett.7. Employed by LAC Minerals as Controller at the Richmond Hill mine located near Lead, South Dakota.{fn7} LAC Minerals owns or controls patented and unpatented mineral properties within the prohibited area. Id. From 1988 to the fall of 1993, LAC Minerals operated the Richmond Hill Mine which was an active gold and silver surface mining operation. Id. The mine is currently undergoing reclamation activities. Id. LAC Minerals does not own or operate an active underground mine within South Dakota. Id. Brohm owns or controls the Gilt Edge Mine which is an active gold and silver surface mining operation. Affidavit of Randy E. Beck.8. Employed by Brohm as the General Manager of Gilt Edge Mine located near Deadwood, South Dakota.{fn8} Brohm does not have an active underground mine within South Dakota.

[¶8]  Plaintiff Homestake has both an active surface mine and an active underground mine in Lawrence County. Affidavit of Baker. Homestake has both patented and unpatented mining claims within the area defined as Spearfish Canyon. Id. Naneco currently holds a state surface mine permit but has not begun mining. Affidavit of C.J. Miller. Naneco also owns or controls privately owned lands which consist of mostly patented mining claims which are located within the prohibited area. Id.

[¶9]  The Galis own patented mining claims in Lawrence County within the area defined as Spearfish Canyon. Affidavit of Fred Gali. The Galis currently lease these mineral rights to mining companies while retaining a royalty. Id.

[¶10]  Defendant Lawrence County did not object to the statement of facts set forth by plaintiffs. Intervenor Cole’s objections to plaintiffs’ statement of facts were not material.9 Intervenor Cole objected to the plaintiffs’ reference to the land defined as Spearfish Canyon as “the prohibited area.” This objection is not material to the issues before this Court. Intervenor also states that the land covered by the ordinance at issue is also under the control and supervision of Lawrence County and the state of South Dakota and that the land is covered by federal, state, and county ordinances. Plaintiffs do not disagree with this point. Intervenor also disputes any implication that the majority of the affected property is “privately owned patented mining claims.” The affidavits presented by plaintiffs represent that 90 percent of the land defined as Spearfish Canyon is land owned by the government. Plaintiffs have not argued that the majority of the land affected by the ordinance is “privately owned patented mining claims.” Intervenor states that the majority of the governmental property is undeveloped for any purpose. Whether the federal land within the area defined as Spearfish Canyon is currently developed is not the issue; the issue is whether federal law permits the surface mining and local law is in conflict with federal law.

  Cole objects to plaintiffs’ statement that “lands that are part of [an active] mining operation” is misleading because it implies that surface mining has taken place on the land within the area defined as Spearfish Canyon under the ordinance. Plaintiffs are not arguing that they have obtained new permits or amended permits for surface mining under the current ordinance. Cole also disputes plaintiffs’ statement that the majority of gold mining in the recent years has come from surface mining. Cole believes that the majority of gold mining is accomplished through underground mining. How the majority of gold mining is performed is not material to the issue in this case— whether the local ordinance conflicts with state and federal law. In addition, plaintiffs do not disagree that the majority of gold mining is accomplished through underground mining. See Supplement to Plaintiffs’ Brief in Response to Action’s Amicus Curiae Brief.{fn9} As far as whether plaintiffs have patented or unpatented land in the prohibited area, Cole stated that he “has no basis to determine the accuracy of representations regarding mineral ownership in the area subject to the ordinance, and therefore accepts the same as truthful for purposes of this Motion for Partial Summary Judgment.” See Intervenor’s Reply to Plaintiffs’ Statement of Facts in Support of Motion for Partial Summary Judgment.

III. JURISDICTION10. In an order issued by this Court, this Court required the parties to brief the issue of whether this action was ripe for adjudication under the Declaratory Judgment Act. {fn10}

[¶11]  Article III of the Constitution and the Declaratory Judgment Act [hereinafter “Act”] restricts the jurisdiction of federal courts to actual ongoing cases or controversies. US Const. art. III, § 2, cl. 1; 28 USC § 2201-02. See also Douglas v. Brownell, 88 F3d 1511, 1515 (8th Cir. 1996) (citing Lewis v. Continental Bank Corp., 494 US 472, 477, 110 SCt 1249, 1253, 108 LEd2d 400 (1990); Arkansas AFL-CIO v. F.C.C., 11 F3d 1430, 1435 (8th Cir. 1993) (en banc)); Sisseton-Wahpeton Sioux Tribe v. United States, 804 FSupp 1199, 1204 (D.SD 1992). Independent of the Act, a plaintiff must allege that a district court has jurisdiction. This Court has jurisdiction to proceed independent of the Act pursuant to 28 USC §§ 1331, 1343.

[¶12]  The Court has considered the parties’ submissions as to ripeness and concludes this matter is ripe for consideration. See Abbott Laboratories v. Gardner, 387 US 136, 87 SCt 1507, 18 LEd2d 681 (1967); Pacific Gas & Elec. v. State Energy Resources Conserv. & Dev. Corp., 461 US 190, 103 SCt 1713, 75 LEd2d 752 (1983); Employers Ass’n v. United Steelworkers AFL-CIO-CLC, 32 F3d 1297, 1299 (8th Cir. 1994).

IV. SUMMARY JUDGMENT STANDARD

[¶13]  The posture of this case is appropriate for summary judgment.11. Action and Cole argue that this case is not an appropriate case for summary judgment, in part, because the United States Supreme Court has upheld state laws which advance different objectives than federal laws. This Court concludes that summary judgment is appropriate in this case. See, e.g., United States v. Nye County, Nevada, 920 FSupp 1108 (D. Nev. 1996) (court consider whether government entitled to summary judgment on issue of whether a county resolution was preempted by federal law). {fn11} Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.”12. The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd 2d 265 (1986).{fn12} In determining whether summary judgment should issue, the facts and inferences are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶14]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶15]  The teaching of Matsushita was further articulated by the Supreme Court in Eastman Kodak Co. v. Image Technical Services, Inc., 504 US 451, 468, 112 SCt 2072, 2083, 119 LEd2d 265 (1992) where the Court said, “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision.” The Court expounded on this notion by reiterating its conclusion in Anderson that, “[s]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Eastman Kodak, 504 US at 468 n.14, 112 SCt at 2083 n.14 (quoting Anderson, 477 US at 248, 106 SCt at 2510). To survive summary judgment there must be evidence that “reasonably tends to prove” plaintiffs’ theory. Id. (citations omitted).

[¶16]  The trilogy of Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986), Anderson, and Matsushita provides the Court with a methodology in analyzing plaintiffs’ motion for summary judgment. Under this trilogy, it is incumbent upon the nonmoving party, based upon the showing set forth by the moving party (defendants), to establish significant probative evidence to prevent summary judgment. See Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F2d 976, 979 (8th Cir. 1991).

V. DISCUSSION

[¶17]  A.  Federal Law

[¶18]  1.  Preemption

[¶19]  Plaintiffs in this case argue that the Lawrence County ordinance at issue is preempted by federal law. The Court agrees. Pursuant to the Property Clause of the United States Constitution,13. The Property Clause provides: “Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.” US Const. art. IV, § 3, cl. 2.{fn13} Congress retains the power to enact “needful” legislation which protects, regulates, and respects public lands. Kleppe v. New Mexico, 426 US 529, 96 SCt 2285, 2291, 49 LEd2d 34 (1976). The Supreme Court has repeatedly held that “the power over public land entrusted to Congress is without limitations.” Id. (citations omitted).

[¶20]  Article VI clause 2 of the United States Constitution, the Supremacy Clause, provides “the laws of the United States ... shall be the supreme law of the land ... with anything in the laws of any state to the contrary notwithstanding.” When Congress acts pursuant to the Property Clause, federal law enacted will override conflicting state laws under the Supremacy Clause. Kleppe, 96 SCt at 2293. The Supremacy Clause is the source of the federal preemption doctrine. Gade v. National Solid Wastes Mgt. Ass’n, 505 US 88, 112 SCt 2374, 2388, 120 LEd2d 73 (1992). Pursuant to the Supremacy Clause, state law is preempted when it interferes or contradicts a congressional act. Hankins v. Finnel, 964 F2d 853, 861 (8th Cir.), cert. denied, 506 US 1013, 113 SCt 635, 121 LEd2d 566 (1992).

[¶21]  As to whether a law is preempted, “[t]he lines of inquiry are identical whether it be either state statute or local ordinance which is being scrutinized against the preemptive force of federal law.” Texas Manufactured Hous. Ass’n v. City of Nederland, 905 FSupp 371, 377 (E.D. Tex. 1995), aff’d, 101 F3d 1095 (5th Cir. 1996), cert. denied, 117 SCt 2497, 138 LEd2d 1003 (1997) (citing City of Burbank v. Lockheed Air Terminal, Inc., 411 US 624, 638, 93 SCt 1854, 1862, 36 LEd2d 547 (1973)). See also Blue Circle Cement, Inc. v. Board of County Comm’rs of the County of Rogers, 27 F3d 1499, 1504 n.4 (10th Cir. 1994) (under a preemption analysis local ordinances are analyzed the same as state laws).

[¶22]  When determining if federal law preempts state law, a court should examine the “text and structure of a statute to determine if it is the ‘clear and manifest purpose of Congress’ to preempt an area of state law.” Peters v. Union Pac. R.R., 80 F3d 257, 261 (8th Cir. 1996) (citations omitted). In examining whether a state statute is preempted by a federal statute, a court must look to the federal law as a whole and to the federal law’s object and policy. Pilot Life Ins. Co. v. Dedeaux, 481 US 41, 107 SCt 1549, 1555, 95 LEd2d 39 (1987).

[¶23]  One type of preemption is conflict preemption; this is the type of preemption which plaintiffs urge is present in this case. Conflict preemption occurs when there is a conflict between federal and state law. See, e.g., Hillsborough County, Florida v. Automated Medical Laboratories, 471 US 707, 105 SCt 2371, 2375, 85 LEd2d 714 (1985). “A conflict exists when the local enactment ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,’” ENSCO, Inc. v. Dumas, 807 F2d 743, 745 (8th Cir. 1986) (quoting Hines v. Davidowitz, 312 US 52, 67, 61 SCt 399, 404, 85 LEd581) (1941)), or when it is impossible to comply with both federal and state law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 US 132, 83 SCt 1210, 1217-1218, 10 LEd2d 248 (1963).14. Federal law will not only preempt a state law when the two are “plainly contradictory,” but a state statute is preempted by a federal statute when “‘the incompatibility between [them] is discernible only through inference.’” Hankins, 964 F2d at 861 (citing Hayfield Northern R.R. Co. v. Chicago & NW Transp. Co., 467 US 622, 104 SCt 2610, 2614, 81 LEd 2d 527 (1984)).{fn14} Once state law is found to conflict with federal law, the state law is deemed to be “without effect.” Cipollone v. Liggett Group, Inc., 505 US 504, 112 SCt 2608, 2617, 120 LEd2d 407 (1992). It is not plaintiffs’ position that federal law in this case prohibits all state regulation of either patented or unpatented mining claims. Plaintiffs believe that the local ordinance is unconstitutional under the Supremacy Clause because the local ordinance is in conflict with the Mining Act of 1872.15. In addition to the Mining Act of 1872, plaintiffs also believe that other federal laws preempt the ordinance at issue. In plaintiffs’ complaint, they argue that the ordinance violates plaintiffs’ rights to surface mine pursuant to the 1976 Federal Land Policy and Management Act, 43 USC §§ 1701, et seq., and the National Environment Policy Act of 1969, 42 USC § 4321 et. seq.. Plaintiffs’ brief in support of its motion for partial summary judgment also points out that the Stock Raising Homestead Act of 1916, 43 USC § 291, also creates a legal right to enter and mine federal lands. Plaintiffs’ main emphasis is that the Lawrence County ordinance is in conflict with the Mining Act of 1872. Therefore, this Court will first consider if the Mining Act of 1872 preempts the ordinance. Only upon a conclusion that the Mining Act of 1872 does not preempt the ordinance will the Court consider if the other federal statutes preempt the Lawrence County ordinance.{fn15} See California Coastal Commission v. Granite Rock Co., 480 US 572, 107 SCt 1419, 1426, 94 LEd2d 577 (1987) (concluding that Mining Act of 1872 does not preempt all state regulation of unpatented mining claims in national forests).

[¶24]  2.  Mining Act of 1872 and Subsequent Federal Law

[¶25]  The foundation of federal mining law began with the Mining Act (Law) of 1872 (“Mining Act”). Brubaker v. Board of County Commissioners, 652 P.2d 1050, 1054 (Colo. 1982). Section 22 of the Mining Act provides:

[e]xcept as otherwise provided, all valuable mineral deposits in lands belonging to the United States, both surveyed and unsurveyed, shall be free and open to exploration and purchase ... by citizens of the United States ... according to the local customs or rules of miners in the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States.

30 USC § 22 (emphasis added). The Mining Act permits private citizens to enter federal lands and explore for mineral deposits. Granite Rock, 107 SCt at 1422. “As evidenced by [section 22], the underlying purpose of the mining laws is to encourage exploration for and development of mineral resources on public lands.” Brubaker, 652 P.2d at 1055 (citing United States v. Weiss, 642 F2d 296 (9th Cir. 1981)). Under the Mining Act, once a person locates a valuable mineral deposit on federal land, and properly complies with the other statutory requirements, the individual will have the exclusive right to the possession of the land but the United States retains title. Granite Rock, 107 SCt at 1422 (citing 30 USC § 26). “The holder of a perfected mining claim may secure a patent to the land by complying with the requirements of the Mining Act and regulations promulgated thereunder, see 43 CFR § 3861.1 et seq. (1986), and, upon issuance of the patent, legal title to the land passes to the patent holder.” Id.

[¶26]   At the time of the enactment of the Mining Act, environmental issues were not yet a concern. However, since the enactment of the Mining Act, subsequent acts have been enacted relating to mining claims located on federal land. In 1955, Congress enacted the Multiple Surface Use Act, codified and amended at 30 USC §§ 611-615, which gave the Bureau of Land Management (“BLM”) the authority to manage non-mineral resources within the boundaries of an unpatented mining claim. See 30 USC § 612. Passage of this Act ended a claimant’s exclusive right of possession. In 1976, the Federal Land Policy and Management Act (FLPMA), 43 USC § 1701, et seq., also affected mining law. The FLPMA required that the secretary, in managing the public lands, take action necessary to prevent unnecessary degradation of the public lands. This Act also recognized that “public lands should be managed in a manner which recognizes the Nation’s need for domestic sources of minerals ... from the public lands including implementation of the Mining and Minerals Policy Act of 1970 ... as it pertains to public lands.” 43 USC § 1701(a)(12).

[¶27]  3.  Persuasive Case Law

[¶28]  In Brubaker v. Board of County Commissioners, 652 P.2d 1050 (Colo. 1982), the Supreme Court of Colorado held that the El Paso County Board of County Commissioners’ (“the Board”) denial of plaintiffs’ use permit authorizing plaintiffs to conduct limited test drilling on the site of the plaintiffs’ unpatented mining claims located on federal land violated the preemption doctrine. Although Brubaker does not involve a facial challenge to a local zoning ordinance, the conclusions reached by the Colorado Supreme Court provide insight to the issue currently before this Court.

[¶29]  The court in Brubaker determined that “the Board ha[d] applied its zoning ordinances so as to prohibit a use of federal property that has been authorized by federal law.” Id. at 1054. Plaintiffs in Brubaker argued that the Board’s denial of the use permit was in conflict with the Mining Act of 1872. The court recognized that the mining laws were enacted so “that the prospector could go out into the public domain, search for minerals and upon discovery establish a claim to the lands upon which the discovery was made.” Id. at 1056 (citing United States v. Curtis-Nevada Mines, Inc., 611 F2d 1277, 1281 (9th Cir. 1980)). The plaintiffs’ very reason for seeking the use permit was to “conduct drilling operations necessary to establish their discovery of valuable mineral deposits on the contested claims.” The Brubaker court concluded, “The Board seeks not merely to supplement the federal scheme, but to prohibit the very activities contemplated and authorized by federal law. Such a veto power is not consistent with the Supremacy Clause.” Id.

[¶30]  In reaching its conclusion, the Colorado Supreme Court reasoned that the plaintiffs’ activity could be characterized as “exploration” and therefore fell within the “express scope” of the Mining Act of 1872. Id. at 1057. Section 22 of the Act provides “all valuable mineral deposits in lands belonging to the United States ... shall be free and open to exploration and purchase ... .” The court reasoned that denying plaintiffs their right to core drilling would prohibit them from determining the validity of their claims. Id. By denying plaintiffs the ability to determine the validity of their claims, the court determined that the Board’s actions “frustrate[d] implementation of the very scheme of disposition of federal mineral lands that is at the core of 30 USC § 22.” Id. at 1057-58.

[¶31]  The court also concluded that the Board’s actions were not saved by the provisions in 30 USC §§ 22 and 26 which authorized state regulation. The court concluded that these sections did not provide support for the Board’s position because the sections only allowed state regulation if that regulation was not inconsistent with federal law. Id. at 1058. In reaching this conclusion, the Court relied on the United States Supreme Court case of Butte City Water Co. v. Baker, 196 US 119, 25 SCt 211, 49 LEd409 (1905). In Baker, the Court upheld a Montana law which prescribed certain location requirements for mining claims. Brubaker, 652 P.2d at 1058. However, in interpreting the Baker Court’s decision, the Colorado Supreme Court noted that in Baker the Court did not “sanction all state regulation of mining claims, and indicated that state laws prohibiting activities authorized by the federal mining laws would be impermissible.” Brubaker, 652 P.2d at 1058 (emphasis added).

[¶32]  The court’s conclusion in Brubaker lends support to this Court’s conclusion in this case. The court stated:

It is established that state or local regulation supplementing the mining laws is permissible. See 30 USC §§ 22, 26; Butte City Water Co. v. Baker, supra; State ex rel. AndrU.S. v. Click, [554 P.2d 969 (Idaho 1976)]. State and local laws that merely impose reasonable conditions upon the use of federal lands may be enforceable, particularly where they are directed to environmental protection concerns. See State ex rel. AndrU.S. v. Click, supra; Note, State and Local Control of Energy Development on Federal Lands, 32 Stanford L. Rev. 373 (1980). Indeed, the appellants concede that such regulation is proper. In this case, however, the Board seeks not to regulate but to prohibit the appellants’ core drilling activities. In the resolution denying the application the Board stated that its reasons for this action were inconsistency of the appellants’ proposed activities with the long-range land use plans of El Paso County and with existing, surrounding uses. This is not denial of a permit because of failure to comply with reasonable regulations supplementing the federal mining laws, but reflects simply a policy judgment as to the appropriate use of the land. That judgment cannot override the conflicting directive of federal legislation. As stated in Ventura County, 601 F2d at 1084, “The federal Government has authorized a specific use of federal lands, and [the county] cannot prohibit that use, either temporarily or permanently, in an attempt to substitute its judgment for that of Congress.”

Brubaker, 652 P.2d at 1059.

[¶33]   In Brubaker, the court also rejected the conclusion that the Mining Act of 1872 was not preempted because of environmental acts which have been passed following Congress’s enactment of the Mining Act. The trial court had concluded that the Board’s actions furthered the environmental concerns of the National Environmental Policy Act of 1969 (NEPA), 42 USC § 4321 et seq., and the Environmental Quality Improvement Act of 1970, codified at 42 USC §§ 4371-4374 (1976), and that therefore, the Board’s denial of the use permit was consistent with Congress’s intent. Brubaker, 652 P.2d at 1059. The court concluded that the “‘NEPA was not intended to repeal by implication any other statute.’” Id. (quoting United States v. SCRAP, 412 US 669, 694, 93 SCt 2405, 2419, 37 LEd2d 254, 273 (1973)). “If there is unavoidable conflict between NEPA and other federal authority, it is the NEPA that must give way.” Id. at 1059-60 (citing Flint Ridge Development Co. v. Scenic Rivers Ass’n, 426 US 776, 96 SCt 2430, 49 LEd2d 205 (1976)). The court in Brubaker also concluded that reference to legislation following the enactment of the NEPA, the Mining and Minerals Policy Act of 1970, 30 USC § 21a (1976), did not support the trial court’s conclusion. Id. at 1060. The Mining and Minerals Policy Act provides in pertinent part, “it is the continuing policy of the Federal Government in the national interest to foster and encourage private enterprise in ... the orderly and economic development of domestic mineral resources ... .” Id. (citing 30 USC § 21a).

[¶34]  In Brubaker, the court relied on the Ninth Circuit case of Ventura County v. Gulf Oil Corp., 601 F2d 1080 (1979), aff’d, 445 US 947, 100 SCt 1593, 63 LEd2d 782. In Ventura, the issue on appeal was whether Ventura County (“Ventura”) could require the federal government’s lessee, Gulf Oil Corporation (“Gulf”), “to obtain a permit from Ventura in compliance with Ventura’s zoning ordinances governing oil exploration and extraction activities before Gulf c[ould] exercise its rights under the lease and drilling permits acquired from the government.” Ventura, 601 F2d at 1082. The county permits are granted if based upon eleven mandatory conditions and additional conditions at the discretion of the planning board. Gulf was advised by Ventura that if it wanted to continue its drilling operations it would need to obtain a permit.

[¶35]  Ventura filed a complaint against Gulf seeking a preliminary injunction which would require Gulf to obtain a permit from the county to continue drilling. The district court dismissed Ventura’s complaint against Gulf for a preliminary injunction. Ventura argued on appeal that the district court erred in finding that the local ordinance requiring a permit was preempted by federal law.

[¶36]   The Mineral Lands Leasing Act of 1920, 30 USC §§ 181 et seq., leased 120 acres located within the Los Padres National Forest in Ventura for purposes of oil exploration and development. The regulation of oil exploration and drilling under the Mineral Lands Leasing Act is extensive. The lease signed by Gulf contained requirements involving protection of the environment. Since the land leased by Gulf was within a national forest, the lease had additional conditions which were designed to combat the environmental hazards which may result from the mining operations. Gulf was also required to obtain specific drilling permits from the Department of the Interior, Geological Survey, and the Department of Agriculture. The Geological Survey formalized its procedures according to NEPA and approved Gulf’s proposed drilling subject to ten conditions. The Forest Service also issued Gulf a permit subject to conditions aimed at the protection of the national forest. Gulf was also subject to regulations promulgated by the Secretary of the Interior involving oil and gas leasing and subsurface and surface operations. In addition, given that the land was within a national forest, Gulf must also comply with the regulations of the Secretary of Agriculture. Even though the federal government had set up an extensive permit scheme, Ventura believed that it was entitled to final approval. Ventura sought to require Gulf to obtain an open use permit which may be issued on whatever conditions Ventura determined appropriate or may not be issued at all.

[¶37]  The court in Ventura held that federal law preempted the local ordinance because the local ordinance would “stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Id. at 1086. The court rejected Ventura’s argument that the savings clause in the Mineral Lands Leasing Act16. The savings clause stated:

Nothing in this chapter shall be construed or held to affect the rights of the States or other local authority to exercise any rights which they may have, including the right to levy and collect taxes upon improvements, output of mines, or other rights, property, or assets of any lessees of the United States.

Ventura, 601 F2d at 1086 (quoting 30 USC § 189).{fn16} authorized the state ordinance. The court held that the proviso to the savings clause reserved to the states only rights which the states already possessed and a state does not possess the right to “apply local regulations impermissibly conflicting with achievement of a congressionally approved use of federal lands.” Id. Relying on Kleppe, the court concluded, “‘[W]here those state laws conflict ... with other legislation passed pursuant to the Property Clause, the law is clear: The state laws must recede.’” Id. (quoting Kleppe, 96 SCt at 2293-94). See also State ex rel. AndrU.S. v. Click, 554 P.2d 969 (Idaho 1976) (holding that requiring a permit and the restoration of the land after the mining operations had concluded did not preempt federal law; however, the court did recognize that where a state regulation rendered it impossible to exercise a right granted through federal legislation, that state regulation would be in conflict with the federal right).17. In Andrus, the Idaho Supreme Court held that a local regulation requiring an application of a permit to conduct mining operations on federal land did not violate the preemption doctrine. To obtain a permit, an operator had to pay a fee which established a surety bond that was conditioned upon certain obligations. An operator was obligated to return the land and streams disturbed by the mining operations to their original state, so far as reasonably possible.{fn17}

[¶38]  4.  Mining Act of 1872 Preempts Lawrence County Ordinance

[¶39]  This Court holds that the Mining Act does leave room for local regulation; however, that local regulation must not conflict with federal law. Brubaker, 652 P.2d at 1056. 30 USC § 22 allows the right to explore and purchase mineral deposits belonging to the United States “under regulations prescribed by law, and according to the local customs or rules of miners in the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States.” 30 USC § 22 (emphasis added). Section 26 of the Act defines a locator’s right to possession and enjoyment of the mining claim as long as the locator complies with “law of the United States, and with State, territorial, and local regulations not in conflict with the laws of the United States.” 30 USC § 26 (emphasis added). The Act is clear that local regulations are not permitted to the extent that they would conflict with the Act.

[¶40]  The Lawrence County ordinance prohibits surface mining which is authorized under federal law. Therefore, the Court finds that a conflict exists between local law and federal law. See, e.g., Brubaker, 652 P.2d at 1060; Ventura, 601 F2d at 1085-86; State ex rel. Cox v. Hibbard, 570 P.2d 1190, 1195 (Or. Ct. App. 1977). Based upon this conflict, this Court holds that federal law, specifically the Mining Act of 1872 preempts local law. ENSCO, 807 F2d at 744. When a federal law preempts a local ordinance, that ordinance is deemed to be without effect. Cipollone, 112 SCt at 2617. This Court finds the Lawrence County ordinance is without effect.

[¶41]  5.  Arguments by Action and Cole

[¶42]  Action and Cole (“the proponents”) present two main arguments for their conclusion that summary judgment is not warranted. First, they believe that there is not a conflict between the Mining Act of 1872 and the Lawrence County ordinance. Second, they argue in the alternative that if the Court determines that there is a conflict, that the issue is inappropriate for summary judgment. The Court is unconvinced. The ordinance defines an absolute prohibition against the issuance of new permits or amendments. Reasonable regulation is one thing— absolute prohibition is quite another. The ordinance’s absolute prohibition of surface mining is in violation of the Mining Act of 1872. Federal laws and regulations recognize the environmental effects which mining may have on the land. Those regulations provide adequate safeguards to whatever environmental impact surface mining may have on this existing area.

[¶43]  The cases relied upon by Action and Cole in arguing that the Lawrence County ordinance does not create a conflict between local and federal law are distinguishable. Those cases did not involve an absolute prohibition of an “act.” See State ex rel. Cox v. Hibbard, 570 P.2d at 1194 (distinguished Ventura on the grounds that zoning ordinance at issue in Ventura was attempting to prohibit any and all oil exploration and extraction activities and the ordinance at issue in Cox required a state permit to mine on federal lands; the court concluded that requiring a permit to mine was not the same as the banning of all mining activity and that the permit did not preempt federal law). In addition, in some of the cases relied upon by Action and Cole the federal statute at issue also authorizes the state to establish more restrictive state regulation if the state so chooses.

[¶44]  State ex rel. AndrU.S. v. Click, 554 P.2d 969 (Idaho 1976), is one such case. Action and Cole argue that often federal environmental regulations are a floor, not a ceiling to the regulation which a state may enact. This Court distinguishes Andrus from this case in that the federal statute at issue in that case permitted greater regulations by the state. Action and Cole also rely on Blue Circle Cement, Inc. v. Board of County Commissioners of the County of Rogers, 27 F3d 1499 (10th Cir. 1994).18. In Blue Circle, an operator of a cement manufacturing plant, Blue Circle, brought suit against the board of county commissioners arguing that the ordinance which was enacted by the board was preempted by federal law, the Resource Conservation and Recovery Act (RCRA). The county ordinance required operators to obtain a conditional use permit to establish an industrial waste disposal site. Blue Circle felt that its burnings of hazardous waste fuels (HWFs) in its cement plant did not constitute disposal but constituted “recycling” or “burning for energy recovery.” Therefore, Blue Circle determined that it was not required to comply with the ordinance. A subsequent ordinance was enacted defining “disposal.” Under this ordinance, Blue Circle would have been required to obtain from the board a conditional use permit. Rather than obtaining a permit, Blue Circle filed suit in federal district court seeking a declaratory judgment. One of Blue Circle’s arguments was that the county ordinance was preempted by federal law. The district court held that the RCRA did not preempt the county ordinance and Blue Circle appealed. The Tenth Circuit affirmed the district court’s decision.{fn18} This Court distinguishes the decision reached by the court in Blue Circle for the same reason as it distinguished Andrus—the federal statute at issue gives the state and local government the power to enact regulations which are more stringent than those imposed on the federal level. See 42 USC § 6929 (federal statute at issue in Blue Circle). The Mining Act of 1872 only permits state and local ordinances which are not inconsistent with the federal laws. The Mining Act does not give state and local governments more authority than the federal laws.

[¶45]   Second, in Blue Circle the country ordinance was not a total prohibition on disposal of hazardous waste. The court in Blue Circle even recognizes that county ordinances which have prohibited storage, treatment, or disposal of hazardous waste have been held to be preempted by the RCRA. See, e.g., ENSCO, 807 F2d at 744-45; Hermes Consol., Inc. v. People, 849 P.2d 1302, 1311 (Wyo. 1993); City of Jacksonville v. Arkansas Dep’t of Pollution Control & Ecology, 824 SW2d 840, 842 (Ark. 1992). To the contrary, the Lawrence County ordinance is a total prohibition on surface mining. See also LaFarge Corp. v. Campbell, 813 FSupp 501 (W.D. Tex. 1993) (federal statute also allows more stringent state regulation and is not a total prohibition);19. Action for the Environment and Cole also rely on this case. The district court in LaFarge held that a prohibition of hazardous waste treatment in a state law was not preempted by a federal law which encouraged such treatment. See 42 USC § 6929. The Texas statute at issue in LaFarge prohibits a new commercial hazardous waste management facility from receiving a permit from the Texas Water Commission and the Texas Air Control Board if the facility is within one-half mile of certain structures. LaFarge unsuccessfully argued that the statute was preempted by the Resource Conservation and Recovery Act and the Environmental Protection Agency’s regulation on Boiler and Industrial Furnaces. However, Cole and Action fail to point out one important point, that the federal statute at issue in LaFarge allowed the state to enact requirements which were more stringent than federal law. LaFarge, 813 FSupp at 508. In addition, the court concluded that the state law did not result in a absolute prohibition of federal law.

  Action and Cole rely on LaFarge in arguing that the facts in this case are comparable. In LaFarge, the court did not find that prohibiting the disposal of hazardous waste within a specified area was preempted by federal law. Cole and Action believe that the Lawrence County ordinance is attempting to achieve the same result as the Texas statute in LaFarge. The two are not comparable. LaFarge did place limits on disposal within a certain area, but those limits were based upon specific criteria. The Lawrence County ordinance does not have any conditions or criteria for its prohibition of surface mining with the Spearfish Canyon.{fn19} California Coastal Commission v. Granite Rock Co., 480 US 572, 107 SCt 1419, 1428, 94 LEd2d 577 (1987) (state law was not a total prohibition).

[¶46]  This Court concludes that the Lawrence County local ordinance violates the preemption doctrine. There is a conflict between federal law and the ordinance. “[W]here those state laws conflict ... with other legislation passed pursuant to the Property Clause, the law is clear: The state laws must recede.” Kleppe, 96 SCt at 2293-94.

[¶47]  B.  State Law

[¶48]  The Court, having found that the ordinance is invalid as being in conflict with federal law, need not address the issue of a violation of state law. Such a determination should more appropriately be addressed by a South Dakota state court. Whether the ordinance is in violation of state law is moot by this Court’s holding that Lawrence County Ordinance Number 1, Section 5.11.6 is a violation of federal law.

VI. CONCLUSION

[¶49]Given the above analysis of federal and state law, it is hereby

[¶50]  ORDERED that plaintiffs’ motion for partial summary judgment (Docket # 11) is granted.

[¶51]  IT IS FURTHER ORDERED that the ordinance is deemed to be without effect or invalid and Lawrence County is enjoined from enforcing the ordinance. A judgment issuing a permanent injunction shall issue forthwith.

[¶52]  IT IS FURTHER ORDERED that based upon this opinion, the Court deems that oral argument is unnecessary.



Robinson v. Callahan, 1997 DSD 28

LYLE ROBINSON,

Plaintiff,

v.

JOHN J. CALLAHAN,

Acting Commissioner of Social Security,

Defendant.

[1997 DSD 28]

United States District Court

District of South Dakota - Western Division

CIV. 97-5036

MEMORANDUM OPINION AND ORDER

Opinion Filed October, 1997

Richard H. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  Pending are cross-motions for summary judgment by both parties in this case. Plaintiff protectively filed for supplemental security income on September 27, 1994, and for disability insurance benefits on October 18, 1994. After being denied through the reconsideration level, he timely requested a hearing which was held before an Administrative Law Judge (ALJ) on April 4, 1996. (A.R. 84-113). At the hearing, Robinson was represented by counsel, Catherine R. Enyeart. (A.R. 86). Robinson and vocational expert Earl Houston provided testimony at the hearing. (A.R. 84-113).

[¶2]  On July 16, 1996, the ALJ issued his decision denying Robinson’s claim. (A.R. 65-78). The ALJ determined that Robinson was not disabled because he retained the residual functional capacity to perform “jobs that exist in significant numbers in the national and regional economies. Examples of such jobs are: dispatcher, order clerk and gate guard.” (A.R. 75 (Findings 8, 9)). On March 6, 1997, the Appeals Council declined review of the ALJ’s determination. (A.R. 4-5). On April 25, 1997, Robinson commenced this action to review the Commissioner’s final decision denying his claim. See Docket #1.

[¶3]  This Court has jurisdiction under 42 USC § 405(g) and 42 USC § 1383(c)(3).

FACTS

[¶4]  Robinson was born in 1964. He failed to complete the eighth grade but is one course shy of attaining his GED. (A.R. 87). From 1981 up until September 10, 1992, he held numerous positions in the construction, or construction-related, field throughout the Rapid City area. (A.R. 384-390). Robinson alleged that on September 10, 1992, he injured his back while working and that injury, combined with other maladies, has prevented him from working since. (A.R. 88-89).

[¶5]  A.  MEDICAL EVIDENCE

[¶6]  As a child, Robinson was diagnosed with cancer of the kidney, or Wilms’ tumor, and treated with cobalt radiation. (A.R. 333-34). Robinson’s physical development has been affected by the radiation so that an atriphocation of the surrounding area has resulted. (A.R. 252).

[¶7]  On December 14, 1990, Robinson had surgery on his right knee to relieve pain resulting from an accident on an oil rig on July 2, 1990. (A.R. 397; 208-209). Following the operation, therapy and examination concerning the knee injury continued under the care of Dr. Timothy J. Gill. (A.R. 208-212). On July 30, 1990, Dr. Gill indicated that there was a 10 percent permanent partial impairment and ordered no further restrictions on activity. (A.R. 211-12).

[¶8]  On October 23, 1991, Robinson underwent surgery to repair damage to his left ankle which was injured in a bar fight. (A.R. 242). On December 3, 1991, Dr. Lew Papendick recommended Robinson return to work as his ankle allowed. (A.R. 212).

[¶9]  On September 10, 1992, Robinson went to the emergency room at Rapid City Regional Hospital after straining his back while lifting roof trusses. (A.R. 239-40). The emergency outpatient record indicates Robinson suffered from “lumbar disc displacement” and two “ruptured discs.” (A.R. 225). Robinson was referred to Dr. Steven Goff who became his treating physician for the back ailment for the next several years. From September 21, 1992, to December 25, 1995, Robinson had intermittent bouts of pain and inflexibility due to the back injury. He sporadically received chiropractic and physical therapy for the ailment and visited the emergency room complaining of back pain on three separate occasions. (A.R. 399-409). Additionally, Robinson received emergency treatment for chest pain on November 23, 1993(A.R. 403), abdominal pain on December 6, 1993 (A.R. 404), drug abuse on July 12, 1994 (A.R. 405), facial injuries on July 5, 1995 (A.R. 407), and a broken hand on December 20, 1995. (A.R. 409).

[¶10]  B.  ALJ DECISION

[¶11]  In evaluating Robinson’s claims, the ALJ applied the five-step sequence specified in 20 CFR §§ 404.1520 (Title II), 416.920 (Title XVI). (A.R. 68-74).1. The determination of whether a claimant is entitled to Title II disability insurance benefits or Title XVI supplemental security income benefits must be made according to the following five-step sequential evaluation. See 20 CFR § 404.1520 (Title II); 20 CFR § 416.920 (Title XVI). Step One: The ALJ must determine if the claimant is engaged in “substantial gainful activity.” If so, the claimant cannot be found disabled. Step Two: If the claimant is not engaged in substantial gainful activity, the ALJ must determine if the claimant suffers from a “severe impairment.” Step Three: If the claimant does have a severe impairment, the ALJ must next determine if this impairment meets or equals an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. If the claimant has a listed impairment, then the claimant must be found to be disabled. Step Four: If the claimant does not have a listed impairment, the ALJ must determine whether the claimant can return to his or her past relevant work. If the claimant can return to past relevant work, he or she is not entitled to benefits. Step Five: If the claimant cannot return to past relevant work, then the burden shifts to the Commissioner to demonstrate that the claimant can do some other work which exists in substantial numbers in the national economy. If the Commissioner does not carry this burden, the claimant must be found to be disabled. {fn1} The ALJ first determined that Robinson has not engaged in substantial gainful activity since September 2, 1992. (A.R. 69; A.R. 74 (Finding 1)). In step two of the sequential evaluation, he determined that Robinson has a post disc herniation which constituted a severe physical impairment. (A.R. 69; A.R. 74 (Finding 2)). However, the ALJ discounted Robinson’s claims of a severe mental impairment as not supported by the evidence. (A.R. 69). The ALJ concluded in step three of the sequential evaluation that although Pierce’s impairments may be considered to be “severe,” they are not impairments which meet or equal an impairment listed in 20 CFR Part 404, Subpt. P, App. 1. (A.R. 70; A.R. 74 (Finding 3)).

[¶12]  In step four of the sequential evaluation, the ALJ determined that based on the medical evidence and testimony, Robinson would be unable to return to his past relevant work as a carpenter, cement finisher, equipment operator, roofer, and deck hand in an oilfield because of the exertional requirements involved in these occupations. (A.R. 70; A.R. 75 (Finding 6)). Under step five of the sequential evaluation, the ALJ acknowledged that the Commissioner had the burden of proving that a significant number of jobs existed in the national and regional economies which Robinson could still perform considering his combined medically determinable impairments, functional limitations, age, education, and past work experience. (A.R. 70-74).

[¶13]  The ALJ made a determination that Robinson’s allegations regarding the severity and extent of his pain and suffering were “inconsistent, exaggerated, and not fully credible.” (A.R. 71; A.R. 75 (Finding 4)). The ALJ concluded that Robinson has the residual functional capacity to perform the physical exertional and nonexertional requirements of sedentary work as long as it does not involve lifting over ten pounds, allows sitting, stretching and position changes, and permits limited standing and walking. (A.R. 75 (Finding 5)).

[¶14]  Based in part on the testimony of Earl Houston, a vocational expert, the ALJ found Robinson to have some transferable work skills and that jobs exist in significant numbers in the national and regional economy which Robinson is capable of performing. (A.R. 74-75 (Finding 8)). Examples of the types of position which Robinson is capable of performing, according to the vocational expert, include dispatcher, order clerk, and gate guard. (A.R. 74; 75 (Finding 8)). Therefore, the ALJ concluded that Robinson is not disabled as defined by the Social Security Act. (A.R. 74; 75).

STANDARD OF REVIEW

[¶15]  The decision of the ALJ must be upheld if it is supported by substantial evidence in the record as a whole. 42 USC § 405(g); Metz v. Shalala, 49 F3d 374, 376 (8th Cir. 1995) (citing Sullins v. Shalala, 25 F3d 601, 603 (8th Cir. 1994)); Smith v. Shalala, 987 F2d 1371, 1373 (8th Cir. 1993). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support such a conclusion. Shannon v. Chater, 54 F3d 484, 486 (8th Cir. 1995) (citing Richardson v. Perales, 402 US 389, 401, 91 SCt 1420, 1427, 28 LEd2d 842 (1971)). Review by this Court extends beyond a limited search for the existence of evidence supporting the Commissioner’s decision to include giving consideration to evidence in the record which fairly detracts from the decision. Brockman v. Sullivan, 987 F2d 1344, 1346 (8th Cir. 1993); Locher v. Sullivan, 968 F2d 725, 727 (8th Cir. 1992); Turley v. Sullivan, 939 F2d 524, 528 (8th Cir. 1991). However, the Court’s role is to determine whether there is substantial evidence in the record as a whole to support the decision of the Commissioner and not to re-weigh the evidence or try the issues de novo. Murphy v. Sullivan, 953 F2d 383, 384 (8th Cir. 1992). Furthermore, a reviewing court may not reverse the Commissioner’s decision “merely because substantial evidence would have supported an opposite decision.” Woolf v. Shalala, 3 F3d 1210, 1213 (8th Cir. 1993); Smith v. Shalala, 987 F2d at 1374 (citing Locher, 986 F2d at 727 (quoting Baker v. Heckler, 730 F2d 1147, 1150 (8th Cir. 1984))).

[¶16]  In addition to reviewing the Commissioner’s decision to determine if it is supported by substantial evidence in the record as a whole, the Court must review the Commissioner’s decision to determine if an error of law has been committed. Smith v. Sullivan, 982 F2d 308, 311 (8th Cir. 1992); Nettles v. Schweiker, 714 F2d 833, 836 (8th Cir. 1983). The Commissioner’s conclusions of law are only persuasive, not binding, on the reviewing court. Smith, 982 F2d at 311; Satterfield v. Mathews, 483 FSupp 20, 22 (E.D. Ark. 1979), aff'd per curiam, 615 F2d 1288, 1289 (8th Cir. 1980).

DISCUSSION

[¶17]  In support of his motion for summary judgment, Robinson contends the ALJ’s decision was in error for the following reasons: (1) failure to find that Robinson’s impairment satisfied the definition of a listed impairment; (2) failure to give proper weight to Robinson’s testimony; (3) failure to consider all of Robinson’s maladies in reaching a decision; (4) failure to find Robinson’s mental impairment “severe”; and (5) failure to seek expert advice when completing the Psychiatric Review Technique Form (PRTF).

[¶18]  A.   LISTED IMPAIRMENT

[¶19]  20 CFR § 404.1520 outlines the procedure necessary to determine if a claimant is disabled. Subpart (d) of §404.1520 indicates that if the impairment involved meets or is equal to a listed impairment in Appendix 1 the claimant is disabled and the inquiry ceases. In this case, the ALJ examined the medical evidence in light of 20 CFR §404 Subpt. P, App. 1, § 1.05(C) (Listing § 1.05) and determined that claimant had not met the burden of establishing all the elements required in that section. (A.R. 70). Specifically, the ALJ noted that Robinson failed to show that his back impairment created a significant limitation in motion and significant motor loss as Listing § 1.05 requires. (A.R. 70). In support of this finding the ALJ noted that the medical record indicates that at various times throughout the preceding years, Robinson had minimal limitation of motion and motor loss. (A.R. 70).

[¶20]  Robinson contends that the ALJ erred by failing to find that his musculoskeletal problems met or equaled the definition in Listing § 1.05. Plaintiff’s Opening Memorandum (Plaintiff’s Brief) at 16-17. Claimant contests the ALJ’s finding that the impairment did not result in a “significant” loss of motion and motor loss and urges the Court to adopt a more forgiving interpretation of “significant” as used in Listing § 1.05. Id. The Court refuses to become mired in this semantical debate. As mentioned above, the role of this Court is to determine if the findings of the ALJ are supported by substantial evidence. Murphy, 953 F2d at 384. On the issue of the requirements of Listing § 1.05 the Court does so find.

[¶21]  As the ALJ noted, it is evident by the record that Robinson suffers from severe back pain. (A.R. 70). The record is less clear as to the extent the impairment limits Robinson’s motion and motor skills. Significant evidence indicates that Robinson’s impairment does not illicit significant restrictions in movement and motor skills. Dr. Goff repeatedly indicates that Robinson is capable of light work. (A.R. 299, 297, 296, 293, 290, 159). Moreover, as late as March 10, 1994, Dr. Goff indicated that “[H]is symptoms have all but disappeared.” (A.R. 292). Later in that same report Dr. Goff estimated that Robinson could do “two-thirds to three-fourths” of what he did in his prior construction-related jobs. (A.R. 292). The chiropractic reports also indicate that Robinson’s impairment was not severely limiting his mobility and motor skills. Rhonda Woods indicated in her reports that Robinson went for walks frequently, of up to three miles, and that his back pain was intermittent. (A.R. 69). While Ms. Woods noted periods of increased, severe pain and lessened flexibility, this was the exception and not the rule. It is apparent from the above that the ALJ was supported by substantial evidence that Robinson’s impairment did not satisfy the elements of Listing § 1.05.

[¶22]  B.   ROBINSON’S CREDIBILITY

[¶23]  After hearing all the evidence, the ALJ concluded that Robinson’s testimony was not entirely credible. (A.R. 71; 75 (Finding 4)). It was further noted that the evidence established that Robinson does suffer pain from his back and other ailments; however, as the ALJ indicated, the issue is “whether the claimant’s pain is of such an intensity that it precludes ‘substantial gainful activity.’” (A.R. 72). It is the degree of pain and its impact where the ALJ determined Robinson’s testimony was not credible. The Court finds no error with this finding of the ALJ.

[¶24]  An ALJ has the discretion to discredit claimant’s subjective assertions of pain and suffering if not supported by medical evidence. Cruse v. Bowen, 867 F2d 1183 (8th Cir. 1989). In this case the ALJ outlined his responsibility to evaluate the subjective assertions of Robinson according to the five-step standard from Polaski v. Heckler, 739 F2d 1320, 1322, supplemented, 751 F2d 943 (8th Cir.), vacated, 476 US 1167, 106 SCt 2885, 90 LEd 2d 974 (1986), adhered to on remand, 804 F2d 456 (8th Cir. 1986), cert. denied, 482 US 927, 107 SCt 3211, 96 LEd 2d 698 (1987). After reviewing the evidence pursuant to the Polaski procedure, the ALJ concluded that Robinson’s testimony was inconsistent with other evidence including: claimant’s daily activity of caring for two young children, the duration and frequency of pain, the precipitating and aggravating factors; and the functional restrictions imposed by the pain. (A.R. 72).

[¶25]  After reviewing the entire record, this Court believes that the weight given to Robinson’s testimony is supported by substantial evidence. The ALJ did not neglect to consider the testimony of Robinson, and in fact believed he was in substantial pain. Id. However, the other evidence undermines the assertions made by Robinson. First, he testified that he took care of his two young children, ages two and five, virtually every day. (A.R. 106). This included lifting and playing with them. (A.R. 110-11). Robinson later testified that the children weighed 25-30 pounds. (A.R. 116). Second, Robinson testified that he was often unable to concentrate due to the pain. (A.R. 96-97). Yet he is considering attending vocational training classes in addition to already taking courses toward his GED; both of which require the ability to concentrate and sit for lengthy periods of time. (A.R. 109-10; 87) Third, on at least two occasions after the back injury, Robinson indicated he went on walks of over three miles, including one walk of five miles. (A.R. 69; 103). This not only indicates his ability to walk but also his stamina and endurance. These discrepancies provide a sufficient basis to discount Robinson’s subjective complaints of debilitating pain.

[¶26]  C.  CONSIDERATION OF ALL OF ROBINSON’S IMPAIRMENTS

[¶27]  Robinson next contends that the ALJ erred by not considering the cumulative effect of Robinson’s several impairments. Plaintiff’s Brief at 21. However, the ALJ noted the other maladies including mentioning by name the effects from the childhood cancer treatments and loss of a kidney. (A.R. 69). While he may not have mentioned specific injuries, it is apparent that he considered Robinson’s complete medical condition when analyzing the medical history summary provided by Robinson’s attorney. Id. Moreover, many of Robinson’s immediate health problems were addressed during the hearing for the ALJ to consider. These include: cancer as a child (A.R. 90); shoulder problems (A.R. 100-101); broken hand (A.R. 93); alcohol and drug abuse (A.R. 91-93); knee injury (A.R. 102); and an ankle injury (A.R. 102). Accordingly, the Court finds that the ALJ did consider Robinson’s entire medical condition in concluding that he was not disabled.

[¶28]  D.  MENTAL IMPAIRMENT

[¶29]  Robinson contends that the ALJ’s refusal to order further examination of Robinson’s alleged mental impairment and failure to develop a complete record on this issue require a remand. Plaintiff’s Brief at 21-22.

[¶30]  It is well established that the ALJ has a duty to fully and fairly develop the record. Boyd v. Sullivan, 960 F2d 733, 736 (8th Cir. 1992) (quoting Warner v. Heckler, 722 F2d 428, 431 (8th Cir. 1983)). The duty to develop the record may include ordering a consultative examination in appropriate cases. Dozier v. Heckler, 754 F2d 274, 276 (8th Cir. 1985). However, the regulations do not require the ALJ to order a consultative evaluation of every alleged impairment. See 20 CFR § 416.919a; Matthews v. Bowen, 879 F2d 422, 424 (8th Cir. 1989). The regulations require a consultive examination “when the evidence as a whole, both medical and nonmedical, is not sufficient to support a decision on [a] claim.” 20 CFR § 416.919a(b). Additionally, as with physical impairments, to establish a mental impairment “there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment.” Brown v. Shalala, 15 F3d 97, 98 (8th Cir. 1994); See 42 USC § 423(d)(5)(A); See also, 20 CFR § 404.1508, §404.1512(b)(1), § 404.1527(a)(1).

[¶31]  In this case, aside from his application for reconsideration, Robinson fails to demarcate where the medical evidence indicates he suffers from a mental impairment. His chiropractor, Rhonda Woods, indicates that “[U]ndoubtedly he has additional limitations; for example, affecting his concentration and mood, etc., resulting from chronic pain.” (A.R. 282). However, such an assertion from one with no training in depression or mental impairments is hardly grounds for further inquiry. The ALJ did consider claimant’s mental condition, including a possible substance abuse problem, and concluded that there was at most only a slight imposition on Robinson’s lifestyle due to lack of concentration etc... (A.R. 69-70) Given the paucity of medical evidence supporting plaintiff’s claim of depression, this Court concludes that there existed substantial evidence to support the ALJ in concluding that further examination was not warranted.

[¶32]  E.   PSYCHIATRIC REVIEW TECHNIQUE FORM

[¶33]  Additionally, Robinson claims that the failure to use the services of an expert to complete the PRTF is reversible error. Plaintiff’s Brief at 22.

[¶34]  In support of his contention, Robinson cites Montgomery v. Shalala, 30 F2d 98 (8th Cir. 1994). Montgomery is distinguishable. The Montgomery court noted that the ALJ has the discretion to complete the PRTF without the assistance of a medical advisor. Montgomery, 30 F3d at 101. However, the court cautioned that where there is evidence of a mental impairment a reasonable effort should be made to secure the assistance of an expert. Id. In that case the court determined that the claimant’s record, including a documented history of depression and one suicide attempt, provided sufficient evidence to warrant the aid of an expert. Id. at 100. Unlike the claimant in Montgomery, in the instant case there was little or no medical evidence which indicated that Robinson suffered from a mental impairment.2. See part D supra for further discussion of the lack of credible medical testimony concerning Robinson’s alleged mental impairment.{fn2}

[¶35]  Given the dearth of any credible medical evidence concerning Robinson’s alleged mental impairment, this Court finds that the ALJ properly exercised his discretion in completing the PRTF without the services of an expert.

CONCLUSION

[¶36]  The Commissioner’s decision that Robinson is not disabled because he has the residual functional capacity to perform the physical exertional and nonexertional requirements of sedentary work is supported by substantial evidence in the record as a whole.

[¶37]  Accordingly, it is hereby

[¶38]  ORDERED that Robinson’s motion for summary judgment (Docket #11) is denied.

[¶39]  IT IS FURTHER ORDERED that the Commissioner’s motion for summary judgment (Docket #13) is granted. The Commissioner shall have judgment against Robinson.



Symens v. SmithKline Beecham Corp., 1997 DSD 29

RICHARD SYMENS and JOYCE SYMENS,

Plaintiff,

v.

SMITHKLINE BEECHAM CORPORATION,

a Pennsylvania Corporation;

Defendant.

[1997 DSD 29]

United States District Court

District of South Dakota - Northern Division

CIV 94-1036

ORDER ON MOTION FOR SUMMARY JUDGMENT

Opinion Filed October, 1997

Charles Kornmann, District Judge

BACKGROUND

[¶1]  Plaintiffs are engaged in the feedlot business near Claremont, Marshall County, South Dakota. Beginning in July of 1992, and continuing until December of 1992, plaintiffs injected their cattle with the vaccine Bovishield 4 which was manufactured, tested and marketed by defendant. Plaintiffs contend that, despite vaccination, plaintiffs’ cattle and cattle belonging to others which cattle were in plaintiffs’ feedlot, contracted a disease resulting in weight loss or death. Plaintiffs instituted this diversity action, claiming that defendant’s Bovishield 4 vaccine is defectively designed and manufactured and unreasonably dangerous (Count I), that defendant breached implied warranties of fitness for a particular purpose and merchantability, (Counts II and III), that defendant falsely advertised and promoted the vaccine (Counts IV and V), that defendant failed to warn of foreseeable dangers associated with the use of the vaccine (Counts VI and VII), and that defendant knowingly supplied false information to the United States Department of Agriculture (“USDA”) in its applications for a license for the vaccine (Count 8). Defendants deny the material allegations of the complaint and have moved for summary judgment, Doc. 52, claiming plaintiffs’ claims are all preempted by the Virus-Serum-Toxin Act (VSTA), 21 USC § 151-159.

DISCUSSION

[¶2]  Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c), Donaho v. FMC Corp., 74 F3d 894, 898 (8th Cir. 1996). The issue of federal preemption is one of law for the court to decide. Defendant requested oral argument. Defendant has briefed this issue numerous times before numerous other federal and state courts and almost all of the issues have been adequately addressed by the parties and by other courts. Pursuant to D.SD LR 7.1, the motion will be decided without oral argument. Jetton v. McDonnell Douglas Corp., 121 F3d 423, 426-427 (8th Cir. 1997). Defendant’s motion for oral argument has been considered and denied.

[¶3]  The issue presented by defendant’s motion for summary judgment has been analyzed by at least five federal and state courts. See Lynnbrook Farms v. SmithKline Beecham Corp., 79 F3d 620 (7th Cir. 1996), cert. den. 117 SCt 178, 136 LEd 2d 118 (1996); Garrelts v. SmithKline Beecham Corp., 943 FSupp 1023 (ND Iowa 1996); Gresham v. Boehringer Ingelheim Animal Health, Inc., Civ. 95-3376, 1996 WL 751126 (ND Ga. August 7, 1996); Murphy v. SmithKline Beecham Animal Health Group, 898 FSupp 811 (D. Kan. 1995); and Brandt v. SmithKline Beecham Corp., 540 NW2d 870 (Minn. App. 1995). The issue presented was best stated by Judge Bennett in Garrelts as “whether the regulations promulgated by the ... VSTA ... preempt plaintiffs’ state tort claims, because plaintiffs’ claims are allegedly premised on inadequate labeling of a product whose label had been approved by the agency under its regulations.” Garrelts v. SmithKline Beecham, 943 FSupp at 1028. Garrelts and Gresham decided that the VSTA did not preempt some state law claims. Lynnbrook, Murphy, and Brandt held that the VSTA completely preempted state law claims.

[¶4]  The United States Supreme Court has “recognized that the Supremacy Clause, US Const., Art. VI, may entail pre-emption of state law either by express provision, by implication, or by a conflict between federal and state law.” New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins., 514 US 645, 654, 115 SCt 1671, 1676, 131 LEd 2d 695 (1995); Freightliner Corp. v. Myrick, 514 US 280, 287, 115 SCt 1483, 1487, 131 LEd 2d 385 (1995). The Eighth Circuit recognizes an additional method of preemption where the subject matter of the legislation concerns “a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.” Heart of America Grain Inspection Service, Inc. v. Missouri Department of Agriculture, ___ F3d ___, ___, 1997 WL 519364, 4 (8th Cir. 1997) (citations omitted). The Eighth Circuit has characterized the exceptions as follows:

Preemption traditionally comes in four “flavors”: (1) “express preemption,” resulting from an express Congressional directive ousting state law (Morales v. Trans World Airlines, Inc., 504 US 374, 112 SCt 2031, 119 LEd 2d 157 (1992)); (2) “implied preemption,” resulting from an inference that Congress intended to oust state law in order to achieve its objective (Hines v. Davidowitz, 312 US 52, 67, 61 SCt 399, 404, 85 LEd581 (1941)); (3) “conflict preemption,” resulting from the operation of the Supremacy Clause when federal and state law actually conflict, even when Congress says nothing about it (Florida Lime & Avocado Growers, Inc. v. Paul, 373 US 132, 143, 83 SCt 1210, 1218, 10 LEd 2d 248 (1963)); and (4) “field preemption,” resulting from a determination that Congress intended to remove an entire area from state regulatory authority (Fidelity Fed. Savs. & Loan Ass’n v. de la Cuesta, 458 US 141, 153, 102 SCt 3014, 3022, 73 LEd 2d 664 (1982)).

Kinley Corp. v. Iowa Utilities Bd., Utilities Div., Dept. of Commerce, 999 F2d 354, 358 n 3 (8th Cir. 1993).

[¶5]  The ultimate touchstone of statutory preemption is congressional intent. Medtronic, Inc. v. Lohr, ___ US ___, ___, 116 SCt 2240, 2250, 135 LEd 2d 700 (1996); Kinley Corp. v. Iowa Utilities Bd., 999 F2d 354, 357 (8th Cir. 1994). “In all preemption cases ... we ‘start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’” Medtronic v. Lohr, ___ US at ___, 116 SCt at 2250 (quoting Rice v. Santa Fe Elevator Corp., 331 US 218, 230, 67 SCt 1146, 1152, 91 LEd1447 (1947)). “The historic police powers of the State include the regulation of matters of health and safety.” De Buono v. NYSA-ILA Medical and Clinical Services Fund, ___ US ___, ___, 117 SCt 1747, 1751, 138 LEd 2d 21 (1997), citing Hillsborough County v. Automated Medical Laboratories, Inc., 471 US 707, 715, 105 SCt 2371, 2376, 85 LEd 2d 714 (1985). Defendant therefore “bears the considerable burden of overcoming ‘the starting presumption that Congress does not intend to supplant state law.’” Id. at _____, 117 SCt at 1751 (quoting Travelers, 514 US at 654, 115 SCt at 1676).

[¶6]  The Federal act in question here is the VSTA. The VSTA was promulgated in 1913 and authorizes the Secretary of the Department of Agriculture (“USDA”) to issue regulations for the preparation and sale, and the issuance of licenses for the sale of viruses serums and toxins for domestic animals. As amended in 1985, the VSTA provides, inter alia:

The Secretary of Agriculture is authorized to make and promulgate from time to time such rules and regulations as may be necessary to prevent the preparation, sale, barter, exchange, or shipment as aforesaid of any worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product for use in the treatment of domestic animals, or otherwise to carry out this paragraph, and to issue, suspend, and revoke licenses for the maintenance of establishments for the preparation of viruses serums, toxins, and analogous products, for use in the treatment of domestic animals, intended for sale, barter, exchange, or shipment as aforesaid.

21 USC § 154. The agency within the USDA responsible for administering the VSTA is the Animal and Plant Health Inspection Service (“APHIS”). 9 CFR § 101.2. APHIS promulgated extensive rules to implement the VSTA. 9 CFR § 101-123.

[¶7]  Defendant recognizes that the VSTA does not expressly preempt state law tort claims but it argues that a federal agency may preempt state law even without congressional authorization and that APHIS expressly declared its intent to preempt state law damages actions. Defendant argues that Congress did not specifically preserve state tort law remedies in the VSTA, that Congress knows how to do so, and that the broad based directive to APHIS and APHIS action carries the day for defendant. This Court disagrees.

[¶8]  Judge Bennett pointed out in Garrelts, “[t]he phrase ‘Laws of the United States’ in the Supremacy Clause, the Supreme Court has held, encompasses both federal statutes and statutorily authorized federal regulations.” Garrelts v. SmithKline Beecham, 943 FSupp at 1036 citing City of New York v. FCC., 486 US 57, 63, 108 SCt 1637, 1642, 100 LEd 2d 48 (1988). Judge Bennett applied a two-fold analysis of agency preemption: first, “did the agency intent to preempt the state law in question;” second, “if so, was that action within the scope of the agency’s delegated authority?” Garrelts v. SmithKline Beecham, 943 FSupp at 1038. Agency intent to preempt state law may be either express or implied. Id., citing City of New York v. FCC, 486 US at 64, 108 SCt at 1642.

[¶9]  Defendant argues that APHIS declared its intent to preempt all state law requirements which are different from or in addition to those imposed by APHIS’s regulation when it published the background to a final rule on August 27, 1992, wherein APHIS stated:

APHIS, however, does not agree that States should be allowed to add various restrictions, as appropriate, based upon a need to protect domestic animals or the public health, interest, or safety. Any restrictions, other than those which are necessary to address a local disease condition, should be Federally imposed so that they are uniform nationwide.

* * *

States are not free to impose requirements which are different from or in addition to those imposed by USDA regarding the safety, efficacy, potency, or purity of a product. Similarly, labeling requirements which are different from or in addition to those in the regulations under the Act may not be imposed by the States. Such additional or different requirements would thwart the Congressional intent regarding uniform national standards and would usurp USDA’s authority to determine which biologics are pure, safe, potent, and efficacious.

* * *

However, where safety, efficacy, purity, and potency of biological products are concerned, it is the agency’s intent to occupy the field. This includes but is not limited to the regulation of labeling .

57 Fed. Reg. 3875, 3879 (August 27, 1992). Additional support for the proposition that APHIS intended to preempt state law tort actions can be found, defendant argues, in a letter from Terry L. Medley, Acting Administrator, APHIS, of December 22, 1995, which letter was in response to a request from US Senator Paul Wellstone, requesting a written clarification of the scope of APHIS’s preemption of state law under the VISTA:

Our intent in promulgating the rule was, and continues to be, to preempt States from imposing requirements either through statutes, regulations, or other means that are different from, or in addition to, those imposed by USDA regarding the safety, efficacy, potency, or purity of a product. Such requirements would include, but are not limited to production, testing, distribution, or labeling requirements. We did not intend to preempt common law actions for damages arising from noncompliance with USDA regulatory standards.

Defendant argues this letter and the comment to the Federal Regulations clearly set forth the agency’s express intent to preempt state law tort actions.1. Defendant seeks to strike paragraph 4 of the affidavit of James A. Davis, Esq., attorney for the plaintiffs, wherein he criticizes the Medley letter, claiming it arose out of a meeting with APHIS and defendant’s attorneys, which meeting plaintiffs’ attorney was specifically excluded from. Defendant contends the letter contains hearsay. Mr. Davis may well have personal knowledge of the information contained in the affidavit but he is not allowed to testify about his contacts with the USDA. He may not be a witness as to contested matters and act as counsel. See Rule 3.7 of the Rules of Professional Conduct. See also Haberer v. First Bank of South Dakota, (NA), 429 NW2d 62 (SD 1988). Certainly Mr. Davis’s criticisms could call into question whether that letter accurately sets forth APHIS’s intent or whether it was the result of political or legal maneuvering in the midst of several court battles over this issue. The affidavit will not be stricken but will not be considered by the Court since Mr. Davis is not competent to act as a witness and as one of the attorneys of record.{fn1} The parties offer no authority for the proposition that an administrative agency may act officially by virtue of a letter from an acting administrator to a member of Congress. We even have one letter to plaintiffs’ attorney by some APHIS official.

[¶10]  Defendant’s argument that “requirements which are different from, or in addition to, those imposed by USDA” include state law tort claims is an argument which has met with success in some cases. In Murphy v. SmithKline Beecham, Judge Saffels held that the APHIS regulations preempted claims for strict liability, breach of the warranties of merchantability and fitness for a particular purpose, failure to warn and negligence. 898 FSupp at 818 (“The Court regrets the fact that its decision leaves the plaintiff without a remedy at law, but unfortunately, we are left with no alternative. The court’s decision is dictated by Congress’s broad grant of authority to USDA, and the agency’s permissible exercise of that authority.”). In Lynnbrook Farms v. SmithKline Beecham, the Seventh Circuit held that the APHIS regulations preempted claims for strict liability, breach of the implied warranties of fitness for a particular purpose and of merchantability, fraudulent misrepresentation and false advertising. 79 F2d at 630 (“This is not a case involving non-compliance. Both vaccines have met APHIS standards for safety, purity, potency, and efficacy. Thus, if Lynnbrook’s claims relate to these qualities, seeking to impose additional or different requirements in these areas, they are preempted.”). In Garrelts v. SmithKline Beecham, Judge Bennett of the Northern District of Iowa held that a claim that the label is inadequate under state tort law standards, despite having been approved by APHIS, involves different or additional standards and is therefore preempted. 943 FSupp at 1060. However, Garrelts ultimately held that although APHIS intended to preempt state tort law, it had no congressional authority to preempt plaintiffs’ claim for injury to humans. 943 FSupp at 1068.

[¶11]  This Court respectfully declines to follow those opinions holding strict liability, breach of warranty, and tort claims are preempted by APHIS, adopting instead the rationale of the opinion in Gresham v. Boehringer Ingelheim Animal Health, Inc., CIV 95-3376, 1996 WL 751126 (NDGa 1996), although not entirely for the reason stated therein.

[¶12]  None of the courts who have analyzed the regulations promulgated pursuant to the VSTA have stated that the regulations as a whole have been considered. A complete reading of APHIS’s regulations, together with the Medley letter (assuming but without deciding it is entitled to some weight), compel no other conclusion than that APHIS did not intend to preempt plaintiffs’ claims. To the contrary, the regulations and policy statements specifically retain plaintiffs’ state law contract and tort claims.

[¶13]  Pursuant to APHIS’s rules, a manufacturer must obtain a license from APHIS to manufacture an animal vaccine. 9 CFR § 102.3(a). Each license application must include “labels in finished form together with information regarding all claims to be made on labels and in advertising matter to be used in connection with or related to the biological product.” 9 CFR § 102.4(b)(2)(iv). Pursuant to 9 CFR § 112.5(c)(1), only labels submitted for approval by APHIS may be used. APHIS specifically provides that:

No person shall apply or affix to or include with, or cause to be applied or affixed to or included with, any carton or final container of a biological product, any label, stamp, mark or statement that is false or misleading in any particular, is not in compliance with the regulations, or is not approved by APHIS.

9 CFR § 112.1(b) (emphasis supplied). This section clearly implies that no false or misleading statements may be included with the product even if they are inadvertently approved by APHIS. This section also implies that some statements may be included with the product that are not necessarily required by APHIS’s regulations but are nonetheless approved by APHIS. 9 CFR § 112.2 sets forth the information which must be included in the labels and enclosures. That section requires that the container include “[f]ull instructions for the proper use of the product, including ... warnings, cautions, and the like ... .” 9 CFR § 112.2(a)(5). Finally, 9 CFR § 112.2(b) provides: “Labels may also include any other statement which is not false or misleading and may include factual statements regarding variable response of different animals when vaccinated as directed but may not include disclaimers of merchantability, fitness for the purpose offered, or responsibility for the product.” Clearly, APHIS’s regulations intend that manufacturers will be held responsible for their products. Since neither the VSTA nor APHIS’s regulations provide a cause of action for violation of the warranties of merchantability and fitness for a particular purpose or for any tort liability, APHIS must have intended to preserve consumer’s state contract and tort law claims.

[¶14]  The fact that the labels must be approved does not mean that they in fact do comply with the regulations regarding warnings. David A. Espeseth, Director, Licencing and Policy Development, Center for Veterinary Biologics, sent a letter to James A. Davis, plaintiffs’ attorney in this and other SmithKline Beecham litigation, on November 25, 1996, on APHIS stationary, wherein he states that

submitting false and misleading information could cause a host of problems for the firm and could place its license in jeopardy. If such information is directly related to the production and testing of a product, it would, of course, invalidate any approval the product may have received based on such information.

This statement, when read together with the Medley letter’s statement that APHIS “did not intend to preempt common law actions for damages arising from noncompliance with USDA regulatory standards” and 9 CFR § 112.2(b), compels the conclusion that where the manufacturer provides incomplete or false information in support of its license application, the manufacturer has failed to comply with USDA regulatory standards and plaintiffs’ common law damages actions for breach of warranty and for strict liability are not preempted by APHIS’s regulations. Gresham v. Boehringer Ingelheim Animal Health, Inc., 1996 WL 751126 at 3 (“To the extent that Plaintiff intends to prove that the particular batch of Alpha-7 which he received was not in compliance with federal regulations, these actions do not impose requirements different from or in addition to those established by APHIS.”).

[¶15]  The defendant has not identified a provision of the VSTA which expressly preempts state tort law. No such provision exists. Defendant’s contention that a federal agency may expressly preempt state tort law even without congressional authorization and that APHIS has expressly preempted state tort law has been rejected above. Even if it were concluded that APHIS did intend to completely preempt state tort law, defendant’s motion for summary judgment should be denied. “Whether federal law preempts state law is a question of congressional intent, not the regulating agency’s intent. Heart of America Grain Inspection Service, Inc. v. Missouri Department of Agriculture, ___ F3d at ___, 1997 WL 519364, 6 (8th Cir. 1997). “The critical question in any pre-emption analysis is always whether Congress intended that federal regulation supersede state law.” Iowa Utilities Bd. v. F.C.C., 120 F3d 753, 798 (8th Cir. 1997), citing Louisiana Pub. Serv. Comm’n v. FCC, 476 US 355, 369, 106 SCt 1890, 1899, 90 LEd 2d 369 (1986). Nothing in the VSTA leads to any conclusion that state tort law remedies would or could be preempted by APHIS. The purpose of the VSTA was “to prevent the production and sale of any ‘worthless, contaminated, dangerous or harmful’ animal vaccines.” Lynnbrook Farms v. SmithKline Beecham, 79 F3d at 625. The Seventh Circuit held in Lynnbrook that where the Congressional mandate is broad, the agency’s choice to preempt will not be disturbed unless the statute clearly prevents preemption. Id. at 625-626. This Court declines to adopt so broad an interpretation of the federal preemption doctrine.

[¶16]  If this case was proceeding in state court, the defendant would have to convince the state court that APHIS may also nullify Art. VI, § 20, of the South Dakota Constitution, as interpreted in Baatz v. Arrow Bar, 426 NW2d 298 (SD 1988), aff’d 452 NW2d 138 (SD 1990).

[¶17]  Defendant relies on Medtronic v. Lohr for the proposition that the word “requirements” preempts state law damages actions. Medtronic involved the Medical Devices Amendments of 1976 (“MDA”), 21 USC § 360c et seq., and its application to claims of negligence and strict liability in the manufacture of a pacemaker. The MDA specifically provides that

“no State or political subdivision of any State may establish or continue in effect with respect to a device intended for human use any requirement (1) which is different from, or in addition to, any requirement applicable under this chapter to the device, and (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this chapter.

21 USC § 360k(a). Medtronic argued that the word “requirement” preempts any common law claims being brought by an injured plaintiff against a manufacturer of medical devices. The Supreme Court rejected this argument in a plurality opinion. Medtronic v. Lohr, ___ US at ___, 116 SCt at 2251 (plurality opinion). Four justices joined in that opinion, one justice concluded that the term “requirements” preempts all state common law causes of action and four justices agreed with the plurality that defective design claims are not preempted but concluded that failure to warn claims are preempted. Defendant also relies on the Supreme Court’s opinion in Cipollone v. Liggett Group, Inc., 505 US 504, 521, 112 SCt 2608, 2620, 120 LEd 2d 407 (1992), where a plurality of the Supreme Court agreed that state common law damages actions do impose “requirements” different than those under the Public Health Cigarette Smoking Act of 1969. However, Cipollone concluded that state law products liability, failure to warn, breach of express warranty and fraudulent misrepresentation claims were not preempted by the term “requirements”.

[¶18]  Defendant seeks to impose the federal preemption doctrine to prevent plaintiffs from obtaining any relief. That is, in fact, the result obtained in every case where SmithKline Beecham has convinced the court that the VSTA and APHIS’s regulations preempt state law tort actions. The United States Supreme Court criticized this result in Medtronic v. Lohr.

Medtronic’s argument is not only unpersuasive, it is implausible, Under Medtronic’s view of the statute, Congress effectively precluded state courts from affording state consumers any protection from injuries resulting from a defective medical device. Moreover, because there is no explicit private cause of action against manufacturers contained in the MDA, and no suggestion that the Act created an implied private right of action, Congress would have barred most, if not all, relief for persons injured by defective medical devices. Medtronic’s construction of § 360k would therefore have the perverse effect of granting complete immunity from design defect liability to an entire industry that, in the judgment of Congress, needed more stringent regulation in order “to provide for the safety and effectiveness of medical devices intended for human use.” It is, to say the least, “difficult to believe that Congress would, without comment, remove all means of judicial recourse for those injured by illegal conduct,” and it would take language much plainer than the text of § 360k to convince us that Congress intended that result.

Medtronic v. Lohr, ___ US at ___, 116 SCt at 2251 (plurality opinion) (citations omitted). Such a result is not statutorily mandated by the VSTA and is not clearly provided for in the regulations promulgated by APHIS. Defendant’s claim is therefore rejected.

ORDER

[¶19]  IT IS ORDERED:

(1)  Defendant’s motion for summary judgment, Doc. 52, is denied.

(2)  Defendant’s motion to strike, Doc. 71, is denied.



United States v. Days Inns of America, Inc., 1997 DSD 30

UNITED STATES OF AMERICA,

Plaintiff,

v.

DAYS INNS OF AMERICA, INC.,

and Hospitality Franchise Systems, Inc.,

Defendants.

[1997 DSD 30]

United States District Court

District of South Dakota - Western Division

CIV. 96-5012

MEMORANDUM OPINION AND ORDER

Opinion Filed Oct , 1997

Richard H. Battey, Chief Judge

NATURE AND PROCEDURAL HISTORY

[¶1]  On February 8, 1996, the United States Department of Justice (DOJ) filed suit against defendants for violations of title III of the Americans with Disabilities Act of 1990 (ADA). The subject of the complaint is the Days Inn in Wall, South Dakota. Specifically, the complaint alleged that the hotel was in violation of 42 USC §§ 12181 through 12189 (Docket #1). DOJ is seeking injunctive relief and civil penalties.

[¶2]  The defendants named in the complaint were: Days Inns of America, Inc. (DIA), the franchisor of the Wall Days Inn; Hospitality Franchise Systems, Inc. (HFS), the parent company of DIA; Richard and Karla Hauk (Hauks), owners of the Wall Days Inn; David Baumann (Baumann), the architect of the Wall Days Inn; and Double H Enterprises, Inc. (Double H), the general contractor. The Court entered a consent judgment on June 5, 1997, in which the Hauks, Baumann, and Double H were dismissed from the suit, leaving only DIA and HFS.1. HFS is the parent company of DIA. It will be collectively referred to as DIA unless the context requires otherwise. {fn1} (Docket #50).

[¶3]  Pending before the Court are cross motions for summary judgment filed by both DOJ (Docket #63) and DIA (Docket #59).

[¶4]  This Court has jurisdiction under 42 USC § 12188(b)(1)(B). Remedial authority is set forth at 42 USC § 12188(b)(2).

FACTS

[¶5]  In 1992 Richard Hauk (Hauk) purchased real estate in Wall, South Dakota, from his father. R. Hauk Depo. at 12. Later that year Hauk was approached by Andy Anderson (Anderson), a DIA franchise representative, about the prospects for the piece of vacant property. (DOJ’s Facts ¶¶ 44, 45). Hauks entered into conversations with Anderson about the possibility of pursuing a Days Inn franchise. Anderson referred Hauks to David Baumann (Baumann), an architect with whom Anderson was familiar and who he knew had designed other Days Inns. Id. at ¶¶  46, 47. Anderson also referred Hauks to Double H, a contractor who had built several Days Inns previously. Id. at ¶ 54-55. Consequently, Hauks retained the services of both Baumann and Double H for the design and construction of the Wall Days Inn.

[¶6]  Hauks entered into a licensing agreement with DIA on December 12, 1992 (Wall License Agreement). Part of the licensing agreement required the following from Hauks relating to design and construction of the hotel: (1) “create a site plan and detailed architectural plans and specifications ... which must be submitted to DIA"; (2) get written approval of said plans from DIA before proceeding; (3) provide written notice to DIA prior to beginning construction; (4) obtain DIA approval of any modifications to the construction plans; and (5) allow DIA to inspect construction while in progress. Wall License Agreement ¶ 4. The licensing agreement also addressed Hauks’ utilization of the DIA “System,” a comprehensive procedure for the marketing and maintenance of the franchise. Id. at ¶ 6. The licensing agreement contained provisions for the following as well: proprietary rights ¶ 10; system standards ¶ 11; reservation system ¶ 12; marketing ¶ 13; training and consulting services ¶ 14; and additional licensee duties ¶ 16.

[¶7]  Hauks did not comply with several of the above provisions. First, the plans for the Wall project submitted to DIA consisted of four pages of preliminary plans which were sent to Mark Zelazny (Zelazny) of DIA’s Design and Construction Department. DOJ’s Facts ¶ 72. Second, Baumann, the architect, completed the final plans prior to receiving the preliminary plans back from Zelazny. Baumann Depo. at 154-56. Third, the DIA-approved plans were not incorporated into final construction. Hayes Depo. at 118-19, 23. Finally, the unapproved plans were modified during construction without the approval of DIA. Hayes Depo. at 133-41; R. Hauk Depo. at 255-57.

[¶8]  During the period of time relevant to this case, DIA had in existence a Planning and Design Standards Manual (PDSM) and an Operating Policies Manual (OPM) providing system standards for newly constructed hotels. (DIA’s Facts ¶ 6). During design of the Wall project, Baumann relied upon the PDSM for guidance as to DIA minimum requirements. Baumann Depo. at 79, 100.

[¶9]  The purpose of the PDSM “is to establish the minimum standards required by Days Inns of America, Inc.” PDSM at 2. It provided for a variety of guidelines and requirements for designing and planning new Days Inn hotels. Included in the PDSM was a provision noting that it was the responsibility of the licensee to make sure the design of the facility complies with various regulations and codes including the ADA. PDSM section 1.03-A-B. Baumann was aware that the PDSM represented minimum standards, and that the accessibility standards of the ADA needed to be met in addition to the guidelines in the PDSM. Baumann Depo. 193-199. It is undisputed that the completed project did not comply with the guidelines in the PDSM or the ADA.

[¶10]  During construction of the Wall Days Inn, Anderson visited the site on two occasions. DOJ’s Facts ¶ 75. DIA also called Hauks on several occasions while the hotel was being built. Id. at ¶ 76. DIA’s presence and influence in the operation of hotels run by Days Inn franchisees continued in varying degrees after construction of the hotel. Shortly after completion of the Inn, a DIA official visited Wall to install the reservation system and conduct management training. Merriman Depo. at 54-59. The OPM sets minimum standards for reservations, quality assurance, training, operations, marketing, and various other areas.2. The types of areas for which detailed standards exist in the OPM include: “cleanliness, maintenance, supplies, concession types, Food and Beverage service, vending machines, uniforms, staffing, employee training, replacement of F/F/E [furniture, fixtures, and equipment], decor and other capital items, guest relations guest comfort, and other areas.” OPM at 103. {fn2} OPM at 1-2. The franchise agreement requires the OPM to be followed.

[¶11]  Compliance with the above standards is monitored through three quality assurance inspections a year. OPM at 46. The inspector grades the facility, with a maximum score of 500 points. OPM at 6. A score of less than 400 constitutes a failing grade and the licensee is given up to thirty days to comply with the OPM. Id. Upon inspection, if the facility fails again DIA may suspend the hotel from the Reservation System and “terminate the Days Inns Agreement or take other appropriate action.” Id.

SUMMARY JUDGMENT STANDARD

[¶12]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶13]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ’secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶14]  The trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing motions for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).3. The trilogy of Celotex, Anderson, and Matsushita has redefined the standard for summary judgment previously annunciated in Adickes v. S.H. Kress & Co., 398 US 144, 157, 90 SCt 1598, 1608, 26 LEd2d 142 (1970) and Poller v. Columbia Broadcasting Sys., Inc., 368 US 464, 467, 82 SCt 486, 7 LEd2d 458, 488 (1962). Poller and Adickes run counter to the teachings of Celotex, Anderson, and Matsushita which take issue with the concept that summary judgment is to be used sparingly. See generally William W. Schwarzer, Alan Hirsch, and David J. Barrans, The Analysis and Decision of Summary Judgment Motions: A Monograph on Rule 56 of the Federal Rules of Civil Procedure, Federal Judicial Center, at 4 (1991). {fn3}

DISCUSSION

[¶15]  The Statutes

[¶16]  Two sections of title III of the ADA, § 302 and § 303, are applicable. The statutes are as follows:

Section 302 of the ADA reads, in part, as follows:

§ 12182. Prohibition of discrimination by public accommodations

(a) General rule

  No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.

42 USC § 12182 (1995) (emphasis supplied).

[¶17]  Section 303 of the ADA reads, in part, as follows:

§ 12183. New construction and alterations in public accommodation and commercial facilities

(a)  Application of term

  Except as provided in subsection (b) of this section, as applied to public accommodations and commercial facilities, discrimination for purposes of section 12182(a) [§ 302 of the ADA] of this title includes --

(1)  a failure to design and construct facilities for first occupancy later than 30 months after July 26, 1990, that are readily accessible to and usable by individuals with disabilities, except where an entity can demonstrate that it is structurally impracticable to meet the requirements of such subsection in accordance with standards set forth or incorporated by reference in regulations issued under this subchapter; ...

42 USC § 12183 (1995) (emphasis supplied).

[¶18]  The Parties’ Positions

[¶19]  DOJ would have the Court interpret § 303 to hold DIA liable as a party which “designed and constructed” the Wall Days Inn. DOJ’s alternate position is that even if § 303 does not hold DIA liable as a designer and constructor, DIA would still be liable since DIA is within the definition of an operator under § 302. DOJ’s Brief at 25-34. 4. Both sides agree that § 303 incorporates the language from § 302, which holds liable owners, operators, and lessors of non-ADA complying public accommodations and commercial facilities. DOJ’s Brief at 25; DIA’s Brief at 7. {fn4} DIA counters that it should not be considered an operator under § 302. As to DOJ’s alternate position, DIA states it did not design and construct the Wall Days Inn. The Court agrees. DIA does not come within the umbrella of either § 302 or § 303. Summary judgment will be entered in favor of DIA and HFS.

[¶20]  Existing Case Law

[¶21]  In Paralyzed Veterans of America v. Ellerbe Becket Architects & Engineers, 945 FSupp 1 (D.D.C. 1996), an ADA claim was brought against an architectural and engineering firm and its parent company arising out of the design of a sports and multipurpose arena. The defendants exercised a design function only. They did not exercise the construction function. Upon a motion to dismiss filed by the defendants, the district court held that the words “design and construct” found in 42 USC § 12183(a)(1) (§ 303) were distinctly conjunctive. Therefore, since the defendants only designed but did not construct the facility, § 303 did not include them.

[¶22]  The district court further held that 42 USC § 12182 (§ 302) limiting the statute to “owners, operators, and lessors” also applies to § 303, thereby excluding architects from liability. Inferentially, even had the defendants both designed and constructed the facility, they would not have been included under § 303. This latter holding, of course, was dicta and affords no authority to this Court.

[¶23]  A second district court case is Johanson v. Huizenga Holdings, Inc., 963 FSupp 1175 (SD Fla. 1997). This case was also decided in the posture of a motion to dismiss. The action was brought by ADA claimants against, among others, the architect, Ellerbe Beckett, and its parent corporation, who were involved in the construction of a hockey arena. Defendant Ellerbe Beckett, Architects and Engineers, Inc., filed a motion to dismiss claiming that architects were not liable under either § 302 or § 303 of the ADA.

[¶24]  Ellerbe Beckett, relying on Paralyzed Veterans, claimed that since it designed but did not construct the facility, it would not be liable under § 303. Ellerbe Beckett’s fallback position was that since § 303 incorporates § 302 by reference, § 302’s reference to those who “own, lease, or operate” applies to those who “design and construct.” Therefore, since it did not “own, lease, or operate” the facility, it was not liable. The district court denied Ellerbe Beckett’s motion to dismiss stating, “If architects are not liable under the ADA, then it is conceivable that no entity would be liable for construction of a new commercial facility which violates the ADA.”

[¶25]  A Minnesota district court recently was faced with the interpretation of § 303(a). United States v. Ellerbe Beckett, Inc., 1997 WL 610275 (D. Minn. 1997). The complaint alleged that Ellerbe Beckett had engaged in a pattern of practice of designing new sports arenas and stadiums across the United States that failed to comply with the ADA. Ellerbe Beckett filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) arguing that architects are excluded as a matter of law from liability under the ADA. Ellerbe Beckett made essentially the same argument made to the Florida court in Johanson, namely: (1) the plain language of the ADA excludes architects; and (2) only entities which design and construct facilities may be liable under § 302(a). The government’s argument was also essentially the same as the one made to the Florida district court, namely: (1) the inclusion of the word “design” in the ADA indicates congressional intention to subject the designer of buildings to the ADA; (2) otherwise there would remain an “inexplicable gap” in coverage of the statute; and (3) due deference should be afforded the Department of Justice’s interpretation of the ADA.

[¶26]  The Minnesota court denied the motion to dismiss, recognizing implicitly that the questions to be resolved involved fact issues as to whether the defendant Ellerbe Beckett participated in the construction as well as the design of the arenas at issue. In the posture of a Rule 12(b)(6) motion, the court was not permitted to go beyond the allegations of a well-pleaded complaint. See, e.g., Neitzke v. Williams, 490 US 319, 109 SCt 1827, 104 LEd2d 338 (1980); Palmer v. Tracor, Inc., 856 F2d 1131 (8th Cir. 1988) (standard of dismissal under Fed. R. Civ. P. 12(b)(6)). The Minnesota court, applying the Rule 12(b)(6) rule, denied the motion to dismiss.

[¶27]  The posture of this case is different. This case comes to the Court on cross motions for summary judgment under Federal Rule of Civil Procedure 56, facts not being in dispute. This Court is able to decide the substance of DOJ’s motion. This Court need not redetermine the issues addressed by the Florida and Minnesota district courts. Under the undisputed facts of this case, as a matter of law DIA did not design and construct the Wall Days Inn, nor was it an owner, lessor, or operator under § 302.

[¶28]  The district courts in both Johanson and Ellerbe Becket found only the principal architect liable under § 303. Therefore, DOJ is in a position in which it asks this Court to find, as a matter of law, that DIA’s involvement in the design and construction of the Wall Days Inn was significant enough to establish DIA as the designer under § 303. To that end, a discussion of the facts which DOJ alleges supports such a finding is necessary.

[¶29]  DOJ offers a litany of facts which it contends indicates the control that DIA had over the design and construction of the Wall Days Inn. DOJ’s Brief at 7-12. A close review of all the material filed to date demonstrates that while DIA did provide some assistance and guidance to the design and construction process, DIA was not the designer or contractor responsible for the project. The influence DIA exerted through its licensing agreement and standards manuals simply does not rise to the level of control necessary to be considered the designer of the project for § 303 purposes.

[¶30]  DOJ first contends that the standard licensing agreement used by DIA throughout the country contained numerous indicia of control over the design and construction of the Wall project. DOJ’s Brief at 10-11; DOJ’s Facts at 5-8. The more relevant inquiry in this instance is not how DIA operated in a general sense but rather what happened with regard to the Wall Days Inn. To that end, DOJ’s reliance on the standard licensing agreement is misplaced.

[¶31]  DOJ next contends that the actual license agreement between DIA and Hauks also demonstrated a significant degree of control over the design and construction of the Wall facility. DOJ’s Brief at 7; DOJ’s Facts at 8-9. Certainly, the license agreement indicates that DIA, at some level, had input into the design and construction of the Wall Days Inn. This is to be expected for a franchisor to maintain minimum standards over its trademark. See Selinger, J. and Walker, A., How Real is the Risk of Failing to Police Trademarks? Franchise Update 34 (3rd Quarter 1997). At any rate, the record indicates that the input was marginal and in many cases not followed by Baumann and Double H.

[¶32]  Although the license agreement called for DIA approval of the architectural plans, such approval was not given. Baumann, who was the architect, did submit four pages of preliminary plans to the DIA Design and Construction Department. DOJ’s Facts ¶ 72. These preliminary plans were examined by Zelazny, an architect working for DIA, and returned to Baumann with comments. DOJ’s Facts ¶ 73. However, these preliminary plans and the comments by Zelazny were not incorporated into the final plans. Baumann Depo. at 154-56. In fact, the final plans for the Wall Days Inn were completed weeks before return of the marked-up preliminary plans and were never seen by Hayes, the contractor. Hayes Depo. at 118-20. Moreover, the license agreement clearly indicated that review of the architectural plans is for “initial compliance .... with System Standards, and not to detect errors or omissions in the work of the Licensees’ architects, engineers, contractors or the like.” Wall License Agreement ¶ 4.

[¶33]  DOJ also contends that Baumann’s reliance on the Days Inns of America, Inc. Planning & Design Standards Manual (PDSM) demonstrated DIA’s influence on the final product. DOJ’s Brief at 9. Yet the PDSM does not purport to be the definitive guideline for architectural plans and it clearly indicates that plans and construction are to comply with state and federal regulations, including an express reference to compliance with the ADA. PDSM section 1.03A-B. Moreover, the standards set forth in the PDSM are “minimum acceptable requirements” and “are not comprehensive and must be supplemented by the Architect and the Licensee to complete the design specifications for the Days Inn System Unit.” PDSM sections 1.02A and 1.01A.

[¶34]  Perhaps most illustrative of the limited impact the PDSM had on the eventual design and construction is the fact that Baumann failed to comply with many of its mandates. Baumann Depo. at 146-48; 197-78. Aside from the lack of compliance with the ADA as called for in the PDSM, other major requirements were not followed such as the lack of an elevator for a building over two stories. PDSM section 8.12A. These facts indicate that Baumann was not bound by the PDSM or even that he depended upon it in formulating his final plans. He exercised his discretion as chief architect in incorporating certain aspects of the PDSM into the facility, while ignoring others.

[¶35]  Another indication of control, according to DOJ, is the extent to which DIA monitored the progress of construction. DOJ’s Brief at 10. Specifically, DIA points to the number of visits to the site by Anderson, the DIA franchise salesman, phone calls made to Hauk by DIA Property Openings Department, and inspections of the site after completion. Id. DOJ neglects to indicate how these visits and contacts actually influenced the design or construction of the project. Such a passive presence hardly demonstrates control of the project.

[¶36]  Finally, DOJ attempts to ascribe enhanced significance to Anderson’s role as a franchise representative. DOJ’s Brief at 7-9. Anderson worked with Hauks and recommended an architect and contractor, both of whom had experience designing and building other Days Inn hotels. DOJ’s Brief at 8. However, Hauks exercised the final right to choose whomever they desired to design and construct their hotel. Anderson’s advice did not demonstrate DIA’s control over the ultimate choice of who the Hauks chose. The leap of logic required to equate Anderson’s suggestions with DIA control over the design and construction is one this Court refuses to make.

[¶37]  In sum, while a designer of a public accommodation or commercial facility is by definition liable under § 303 of the ADA, the Court refuses DOJ’s invitation to broaden the scope of this interpretation to include all parties who may have been “involved in” or who “participate in” the design and construction process, such as DIA.

[¶38]  DIA as “Operator”

[¶39]  Both parties in this dispute agree that, at a minimum, the “owns, leases (or leases to), operates” language of § 302 is incorporated by reference into § 303. DOJ’s Brief at 25; DIA’s Brief at 7. They disagree as to whether DIA “operated” the Wall Days Inn. DOJ argues that the degree of control exerted by DIA over the day-to-day operations establishes that DIA is an operator as that term has been defined. DOJ’s Brief at 25-34. DIA argues the opposite, that the controls in place merely protect its trademark and that Hauks, as licensees, are the true “operators” of the Wall facility. DIA’s Brief at 27-34.

[¶40]  Nowhere in the ADA is “operate” defined. The Fifth Circuit, faced with a similar factual scenario, addressed the definition of “operate” in the context of § 302 and focused on the degree of control involved. Neff v. American Dairy Queen Corp., 58 F3d 1063, 1067 (5th Cir. 1995), cert denied, US , 116 S. Ct 704, 133 LEd2d 660 (1996). In Neff, a disabled individual brought suit against Dairy Queen, as franchisor, for violations of the ADA by two San Antonio franchises. Id. at 1064. In that case the court was faced with interpreting § 302 as it related to previously constructed facilities with inaccessible conditions, not as it pertained to new construction and § 303. Id. The court determined that the term “operate,” in the § 302 context, meant the degree of control exerted. Id. at 1066. Specifically, the court held that Dairy Queen, as the franchisor, did not exert control over the physical modification of the stores and thus was not the operator. Id. at 1065; see also Young v. American Dairy Queen Corp., 1994 WL 761233, *2 (ND Tex. 1994); Neff v. American Dairy Queen, Inc., 879 FSupp 57, 60 (WD Tex. 1994).

[¶41]  According to the interpretation of “operate” in Neff, determining liability under § 303 hinges on whether DIA exerted control over the design and construction of the Wall Days Inn. The court in Neff referred to the situation in this case and how “operate” may be applied differently to a new construction, § 303 context. Id. at 1068 (“even if ADQ ‘operated’ the store with respect to its construction, such operation is irrelevant because the issue in Neff’s case is whether ADQ ‘operates’ the San Antonio Stores with respect to the removal of existing architectural barriers.”) Drawing upon the reasoning articulated in Neff, the relevant inquiry in the instant case is whether DIA was the operator of the design and construction of the Wall Days Inn. To that end, the relevance of DIA’s control following completion of the Wall facility is limited.

[¶42]  The Eighth Circuit, interpreting the term “operate” in a different setting indicated that “the verb ‘to operate’ means ‘ to perform a work or labor,’ to ‘exert power or influence,’ to produce an effect,’ ‘to cause to occur’ or ‘to bring about by or as if by the exertion of positive effort or influence.’” United States v. Gurley, 43 F3d 1188, 1193 (1994) (citing Webster’s Third New Int'l Dictionary at 1580-81 (1986) to interpret “operate” as used in CERCLA). The Eighth Circuit’s interpretation, coupled with the canon of statutory construction that words be given their “ordinary, contemporary, common meaning,” Perrin v. United States, 444 US 37, 42, 100 SCt 311, 314, 62 LEd2d 199 (1979), leads this Court to believe that determining if DIA was an “operator” for the sake of the design and construction of the Wall Days Inn means discerning how much influence DIA exerted over its design and construction. Simply as a franchisor and under the undisputed facts of this case, the Court is unable to hold that DIA was an “operator” as contemplated by § 303 of the ADA. The Court has been unable to find an Eighth Circuit case interpreting § 302 and § 303.5. See Kathleen Pearson, Let’s All Go To The Dairy Queen Without Margo!: The Liability of Franchisors under Title III of the Americans with Disabilities Act After Neff v. American Dairy Queen Corp., 101 Dick. L. Rev. 137 (1996). {fn5} Nonetheless, this Court believes that if presented with the issues of this case, the Eighth Circuit Court of Appeals would find the Fifth Circuit case of Neff as authority for this Court’s granting of summary judgment in favor of DIA.

CONCLUSION

[¶43]  The Court concludes that DIA did not either own, lease (or lease to), or operate the Days Inn of Wall. Further, DIA did not design and construct the Inn. It therefore did not violate § 302 or § 303 of the ADA.

[¶44]  Accordingly, it is hereby

[¶45]  ORDERED that DOJ’s motion for summary judgment (Docket #63) is denied.

[¶46]  IT IS FURTHER ORDERED that DIA’s motion for summary judgment (Docket #59) is granted. Judgment shall be entered in favor of the DIA, together with costs.



Malehorn v. Hill City Sch. Dist., 1997 DSD 31



KATHY MALEHORN

on behalf of Laura Beth Malehorn,

Plaintiff,

v.

HILL CITY SCHOOL DISTRICT,

Defendant.

[1997 DSD 31]

United States District Court

District of South Dakota - Western Division

CIV. 97-5024

MEMORANDUM OPINION AND ORDER

Opinion Filed Nov 10, 1997

Richard H. Battey, Chief Judge

I. PROCEDURAL HISTORY

[¶1]  On March 31, 1997, plaintiff Kathy Malehorn (“Malehorn”) filed a complaint on behalf of her daughter Laura Beth Malehorn (“Laura Beth”) pursuant to the Individuals with Disabilities Education Act (“the IDEA” or “Act”), 20 USC §§ 1400-1491, as amended by 111 Stat. 37 (1997). Plaintiff’s complaint is an appeal of the decision of the Special Education Hearing Examiner for the state of South Dakota, Judith Atkinson (“Atkinson” or “hearing examiner”). Malehorn had requested a due process hearing before the hearing examiner because Laura Beth was denied door-to-door1{fn1} transportation as part of her individualized education plan (“IEP”).

[¶2]  Plaintiff alleges that the hearing examiner erred in concluding that Laura Beth was not entitled to transportation as a related service under the IDEA. Plaintiff is asking this Court to reverse the hearing examiner’s decision. Plaintiff presents three issues for this Court to address on appeal:

1.  Whether the Hill City School District violated the IDEA by failing to provide Laura Beth Malehorn with the related service of transportation as was contained in her IEP when she moved to the Hill City School District and, as a result, whether [the] Malehorns are entitled to reimbursement for transportation provided by the Malehorns;

2.  Whether Laura Beth Malehorn continues to require transportation as a related service in order to assist her in benefitting from her special education program;

3.  If Laura Beth Malehorn continues to require transportation as a related service, what (based on the least restrictive environment [sic] provisions of the IDEA) form of transportation she requires.

Plaintiff’s Complaint at 3. The Hill City School District (“the District”) is of the opinion that it is not required to provide transportation to Laura Beth as a related service under the IDEA. This Court finds that Malehorn is entitled to reimbursement for mileage prior to December 6, 1996, but that Laura Beth is not entitled to transportation as a related service under the IDEA.

[¶3]  This Court has jurisdiction to proceed over this matter pursuant to 20 USC § 1415(e)(2). This matter is also ripe for this Court’s consideration because the plaintiff’s motion for additional evidence was denied. See 20 USC § 1415(i)(2)(B).

II. HEARING EXAMINER’S DECISION

[¶4]  On February 5, 1997, a due process hearing relating to the education of Laura Beth was held before the hearing examiner. Prior to moving to Hill City, Laura Beth had an IEP in Huron which included door-to-door transportation. Atkinson found that the Huron IEP was reviewed by the District when it was received and that a new IEP was developed December 5, 1996, and that on January 7, 1997, an addendum was made to Laura Beth’s IEP. The January 7, 1997, addendum reads:

LM’s IEP team convened to discuss the parent request for transportation as a related service. To date, Malehorn’s [sic] have/will receive(d) payment (.24 cent per mile for mileage over 2 ½ mil. beyond the bus stop) for transportation in accordance with Hill City School Board policy and have transported LM to and from the bus stop on scheduled school days.

Opinion of Atkinson at 9. See also Exhibit 7 to Administrative Hearing Record. In considering whether Laura Beth was entitled to transportation as a related service, Atkinson considered the age of the child, safety concerns of the child, and how the child would react under given circumstances. Atkinson noted that the IEP team, in reaching its decision not to provide transportation as a related service, considered if Laura Beth could follow directions, that it had observed Laura Beth in similar type situations, and her ability to function in a regular transportation setting. Atkinson stated that she was not required to consider the distance which the child had to travel. Hearing Transcript (hereinafter TR) at 11.

[¶5]  Atkinson concluded that Laura Beth is a student with special needs and is entitled to a free, appropriate public education in the least restrictive environment. TR 16. According to Atkinson, “The IEP team must make the determination that transportation is a need related service based on the unique needs of each child.” Opinion of Atkinson, Exhibit 4 of Defendant’s Brief, at 17. Atkinson concluded:

All of the procedural requirements of IDEA in developing the IEP have been met. The evidence presented shows that the IEP for LM [Laura Beth Malehorn] is appropriate and is reasonably calculated to provide a free appropriate public education to LM. LM does not have a disability related condition which requires that she be provided transportation as part of her IEP. Because it is determined that transportation is not necessary under the IEP for LM, the issue of least restrictive environment is not a part of ... this decision. An offer was made to transport LM even though it was not part of her IEP and this offer was refused by Malehorn. Malehorn’s request for payment for the months of April, May and June 1996, for transportation must be taken up with the School Board and are not part of special education costs.

Opinion of Atkinson at 20.

III. STANDARD OF REVIEW

[¶6]  In reviewing the complaint, the Act provides that a court “shall receive the record of the [state] administrative proceedings, shall hear additional evidence at the request of a party, and basing its decision on the preponderance of the evidence, shall grant such relief as the court determines is appropriate.” Board of Educ. v. Rowley, 458 US 176, 102 SCt 3034, 3050, 73 LEd2d 690 (1982) (quoting 20 USC § 1415(e)(2), as amended 20 USC § 1415(i)(2)(B)). The “preponderance of the evidence” standard is “by no means an invitation to the courts to substitute their own notions of sound educational policy for those of the school authorities which they review.” Rowley, 102 SCt at 3051. A court must be careful not to perform a de novo review. Id. at 3050 (rejecting de novo as the standard of review for the Education of the Handicapped Act (EHA), 20 USC § 1400 et seq., as amended the IDEA, see EHA Amendments of 1990, Pub. L. No. 101-476, § 901(a)(1) (codified at 20 USC § 1400(a)). This Court is required to give “due weight” to the records of the state administrative proceeding. Id. at 3051. See also Town of Burlington v. Department of Educ. Com. of Mass., 736 F2d 773 (1st Cir. 1994). This Court is to consider the hearing examiner’s findings, but may accept or reject them in whole or in part. Hall v. Shawnee Mission School Dist., 856 FSupp 1521 (D. Kan. 1994) (citing B.G. by F.G. v. Cranford Bd. of Educ., 702 FSupp 1140, 1149 (D.N.J. 1988) (citations omitted)). The extent of deference to be given to the state hearings is within the court’s discretion. Union School District v. B. Smith, 15 F3d 1519, 1524 (9th Cir. 1994). Deference should be given to the findings of the hearing officer when the findings are thorough and careful. Id.

[¶7]  A court’s inquiry on review of a state administrative proceeding pursuant to the IDEA is twofold. Rowley, 102 SCt at 3051. A court should consider “[f]irst, has the State complied with the procedures set forth in the Act? And second, is the individualized educational program developed through the Act’s procedures reasonable calculated to enable the child to receive educational benefits?” Id. Plaintiff recognizes the party challenging this action has the burden of proof. See Donald B. v. Board of School Commissioners of Mobile County, Alabama, 117 F3d 1371, 1375 (11th Cir. 1997); Hiller v. Board of Education of Brunswick Central School District, 743 FSupp 958, 967 (N.D.N.Y. 1990).

IV. FACTS

[¶8]  In April of 1996, the Malehorns moved from Huron into the Hill City School District. TR 12. The Malehorns live approximately 13.5 miles from the school which Laura Beth attends. TR 12. The Malehorns live on Castle Peak Road which is about one-half mile from Mystic Road. Currently, Kathy Malehorn is responsible for dropping Laura Beth off at the bus stop on Deerfield Road where a school bus picks up Laura Beth and the Malehorns’ other children and transports them the last five miles to school. TR 24. Malehorn drives a total of thirty-four miles a day transporting her children to and from school. TR 28.

[¶9]  When the Malehorns moved into the District, Laura Beth’s IEP from Huron included transportation as a related service. TR 16. After the Malehorns had moved, Kathy Malehorn brought the transportation issue up with Mr. Emch, the superintendent of Hill City Schools, and was told by Mr. Emch that the District did not currently have any special transportation and that therefore the transportation portion of Laura Beth’s IEP would automatically be nonexistent. TR 17-18. Mr. Emch told Kathy Malehorn that she should take her concerns to the school board. TR 18. In May of 1996, Kathy Malehorn attended a school board meeting, but was told that no action could be taken by the school board because the board only considers such petitions once a year in October. TR 20. At the October board meeting, she did not bring up Laura Beth’s special needs. TR 22. In October, the board denied her request.

[¶10]  As a parent, Kathy Malehorn is concerned with her daughter’s inability to make good decisions. TR 15. Kathy Malehorn testified that she is concerned for Laura Beth’s safety at the bus stop on Deerfield Road. TR 25. The bus stop does not have any shelter or supervision. TR 26. She is concerned that Laura Beth may injure herself by stepping out into traffic at the bus stop. Once Laura Beth was released early from school because of snow, and she had to wait at the bus stop for a half hour before Kathy Malehorn could get to the bus stop due to the weather conditions. TR 25-26. Another time Laura Beth was sent home on the bus when Kathy Malehorn had planned to pick her up at school. TR 26. By the time Kathy Malehorn arrived at the bus stop, Laura Beth had been alone and unsupervised at the bus stop for at least thirty minutes. TR 26. Also, due to the lack of supervision at the bus stop, Laura Beth has experienced personal injury one of the times she was left alone at the bus stop. TR 27.2{fn2}

[¶11]  At the time of the administrative hearing, Kathy Malehorn had been reimbursed for transportation costs by the District for September, October, and November. TR 27. Kathy Malehorn had requested reimbursement for April, May, and June but was declined reimbursement because she failed to file for reimbursement before the end of the District’s fiscal year. TR 27. Kathy Malehorn was not informed that there was a cutoff date for filing for reimbursement. TR 28.

[¶12]  In December of 1996, an IEP meeting was held. TR 22. Kathy Malehorn did not bring up the issue of transportation at the meeting because she had been told to pursue the issue of transportation through the school board. TR 23. In January of 1997, another IEP meeting was held to discuss the issue of Laura Beth’s transportation to and from school. TR 24. Janet Stahl, the resource teacher for Hill City Elementary School, testified at the administrative hearing and was a member of the committee who prepared Laura Beth’s IEP. TR 80. Stahl stated that a new school is required to follow an old IEP until a new one is in place. TR 86. Stahl testified that December was the first time that the full IEP committee met to write a new IEP for Laura Beth because December was when Laura Beth’s year review was required. TR 82. Stahl recalls completing two addendums to the Huron IEP, one involving summer school and the other involving P.E. TR 82-83. Stahl testified that transportation as a related service was not considered at the December IEP meeting because no one brought it up. TR 82. It was not until January of 1997 when an addendum for transportation was done. TR 83.

[¶13]  In Stahl’s opinion, Laura Beth does not have “any sort of a physical condition that would require that she have special busing.” TR 84. Stahl thinks that Laura Beth is capable of following a direction not to walk out in front of a car. TR 85. Gloria Schaeffer, Director of Special Education for Custer and Hill City School Districts, testified that she sees Laura Beth approximately once a week. TR 90. Schaeffer testified that in her opinion, Malehorn is capable of waiting at the bus stop. TR 97.

[¶14]  Schaeffer was approached by one of the special education case managers as to Laura Beth’s request for transportation as a related service. TR 91. In January, an IEP meeting was held and the committee made a determination that “transportation as a related service was not necessary in Laura Beth’s case.” TR 91.(3) Schaeffer stated that she does not believe that the distance a child lives is a factor to consider in determining whether a child should receive transportation as a related service. TR 99. However, Schaeffer did testify that safety concerns would be a factor to consider given a child’s capability to react. TR 99.

[¶15]  Laura Beth was denied transportation as a related service because the IEP committee “felt that her disability did not warrant the need for transportation as a related service for her to benefit from her education and that regular ed transportation was something that was the least restrictive environment for her as it was already set up.” TR 104. At the time of the due process hearing, Laura Beth was eight years old. The IEP team decided Laura Beth did not require transportation as a related service. TR 105. Because the IEP team concluded that Laura Beth did not require transportation, the team was not required to consider the second question-- what type of transportation is required. TR 106.

[¶16]  There is no dispute between the parties as to the fact that Laura Beth is a student who qualifies for special education under the IDEA. Also, the parties agree that Laura Beth would be unable to walk to school or to the location where the bus picks her up. TR 25, 87. Malehorn does not deny that she would prefer that all her children receive door-to-door transportation to school or that she believes that having Laura Beth ride the school bus with other children would be the least restrictive alternative for Laura Beth, but she understands that the hearing officer was making a decision only as to the transportation of Laura Beth. TR 77-78.

V. INDIVIDUALS WITH DISABILITY EDUCATION ACT

[¶17]  Under the IDEA, a “child with a disability” is defined as a child

with mental retardation, hearing impairments (including deafness), speech or language impairments, visual impairments (including blindness), serious emotional disturbance (hereinafter referred to as ‘emotional disturbance') orthopedic impairments, autism, traumatic brain injury, other health impairments, or specific learning disabilities; and who, by reason thereof, needs special educations and related services.

20 USC § 1401(3)(i) and (ii). The purpose of the IDEA is “to ensure that all children with disabilities have available to them a free appropriate public education and related services designed to meet their unique needs and prepare them for employment and independent living.” 20 USC § 1400(d)(1)(A).(fn4) The IDEA provides a child with a disability special education and related services without charge. Related services include transportation. 20 USC § 1401 (22). Related services are to be provided “as required to assist a child with a disability to benefit from special education ... .” 20 USC § 1401(22).

[¶18]  When it has been determined that a child is a disabled child under the IDEA, an IEP team will arrive at an individualized education plan for the child. “The term ‘individualized education program’ or ‘IEP’ means a written statement for each child with a disability that is developed, reviewed, and revised in accordance with section 614(d).” 20 USC § 1401(11). The parents have the right to participate in the development of their child’s IEP. In addition, if the parents disagree with the child’s IEP they have a right to challenge the IEP in administrative and court proceedings.

VI. DISCUSSION

A.

[¶19]  When the Malehorns moved to Hill City in April of 1996, Laura Beth’s previous IEP contained the related service of door-to-door transportation to school. However, the District failed to provide Laura Beth with door-to-door transportation. Kathy Malehorn believes that the District failed to follow the appropriate procedure and that as a result she is entitled to damages-- the costs she incurred in transporting Laura Beth to school. The issues to be addressed are whether the District failed to follow appropriate procedure when it refused to implement the Huron IEP, and second, if the district was to follow the Huron IEP, are the Malehorns entitled to reimbursement for the mileage they incurred.

[¶20]  The Malehorns have been reimbursed for their travel expenses for September, October, and November; however, the Malehorns were not reimbursed for all the miles which they traveled in transporting Laura Beth to and from school. The Board did not reimburse the Malehorns for ten miles per school day. The Malehorns believe that they should be reimbursed for all mileage. In addition, the Malehorns argue that they are entitled to reimbursement for April, May, and June of 1996. The Malehorns were denied reimbursement for April, May, and June because they failed to submit a travel voucher by the end of the fiscal year, June 30, 1996. The hearing examiner’s decision did not grant the Malehorns any additional reimbursement from the district.

[¶21]  34 CFR Pt. 300, App.C., Question 6 provides the Court with instruction as to this point. Question 6 states:

If a child with a disability has been receiving special education in one LEA [local educational agency] and moves to another community, must the new LEA hold an IEP meeting before the child is placed in a special education program?

It would not be necessary for the new LEA to conduct an IEP meeting if:

(1)  A copy of the Child’s current IEP is available;

(2)  the parents indicate that they are satisfied with the current IEP; and

(3)  the new LEA determines that the current IEP is appropriate and can be implemented as written.

If the child’s current IEP is not available, or if either the LEA or the parent believes that it is not appropriate, an IEP meeting would have to be conducted. This meeting should take place within a short time after the child enrolls in the new LEA (normally, within one week).

When the Malehorns moved to Hill City, the District was provided with a copy of Laura Beth’s IEP. The parents were satisfied with the IEP. Mr. Emch, the superintendent of Hill City Schools, told Kathy Malehorn that the District did not currently have any special transportation and that therefore the transportation portion of Laura Beth’s IEP would automatically be nonexistent. TR 17-18. However, despite the fact that two addendums to Laura Beth’s IEP were enacted prior to the IEP team’s December meeting, the transportation issue was not addressed. Mr. Emch had told Kathy Malehorn to take the issue of transportation to the school board.

[¶22]  The Federal Office of Special Education Programs (OSEP) issued an opinion which stated that a child’s IEP may not be “overruled unilaterally by an agency administrator.” Letter to Anonymous, 20 Individuals with Disabilities Education Law Reporter (hereinafter IDELR) 1222 (OSEP 1993). Therefore, the superintendent’s statement that transportation would no longer be provided under Laura Beth’s IEP was not sufficient to change her IEP.

[¶23]  24:05:27:15 states:

If an eligible student has been receiving special education in one district and moves to another district, the new district need not conduct a placement meeting if a copy of the student’s individual education plan is available and the parents indicate they are satisfied with it and the new district determines that the current individual education plan is appropriate and can be implemented as written.

In this case, the school superintendent felt that the Huron IEP could not be implemented as written. However, it was not until December of 1996 that a new IEP was implemented. See School District of Philadelphia, 25 IDELR 473 (1996) (holding that school district should have implemented IEP from previous school district in student’s new school district). The Court finds that Laura Beth’s IEP was in effect until December.

[¶24]  The Court finds that the Malehorns are entitled to reimbursement for the transportation which they provided until the new IEP came into effect in December.5{fn5} See 20 USC § 1415(i)(2)(B)(iii); Rapid City School District v. Vahle, 733 FSupp 1364 (DSD 1990), aff'd, 922 F2d 476 (8th Cir. 1990) (the Court awarded reimbursement under the IDEA when district failed to provide appropriate services). The IDEA states that related services are to be provided without charge, 20 USC § 1401(8)(A), and under the IDEA transportation is considered to be a related services. Therefore, Malehorn shall be reimbursed for the full cost of transportation from her house to school at the state rate from April of 1996 to December 5, 1996.6{fn6}

B.

[¶25]  The second issue this Court must address is whether the hearing examiner erred in concluding that Laura Beth was not entitled to transportation as a related service under the IDEA. As mentioned above, the Court in Rowley set forth two steps for a district court to follow when reviewing the decision of a hearing examiner under the IDEA. The first step, whether the appropriate procedure was followed, is not challenged as to this issue. However, the second step, whether the IEP developed through the Act’s procedures is reasonably calculated to enable Laura Beth to receive her educational benefits, is relevant. Few district court or circuit court decisions are available on the issue of when transportation is necessary as a related service under the IDEA.

[¶26]  A public agency must provide transportation to a disabled student “if a public agency provides transportation to the general student population to and from school.” Letter to Smith, 23 IDELR 344 (OSEP 1995). However, “if a public agency does not provide transportation to the general student population, the issue of transportation for students with disabilities must be decided on a case-by-case basis.” Id. The District provides the general student population with transportation from the Deerfield bus stop. Those students living in the same area as Laura Beth do not receive door-to-door transportation. Therefore, given that Laura Beth is requesting door-to-door transportation, her situation will be analyzed on a case-by-case basis.

[¶27]  Federal law does not state whether transportation as a related service must be door-to-door. Fort Sage Unified Sch. Dist./ Lassen County Office of Educ., 23 IDELR 1078 (1995). However, the US Department of Education has issued a policy letter on the issue:

In terms of establishing bus stop locations, [the IDEA] does not mandate that the child be picked up at his/her home, nor does it prohibit the county board from establishing bus stop locations for handicapped children.

Id. (citing Letter to Smith, Education for the Handicapped Law Reporter (hereinafter EHLR) 211:191-192 (1980)).

[¶28]  The Eleventh Circuit recently considered an issue similar to the issue in this case in Donald B. v. Board of School Commissioners of Mobile County, Alabama, 117 F3d 1371 (11th Cir. 1997).7{fn7} In this case, Donald B. urged “that the district court erred in ruling that under the IDEA the Board has no obligation either to transport him three blocks between his private school and the public school that offered the speech therapy he needed or to provide such services at his private school.” Id. at 1372-73. The Eleventh Circuit affirmed the district court’s decision; however, the Eleventh Circuit’s decision was based upon different reasoning. Id. at 1373.

[¶29]  The Eleventh Circuit held that “the IDEA requires transportation if that service is necessary for a disabled child ‘to benefit from special education,’ 20 USC § 1401(a)(17), even if that child has no ambulatory impairment that directly causes a ‘unique need’ for some form of specialized transport.” Id. at 1374. The court distinguished McNair v. Oak Hills Local Sch. Dist., 872 F2d 153 (6th Cir. 1989), to the extent that McNair required that a related service address the unique needs caused by a particular handicap. Donald B., 117 F3d at 1374. Relying on McNair, the district court in Donald B. reasoned that “Donald B. is afflicted with a speech impairment only and not a handicap affecting his ability to walk or move ... [his] handicap does not require any special transportation, the transportation requested by Plaintiffs is not a reasonable and necessary service for meeting Donald B.’s unique needs.” Id. at 1374 (citing Donald B. v. Bd. of Sch. Comm'rs of Mobile County, Ala., No. 94-0554-AH-S, slip op. at 6-7 (SD Ala. March 29, 1996)). The Eleventh Circuit found the district court’s reasoning to be flawed based upon the context of the IDEA.

[¶30]  The court concluded that it must focus on the word “necessary.” Donald B., 117 F3d at 1375. The Eleventh Circuit stated that only those services “‘necessary to aid a handicapped child to benefit from special education must be provided, regardless [of] how easily a school [official] could furnish them.’” Id. at 1374-75 (quoting Irving Indep. Sch. Dist. v. Tatro, 468 US 883, 894, 104 SCt 3371, 3378, 82 LEd2d 664 (1984)). The court held that transportation would be necessary in Donald B. “if in its absence a disabled child in private school would be denied ‘a genuine opportunity for equitable participation in [a special education program],’ 34 CFR § 76.651(a)(1), or special education program benefits ‘comparable in quality, scope, and opportunity for participation ... [to those provided for] students enrolled in public schools,’ 34 CFR § 76.654(a).” The court shifted the focus from whether the child had a unique need which required transportation to whether transportation was necessary for the child to participate in special education program.

[¶31]  In determining whether transportation as a related service was necessary, the court considered:

(1) [the disabled child’s] age: (2) the distance he or she must travel; (3) the nature of the area through which the child must pass; (4) his or her access to private assistance in making the trip; and (5) the availability of other forms of public assistance in route, such as crossing guards or public transit.

Donald B., 117 F3d at 1375. See also Simi Valley Unified Sch. Dist., 23 IDELR 760 (1995) (considered distance from disabled student’s home to his school when determining that student was entitled to door-to-door transportation under the IDEA); Fort Sage Unified Sch. Dist./Lassen County Office of Educ., 23 IDELR 1078 (1995) (concluded student entitled to door-to-door transportation given the distance the disabled student lived from school and the dangers which he might encounter while waiting at the bus stop).

[¶32]  The Eleventh Circuit placed the burden on Donald B. to show that he was unable to travel to the private school without the Board’s help. Donald B., 117 F3d at 1375. The court concluded that Donald B. had to travel only a short distance (three blocks) and that he was a young age (seven years at time of the decision). Id. The court concluded that Donald B. had not offered any evidence to show that the area was dangerous or that he could not easily travel the area. Id. In Donald B. there was evidence that his mother could not leave her work to assist Donald B. in traveling the three blocks; however, the court concluded that this fact did not matter given that Donald B. failed to present evidence “regarding other means, private and public which may have been at his disposal to assist him in covering the three blocks.” Id.

[¶33]  Using the factors established by the court in Donald B., this court finds that the related service of transportation is not “necessary” for Laura Beth to benefit from the special education. After giving due weight to the administrative record and the findings of the hearing examiner, this Court finds by a preponderance of the evidence that transportation is not necessary for Laura Beth to benefit from a free appropriate public education. The distance which Laura Beth is required to travel each day is 13.5 miles one way. This is a much greater distance than Donald B. was required to travel, but balancing the other factors this Court finds that the distance that Laura Beth must travel does not tip the scales in her favor. Laura Beth is one year (eight years old at the time of the administrative hearing) older than the child in Donald B. Laura Beth’s mother testified that the bus stop is an unsafe area for Laura Beth to be left because she may step into oncoming traffic. However, both Stahl and Schaeffer testified that Laura Beth could follow directions not to walk out in front of a car. Deerfield Road where Laura Beth is dropped off is a two-lane road where traffic travels at 55 mph. When Laura Beth was in Huron her IEP called for Laura Beth to ride the regular bus home and drop her off on a road which had four lane traffic and a speed limit of 50 mph. Kathy Malehorn stated that Laura Beth did not ride the bus home but that she was always picked up from school and that the IEP was written that way to make it convenient so Kathy Malehorn did not have to call when Laura Beth would not be riding the bus.

[¶34]  This Court recognizes that it may not rely on the determinations of the Huron IEP team in concluding why Laura Beth may or may not currently be entitled to transportation as a related service, but this testimony is helpful in accessing the credibility of Kathy Malehorn. Regardless of how the IEP was set up, a team should not set up an IEP which would endanger a student for convenience sake. Therefore, the IEP team in Huron obviously felt that Laura Beth would be safe if dropped off near a four-lane highway which had a speed limit of 50 mph. More important her teachers who observe her at school in Hill City feel that she can be directed to make this determination. Both Stahl and Schaeffer who work with and are familiar with Laura Beth’s background felt that she could follow a direction not to run into oncoming traffic.

[¶35]  On the balance, this Court finds that Laura Beth has not shown that she is unable to travel to school without the Board providing door-to-door transportation. She traveled to school starting in April and all through the fall of 1996 without the Board’s help. Kathy Malehorn did state that she has been unable to seek employment because she must transport her children to and from school. This Court agrees with the hearing examiner’s conclusion that the Malehorns’ other children’s transportation needs may not play a part in this Court’s decision as to Laura Beth’s transportation needs. However, the Malehorns did not prove that there would not be another available solution for Laura Beth. See Donald B., 117 F3d at 1375.

[¶36]  Malehorn argues that in determining whether transportation must be provided as a related service under the IDEA this Court may not consider a parent’s ability to provide transportation. Malehorn relies on an article by Linda Bluth. See Defendant’s Exhibit 11 (copy of Bluth article). However, Malehorn also relies on Donald B. in support of its position. In that case, as discussed above, the Court in Donald B. considered whether the student would have private assistance in making the trip. Malehorn does not discuss the fact that the court considered this factor, but instead emphasizes the fact that the court considered distance as a factor. Malehorn is urging that the Court adopt only select factors set forth by the Eleventh Circuit. Relying on Donald B., this Court concludes that it may consider a child’s access to private assistance in making the trip as a factor, but not the sole factor. However, this Court concludes that this factor is not determinative in this case.

[¶37]  Malehorn wants to place emphasis on the distance that Laura Beth lives from the school. Malehorn argues that some courts which have concluded that transportation is required as a related service have considered the distance which the child lived from the school he or she was attending. However, most of those cases did not rely on distance alone in concluding that transportation was a related service. See, e.g., Fort Sage, 23 IDELR 1078 (in reaching decision the fact that child did not appreciate dangers he would encounter at bus stop was also considered); Donald B., 117 F3d at 1375 (distance was only one factor the court considered). But see, Simi Valley, 23 IDELR 760 (relied on distance only in concluding that child entitled to transportation as a related service). In this case, Malehorn urges that Laura Beth’s safety at the bus stop is the other factor to be considered. However after giving due weight to the administrative record, this Court finds by a preponderance of the evidence that the record represents that Laura Beth would be safe at the bus stop. Therefore, after balancing the factors, the scale is tipped in the District’s favor.

[¶38]  Giving the record at the administrative hearing due weight, this Court finds that Laura Beth is not entitled to transportation as a related service. Transportation is not necessary for Laura Beth to benefit from special education. Counsel for the Malehorns is highly critical of the opinion of the hearing examiner. However, despite the fact that the hearing examiner failed to consider the distance which Laura Beth lived in determining if transportation is necessary as a related service, the distance in the case was not far enough to be determinative. Plaintiff did not present any evidence as to what would be an average distance to travel to school in an attempt to show that Laura Beth travels much farther than other students. Plaintiff did not meet her burden in establishing that transportation is necessary as a related service for Laura Beth to receive free appropriate education.

VII. CONCLUSION

[¶39]  Accordingly, based upon the discussion of this Court set forth above, it is hereby

[¶40]  ORDERED that plaintiff shall submit a brief clearly addressing the transportation costs which she believes she is entitled on or before November 19, 1997. Defendant shall respond to plaintiff’s brief on or before November 29, 1997.

[¶41]  IT IS FURTHER ORDERED that the hearing examiner’s decision is affirmed in part and reversed in part. The decision is reversed to the extent that the hearing examiner refused additional mileage reimbursement. The decision is affirmed to the extent that Laura Beth is not entitled to transportation as a related service under the IDEA and that transportation is not necessary for Laura Beth to receive a free appropriate education.8. Based upon this Court’s conclusion Laura Beth is not entitled to transportation as a related service under the IDEA, this Court is not required to address the third issue presented by plaintiff. {fn8}

Footnotes

1. The Malehorns live on Castle Peak Road which is approximately two-tenths of a mile from the intersection of Mystic Road and Castle Peak Road. By door-to-door transportation, the Court is referring to plaintiff’s request that bus service be provided at the intersection of Castle Peak Road and Mystic Road.

2. The record failed to explain the personal injury which Laura Beth suffered and how it was caused.

3. In considering whether transportation is a related service, the IEP committee looks at the child’s ability to ambulate, ability to get from one place to another, mental capacity, capacity to reason, disability and are there any aspects of the disability which would make transportation in the regular manner difficult. TR 94-95.

4. The term “free appropriate public education” means special education and related services that--

(A)  have been provided at public expense, under public supervision and direction, and without charge;

(B)  meet the standards of the State educational agency;

(C)  include an appropriate preschool, elementary, or secondary school education in the State involved; and

(D)  are provided in conformity with the individualized education program required under section 614(d).

20 USC § 1401(8)(A)-(D) (emphasis added).

5. Malehorn urges that she is entitled to reimbursement after the December IEP meeting. She argues that she was incorrectly informed that the school board was the forum to use in addressing her transportation issue; therefore, she is entitled to reimbursement past December. The law provides that the old IEP be used until a new IEP is enacted. This occurred in December. As the old saying goes, ignorance of the law is no excuse. The District was ignorant in telling Malehorn to go to the school board, and as a result of that ignorance, it is required to reimburse Malehorn for mileage until the new IEP was enacted. Malehorn was ignorant that she should have requested a meeting by the IEP committee to consider transportation, and as a result of that ignorance, she will only be reimbursed for the full cost of transportation through December.

6. Plaintiff must submit a brief clearly setting forth the amount of reimbursement which she believes she is entitled and affidavits in support of this amount if necessary. The District will be permitted to respond. The Court notes that the District has failed to provide the Court with any written policy which would prevent reimbursement because plaintiff failed to apply for reimbursement before the end of the fiscal year.

7. Donald B. was requesting transportation to a parochial school, but this did not become an issue because the Board in denying Donald B.’s request for transportation did not rely on the school’s status as a parochial institution. Donald B., 117 F3d at 1373 n.2. Therefore, the decision is helpful to this Court given that reliance in denying transportation was not placed on the fact that Donald B. was requesting transportation to a private not a public school.



State Farm Mut. Auto. Ins. Co. v. American Concept Ins. Co., 1997 DSD 32

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Plaintiff,

v.

AMERICAN CONCEPT INSURANCE COMPANY,

a South Dakota corporation; Colonial Insurance Company of California,

a California Corporation; Carolyn M. Sanders; Robert L. Sanders; and Jesse W. Ulmer,

Defendants.

[1997 DSD 32]

United States District Court

District of South Dakota - Western Division

CIV. 96-5078

MEMORANDUM OPINION

Opinion Filed Nov 24, 1997

Richard H. Battey, Chief Judge

PROCEDURAL HISTORY

[¶1]     On September 24, 1996, State Farm Mutual Automobile Insurance Company (State Farm), an Illinois corporation registered to do business in South Dakota, filed a complaint against American Concept Insurance Company (American Concept), a South Dakota corporation; Colonial Insurance Company (Colonial), a California corporation; Carolyn Sanders (Sanders) and her son, Robert Sanders, residents of Pennington County, South Dakota; and Jesse Ulmer (Ulmer), also a resident of Pennington County. (Docket #1). State Farm sought declaratory relief regarding its liability for an uninsured motorist claim filed by Ulmer stemming from a two-vehicle accident occurring on April 2, 1995, involving Robert Sanders, the driver of the Sanders vehicle, and Ulmer. At the time of the accident, Carolyn Sanders was insured by American Concept under policy #PA103483. American Concept rescinded the policy, claiming Carolyn Sanders had purposefully failed to indicate that Robert Sanders was a resident in her house at the time she applied for insurance. The recission was retroactive to June 1993, the effect of which was to deny liability coverage for the Sanders vehicle.

[¶2]  Carolyn Sanders filed a cross-claim against American Concept in which she contended that (1) American Concept is required to provide liability coverage; and (2) American Concept acted in bad faith by rescinding the policy retroactive so as to avoid coverage in the collision. Sanders’ Cross-claim at 2-3. (Docket #28).

[¶3]  Pending are Carolyn Sanders’ motion for partial summary judgment as to the liability issue (Docket #60) and American Concept’s motion for partial summary judgment on the bad faith claim. (Docket #67).

[¶4]  This Court has diversity jurisdiction over plaintiff’s claim pursuant to 28 USC § 1332 and supplemental jurisdiction over defendant Sanders’ cross-claim pursuant to 28 USC § 1367.

FACTS

[¶5]  On June 2, 1993, Carolyn Sanders submitted an application for insurance with American Concept for her 1990 Mitsubishi Gallant. Depo. of Carolyn Sanders at 18; Application for Insurance at 1. The application did not indicate that Robert Sanders was living with Carolyn at the time. Sanders’ Statement of Material Facts (Sanders’ SMF) at 2. She paid an initial premium in June of 1993 and made renewal payments every six months thereafter. Id. at 3. Carolyn Sanders was never asked to update the information on the application. Robert Sanders has a history of substance abuse and DUI convictions. Sanders’ SMF at 4.

[¶6]  On April 2, 1995, Robert Sanders was involved in an accident while driving Carolyn Sanders’ Mitsubishi Gallant. It is alleged that he failed to stop for a stop sign and collided with a vehicle being driven by Ulmer. Robert Sanders was convicted of driving under the influence. Id. at 5. American Concept was notified of the accident and rescinded the policy retroactive to the date of its inception, thereby denying liability. It further refused to defend Robert Sanders for the Ulmer liability claim. Sander’s Brief at 4.

[¶7]  It is American Concept’s claim that Carolyn Sanders misrepresented the status of her household at the time of completing the application by neglecting to include Robert Sanders as a member of the household. American Concept contends that had it known of Robert Sanders’ presence in the house no policy would have been issued or a different policy would have been issued by reason of his two convictions for DUI prior to June 1993. American Concept’s Response (Response) at 4. Carolyn Sanders contends that the information on the application was correct since Robert Sanders moved into her home subsequent to the time the application was completed.

SUMMARY JUDGMENT STANDARD

[¶8]  Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can “show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law.” In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 US 574, 106 SCt 1348, 1356-57, 89 LEd2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.

[¶9]  In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 US 242, 106 SCt 2505, 2513, 91 LEd2d 202 (1986). The Supreme Court has instructed that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ’secure the just, speedy, and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 US 317, 327, 106 SCt 2548, 2555, 91 LEd2d 265 (1986). The nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts,” and “[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita, 106 SCt at 1356.

[¶10]  The trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing motions for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).

DISCUSSION

[¶11]  There are two issues in this case, both being addressed by partial motions for summary judgment: (1) whether American Concept must provide liability coverage for the Sanders vehicle under its policy issued to Carolyn Sanders; and (2) whether the recission by American Concept amounted to bad faith denial of coverage.

[¶12]  The Court finds that American Concept’s recission was not legally effective; therefore, American Concept is required to provide liability coverage on the Sanders vehicle. Accordingly, there is no uninsured liability on the part of State Farm. The Court further concludes that the physical damage to the Sanders vehicle and the bad faith claim of Sanders involve disputed issues of fact which preclude summary judgment.

[¶13]  A. Liability

[¶14]  Sanders, by moving for partial summary judgment, asks this Court to find, as a matter of law, that she did not misrepresent the status of her household on the application for insurance with American Concept. Alternatively, she contends that even if there was a misrepresentation, American Concept is still liable under SDCL 32-35-74 which prohibits an insurer from refusing coverage once an injury has occurred. After reviewing the record, the Court finds that the issue of misrepresentation remains an issue of fact which cannot be determined at the summary judgment stage. However, the Court agrees, in part, with Sanders’ interpretation of SDCL 32-35-74 and finds that American Concept must provide liability coverage under its policy #PA103483.

[¶15]  1. Misrepresentation

[¶16]  Sanders counters American Concept’s misrepresentation argument by alleging that Robert Sanders was not living with her at the time she applied for insurance with American Concept. Therefore, there was no material misrepresentation.

[¶17]  Viewing the above evidence most favorably to the nonmoving party, American Concept, the Court concludes that a genuine issue of material fact exists as to whether Robert Sanders was residing at 624 Lion Drive at the time Carolyn Sanders completed the application.

[¶18]  2. Application of SDCL 32-35-74(1)

[¶19]  Sanders contends that even if she had misrepresented the truth on her application, SDCL 32-35-74 prohibits American Concept from retroactively rescinding the policy once an injury has occurred. Sanders’ Brief at 10-11. American Concept counters that SDCL 58-11-44 governs this situation and clearly prevents Sanders from recovering due to her misrepresentation on the application. Response at 11-12. As the issue is one of statutory interpretation, it is ripe for summary judgment.

[¶20]  SDCL 32-35-74(1) states in relevant part:

Policies subject to particular provisions of law. Every motor vehicle liability policy shall be subject to the following provisions which need not be contained therein:

(1)  The liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute whenever injury or damage covered by said motor vehicle liability policy occurs; said policy may not be canceled or annulled as to such liability by any agreement between the insurance carrier and the insured after the occurrence of the injury or damage; no statement made by the insured or on his behalf and no violation of said policy shall defeat or void said policy.

[Emphasis added.]

[¶21]  American Concept argues that this provision is trumped by SDCL 58-11-44 which was enacted in 1966, nine years after section 32-35-74 and thus impliedly abrogates it. The Court is not persuaded.

[¶22]  Section 58-11-44 is found in the Insurance title of SDCL and reads as follows:

Application for insurance or annuity -- Statements by insured deemed representations -- Omissions, concealment and incorrect statements preventing recovery. All statements and descriptions in any application for an insurance policy or annuity contract, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless either:

(1)  Fraudulent; or

(2)  Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or

(3)  The insurer in good faith would either not have issued the policy or contract, or would not have issued it at the same premium rate, or would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.

[¶23]  Section 32-35-74 seemingly would prevent American Concept from denying coverage after the accident occurred, which it did in this case. However, section 58-11-44 appears to extend to American Concept the power to deny coverage if there is a material misrepresentation on the application. The case law on this issue and the policy behind each statute reveal that section 32-35-74, not section 58-11-44, is applicable in this instance.

[¶24]  Under the principle of pari materia which assumes all legislation can be read harmoniously, statutes which on their face seem contradictory must be reconciled if at all possible. In the Matter of Sales Tax Liability of Valley Queen Cheese, 387 NW2d 39, 41 (SD 1986); North Central Investment Co. v. Vander Vorste, 135 NW2d 23, 27 (SD 1965). It should also be noted that American Concept’s request that this Court find that section 58-11-44 impliedly abrogated section 32-35-74 is not an interpretation favored by the courts. South Dakota Dep’t of Public Safety v. Cronin, 250 NW2d 690, 694 (SD 1977) (“It is recognized that repeal by implication is not favored and will be indulged only where there is a manifest and total repugnancy. ... If by any reasonable construction both acts can stand they will be permitted to do so”). Implied statutory abrogation is not proper in this instance.

[¶25]  The financial responsibility laws found in chapter 32-35 were or