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NATIONAL ASSN. FOR COMMUNITY DEV. v. HODGSON

March 30, 1973

NATIONAL ASSOCIATION FOR COMMUNITY DEVELOPMENT et al., Plaintiffs,
v.
James D. HODGSON et al., Defendants


Flannery, District Judge.


The opinion of the court was delivered by: BFLANNERY

FLANNERY, District Judge.

 Plaintiffs in this case are a group of four organizations which purports to represent those who are unemployed. They are suing the Labor Department and an organization known as the Interstate Conference of Employment Security Agencies (I.C.E.S.A.), which is an organization consisting of the various state unemployment offices. Plaintiffs allege that I.C.E.S.A. indulges in lobbying efforts, and that because it receives Congressionally-appropriated funds, it and the Labor Department -- the department which makes the funds available to the I.C.E.S.A. -- are in violation of 18 U.S.C. § 1913 (1970). This section provides:

 
No part of the money appropriated by any enactment of Congress shall, in the absence of express authorization by Congress, be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress, to favor or oppose, by vote or otherwise, any legislation or appropriation by Congress, whether before or after the introduction of any bill or resolution proposing such legislation or appropriation; but this shall not prevent officers or employees of the United States or of its departments or agencies from communicating to Members of Congress on the request of any Member or to Congress, through the proper official channels, requests for legislation or appropriations which they deem necessary for the efficient conduct of the public business.

 Plaintiffs allege that they are harmed because as representatives of those who must deal with the various state unemployment commissions in order to receive compensation, their positions on legislation are usually opposite to the I.C.E.S.A. Therefore, they allege that the government's subsidy of the I.C.E.S.A. not only is illegal, but gives an unfair advantage to the I.C.E.S.A. since both plaintiffs and the I.C.E.S.A. are in direct competition vis-a-vis lobbying efforts regarding any legislation affecting the area of unemployment compensation. For relief, plaintiffs seek to enjoin the Department of Labor (DOL) from authorizing, and I.C.E.S.A. from receiving, any federal funds for the purpose of lobbying.

 The matter is now before the court solely on a motion by defendants I.C.E.S.A. and the DOL for dismissal. At this stage of the proceedings the court shall make no decision whether or not defendants have violated Section 1913. However, for purposes of the motion, the law requires the court to accept the pleaded allegations of the complaint as admitted. The law will not allow this court to dismiss the cause of action unless it appears to be a certainty that plaintiffs are entitled to no relief under any state of facts which could be proved in support of the claim. Haines v. Kerner, 404 U.S. 519, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972); Walker Process Equip. v. Food Mach. & Chemical Corp., 382 U.S. 172, 86 S. Ct. 347, 15 L. Ed. 2d 247 (1965); Gardner v. Toilet Goods Ass'n, 387 U.S. 167, 87 S. Ct. 1526, 18 L. Ed. 2d 704 (1957); Carter v. Carlson, 144 U.S. App. D.C. 388, 447 F.2d 358 (1971); Jones v. Rogers Memorial Hospital, 143 U.S. App. D.C. 51, 442 F.2d 773 (1971). Defendants allege the following grounds in support of their motion:

 I. Common Name

 Defendant I.C.E.S.A. alleges that pursuant to Rule 17(b), Fed. R. Civ. P., it cannot be sued in its common name because it is an unincorporated association. This rule provides that the capacity to sue or be sued shall be determined by the law of the state in which the district court is held, except that an unincorporated association which has no such capacity by the law of such state may sue or be sued in its common name " for the purpose of enforcing for or against it a substantive right existing under the Constitution or laws of the United States." [emphasis supplied] Id. Defendant I.C.E.S.A. relies primarily on Judge Richey's opinion in Democratic Nat'l Committee v. McCord, 356 F. Supp. 1394 (D.D.C. 1972), where he found that in the District of Columbia unincorporated associations may not sue or be sued. Moreover, Judge Richey found the "substantive right" exception inapplicable to his case and therefore held that the court lacked in personam jurisdiction as to both the Democractic Nat'l Committee and the Committee to Re-Elect the President and dismissed these organizations from the action. See Fennell v. Bache, 74 U.S. App. D.C. 247, 123 F.2d 905 (D.C. Cir. 1941); Matson v. Mackubin, 61 U.S. App. D.C. 102, 57 F.2d 941 (D.C. Cir. 1932).

 However, it is not difficult to distinguish McCord from the case at bar. Although the law of the District of Columbia does not permit an unincorporated association to sue or be sued, the "substantive right" exception can apply to the present case even though it clearly did not apply in McCord. The statute involved in the McCord case was the Civil Rights Act -- 42 U.S.C. § 1985(3) (1970). This statute has been held only to apply to natural "persons", i.e., even a corporation is not a person under the civil rights laws, much less an unincorporated association. Thus, the exception in Rule 17(b) which allows an unincorporated association to sue or be sued for the purpose of enforcing a substantive right existing under the laws of the United States could not apply when those laws are the civil rights provisions, since no substantive right can exist for anything other than a natural person. However, when a party seeks to take advantage of the "substantive right" exception and the laws under which that alleged right originate do not specifically limit the right to "persons" but rather say nothing one way or the other, a court is free to decide the applicability of the Rule 17(b) substantive right exception on the merits of the particular case before it. In the present case, plaintiffs base their cause of action on a penal statute, 18 U.S.C. Section 1913 (1970). If the court finds that plaintiffs were substantially injured by activities of the defendants, such activities being illegal under Section 1913, and if the court finds that plaintiffs may sue to redress those injuries even though the statute itself includes only criminal remedies, then the plaintiffs would qualify under the "substantive right" exception in Rule 17(b) and the "common name" ground for defendants' motion to dismiss should be denied.

 II. Civil Suit based on Penal Statute

 Defendants argue that plaintiffs cannot institute a civil suit based solely on a penal statute. However, the state of the law seems to weigh heavily in plaintiffs' favor. The Supreme Court has treated the issue in several cases beginning with Texas & Pacific Railway Co. v. Rigsby, 241 U.S. 33, 36 S. Ct. 482, 60 L. Ed. 874 (1916). In that case the Court stated: "[where] a statute enacts or prohibits a thing for the benefit of a person, he shall have a remedy upon the same statute for the thing enacted for his advantage, or for the recompense of a wrong done to him contrary to the said law". The Court further stated: "A disregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover the damages from the party in default is implied". Id. at 39, 36 S. Ct. at 484. In a more recent case, Wyandotte Transportation Co. v. United States, 389 U.S. 191, 202, 88 S. Ct. 379, 19 L. Ed. 2d 407 (1967), the Court reaffirmed its position in earlier cases, finding that a penal statute can give rise to a civil cause of action (1) where criminal liability was inadequate to insure the full effectiveness of the statute which Congress had intended, (2) where the interest of the plaintiffs falls within the class of interests that the statute was intended to protect, and (3) where the alleged harm that had occurred was of the type that the statute was intended to forestall. Id. See J.I. Case Co. v. Borak, 377 U.S. 426, 84 S. Ct. 1555, 12 L. Ed. 2d 423 (1964) (penal section of S.E.C. Laws held to provide private right of action).

 One of the most recent cases to affirm the right of private parties to use a penal statute as the basis for a civil cause of action comes from our own District Court. In Common Cause v. Democratic National Committee, 333 F. Supp. 803 (D.D.C. 1971), Judge Parker discussed the cases noted above as well as authorities from the states and other circuits and found that the three factors enunciated in the Wyandotte decision were present in the case before him. Thus, he sustained a civil cause of action based solely on 18 U.S.C. Sections 608, 609 (1970), which proscribed limits on campaign contributions and expenditures and set out criminal sanctions for those who exceeded those limits. Id. at 809-814.

 Viewing the three criteria set out in Wyandotte, it is quickly observable that the intent of Congress in passing the criminal statute in question is important to each of the three requirements. Unfortunately, in Section 1913 plaintiffs have dusted off a statute which, because of its obscurity, may render impossible a precise judgment concerning the intent of Congress in passing the legislation. There appears to be no record of any prosecutions under the statute. Only one completely unrelated case even mentions it, and that case merely lists it in a general footnote. A check of the statute's legislative history back to 1919, including floor debates, three house reports, and one senate report, reveal no statement of intent. In fact, the only place this section is even listed is in H. Rept. 11 to accompany H.R. 3478, May 28, 1919, and this report merely records the words of the statute with not one word of explanation. *fn1"

 However, the fact that there is no specific statement of the intent of Congress does not necessarily mean that plaintiffs' case should fall for failure to meet the Wyandotte criteria. Obviously, Congress intended to remedy some problem or further some cause, otherwise they would not have bothered enacting the statute. The fact that there is no specific statement of intent to be found in the legislative history of the bill of which Section 1913 was a part, simply means ...


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