Petition — Supreme Equipment & Systems Corp. v. Walter M. Ballard Co.

MICHAEL RODAK, JRuy CLEREE

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

no. %9-1650

SUPREME EQUIPMENT & SYSTEMS

CORPORATION,

Petitioner,

v<

THE WALTER M. BALLARD COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ROBERT M. BECKMAN

1001 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 331-1050

Attorney for Petitioner

April 18, 1980

SS AAAS ETECOTCO Suk PLP EAE LS SOTO LNG: LF TI

THE CASILLAS PRESS, INC.-1717 K Street N W.—Washungton, 0. C.-223-1220

(i)

TABLE OF CONTENTS

Page

Ee Se essa cy eke wesccsccesees l

GCE T uaa aia don akvecesssercsccccess 2

RP ccc cece ccc ccsccesccetecs 2

CONSTITUTIONAL AND STATUTORY

Gy adie ass cese successes 2

ey sec ece cess rcesecceess 3

REASONS FOR GRANTING THE WRIT Dn See v4s5ke 65 ss 5

GG ga sce wc ne vc ccscceeccenes 10

APPENDIX:

PL Wee mpeeeeeee CES Fret DCCISION .... «2... eee eee ee la

i Wee Ce ie PIE WOPEL EPUCISION, 2.0.1... eee eee Ta

C. The District Court’s Second Decision ................... lla

ee We ck ct cece eens 19a

E. The Court of Appeals’ Order Denying Rehearing ......... 21a

F. The Court of Appeals’ Order Denying

Suggestion for Rehearing en banc ...............0000 05. 23a

(ii)

TABLE OF AUTHORITIES

Page

Cases:

Atchison, Topeka & Santa Fe Ry. Co. v. Witchita

Board of Trade,

REE Nie TE. wach k Rees oe ee ae eek leew caecsk 4

Providence Tool Company v. Norris,

er Os GED xia k oak nc Saw ce beta. ao

S.E.C. v. Chenery Corp.,

ey ee tke ee) ean a PPE, me aN 10

Secretary of Agriculture v. United States,

Ser Ss MP EPONE 5 os s'huatatig es boca deo pda ebechGmaladee 10

Taylor v. McKeithen,

TEES EEE 235 i oud d Coa U RN Ok ORK eeu bce saab ans 9

United States v. Diebold, Inc.,

Se ee Naika ak bl ene si Ok Ch as bkk lm leek 5

Wisniewski v. United States,

Be Sh I op ie ao tiikla a ch wdc bee retiowens 10

Constitution, one and Regulations:

Ly 2h. Sn, PRIN ec ea biebe becasue 2

PPP eT cs voc ven:. Feb saunUeewa ridadesd xeedis vetius 2,9

Be I a en de ba Ch ees Ue Fk Lda eee 2

ee A nde eh OEE eRe k heck bee ee 3

SEAT ie 0 SE. 05 9 oo Oa he CL 3

FU es PO ids cn eee ee eee 6

(iii)

Other Authorities: Page

Commission on Revision of the Federal Court Appellate

System, Structure and Internal Procedures:

Recommendations for Change (1975) ....... 06... 0000 cece eee ]

Hearings Before the Comm'n on Revision of the Federal

Court Appellate System (2d Phase 1974-75) ..............+4+5- 9

Annual Reports of the Director of the Administrative

Office of the United States Courts, 1976, 1977, 1978 ........... 7

Carrington, Meador, Rosenberg, Justice on Appeal

CWP ane FE once chee peace secon. eUnew pene ces 8

Gardner, Ninth Circuit’s Unpublished Opinions:

Denial of Equal Justice?,

ee aa aba wiaseany 8

Haworth, Screening and Summary Procedures in the

United States Courts of Appeals,

hk | ee Se . ) Sor Pee Cunty c aaeeee ere cm core ork 8

Leventhal, Appellate Procedures: Design, Patchwork,

and Managed Flexibility,

SER ee I ic ches a aohhe W's hawks nee es 9

Morrison, Decisions Without Reasons: A Crisis

in the DC Circuit,

EE I, UIOD oo os ca cck b tiiv ese canis re ecises 8

Note, Unreported Decisions in the United States

Courts of Appeals,

pe RR ey ERR ia ae cere oo ea 8

Reynolds and Richman, The Non-Precedential Precedent,

Limited Publication and No-Citation Rules in the

United States Courts of Appeals,

FOC es Ce rn bak wk hors evan vida wee ee 8

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No.

SUPREME EQUIPMENT & SYSTEMS

CORPORATION,

Petitioner,

Vv.

THE WALTER M. BALLARD COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

OPINIONS BELOW

There is no opinion of the Court of Appeals for the

District of Columbia Circuit accompanying its judgment.

The Court’s judgment affirming the judgment of the

District Court appears in Appendix D. The District

Court’s memorandum opinion appears in Appendix C.

The Court of Appeals’ first opinion in this case is not

reported. It appears in Appendix B. The District Court’s

first opinion in this case is not reported. It appears in Ap-

pendix A. The order of the Court of Appeals denying peti-

tioner’s petition for rehearing of the judgment of affir-

2

mance of the District Court’s second decision and the

order of the Court of Appeals denying petitioner’s sugges-

tion for rehearing en banc are not reported and appear in

Appendices E and F respectively.

JURISDICTION

The judgment of the Court of Appeals was filed on

December 11, 1979. The order of the Court of Appeals de-

nying rehearing was filed on January 21, 1980. This Court

has jurisdiction to review the Court of Appeals’ judgment

pursuant to 28 U.S.C. § 1254.

QUESTION PRESENTED

May a court of appeals issue a bare order of affirmance

without any statement of ressons in a case in which

another panel of the same court of appeals in the same

case earlier reached a different conclusion on the same

issue?

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Fifth Amendment to the Federal Constitution pro-

vides, inter alia:

- + + Nor shall any person. . . be deprived of life,

liberty, or property, without due process of law;

28 U.S.C. § 46(c) provides in pertinent part:

(c) Cases and controversies shall be heard and

determined by a court or panel of not more than

three judges....

3

STATEMENT OF THE CASE

This was a civil suit brought in the U.S. District Court

for the District of Columbia under diversity jurisdiction

pursuant to 28 U.S.C. § 1332. The Walter M. Ballard

Company sued Supreme Equipment & Systems Corpora-

tion for a breach of an alleged contract to pay a contingent

fee for arranging for the sale of special filing cabinets to

the federal government. Supreme moved to dismiss the

complaint on the ground that an agreement to pay a con-

tingent fee to procure a contract with the federal govern-

ment to furnish supplies is void as against public policy

and unenforceable in the courts. Providence Tool Com-

pany v. Norris, 2 Wall. 45, 69 U.S. 45 (1864). Ballard sub-

mitted affidavits to show that it came within the exception

for “bona fide commercial or selling agencies maintained

by the contractor for the purpose of securing business.” 41

C.F.R. § 1-1.504-3. The District Court entered summary

judgment for Supreme, finding,

As developed by counsel at oral hearing, the

facts of this case do not support the kind of con-

tinuing relationship which would bring this case

within the narrow exception. Ballard’s contin-

gent fee agreement was for a specific contract for

the sale of a special “privacy file” to IRS. When

the efforts to procure an IRS contract failed,

Ballard ceased its efforts on behalf of Supreme.

Ballard’s other activities on behalf of Supreme

were to attempt to sell its products as a mid-

dleman, buying Supreme’s products and reselling

them at a mark-up to government and private

purchasers. Furthermore, no continuing rela-

tionship on a broad basis has been shown. Ac-

cordingly, the Court concludes that the arrange-

ment which Ballard seeks enforced here falls

4

within the rule prohibiting commission agree-

ments on sales to the federal government. App.

4a.

Ballard appealed to the Court of Appeals for the

District of Columbia Circuit. The Court of Appeals re-

versed the District Court’s judgment and remanded for

trial by the jury of the issues relating to the availability of

the exception. In a Memorandum Opinion explaining that

summary judgment should not have been entered because

there were substantial issues, the Court of Appeals said

that the District Court “had to and did stray into the for-

bidden area of resolving disputed questions of fact. Accor-

dingly, its action cannot be left undisturbed.” App. 9a.

On remand, the case was tried to a jury. Over Supreme’s

objection, the District Court did not submit to the jury

Supreme’s defense that Ballard did not come within the ex-

ception to the rule prohibiting contingent fee arrange-

ments to procure a contract to furnish supplies to the

federal government. On the same evidence that led the

District Court to find that Ballard was not within the ex-

ception, the District Court found that Ballard did have the

kind of continuing relationship which came within the ex-

ception. App. 14a.

The jury found a verdict for Ballard in the afhount of

$60,162. Supreme appealed to the Court of Appeals for

the District of Columbia. The case was briefed and argued

orally to a panel of three judges all of whom were different

judges from the panel which had remanded the case for

trial of the issues relating to the availability of the excep-

tion. The second panel affirmed the District Court’s

disposition of the issues relating to the availability of the

exception in a bare order of affirmance. App. 20a. There

was no explanation at all of the second panel’s reason for

reaching an opposite conclusion to that of the first panel.

5

The second panel’s order stated, “While the issues pre-

sented occasion no need for an opinion, they have been ac-

corded full consideration by the Court.” App. 19a.

Supreme petitioned for rehearing pointing out that

under the circumstances of this case where the District

Court had found opposite facts on the same evidence and

the first panel of the Court of Appeals had held that the ©

District Court should not be finding the facts at all, a bare

order of affirmance without any explanation violated

Supreme’s constitutional and statutory rights to a reason-

ed decision. The second panel denied Supreme’s petition

for rehearing in a bare order without explanation. App.

21a. Supreme’s suggestion for rehearing en banc was

denied by a bare order without explanation. App. 23a.

REASONS FOR GRANTING THE WRIT

One word orders of affirmance or reversal without a

statement of reasons may have justification in some caes

but surely not in this case where one panel of the Court of

Appeals held that the District Court should not itself have

found the facts relating to Supreme’s defense and then

another panel of the same Court of Appeals affirmed

without explanation when the District Court again did so.

Supreme does not know why it lost this case. Supreme

does not know whether the second panel concluded that

there were not substantial issues of fact, contrary to the

decision of the first panel. Supreme does not know

whether the second panel decided that Supreme’s defense

was not valid, contrary to the first panel and the decision

of this Court in Providence Tool Co. v. Norris, supra.

Supreme does not know whether the second panel decided

that disputed issues of fact can be decided by the District

Court, contrary to the first panel and the decision of this

Court in United States v. Diebold, Inc., 369 U.S. 654

6

(1962). Nor does the bar or the public know what was the

meaning and effect of the Court of Appeal’s decision —

but the bar and the public are not meant to know because

the Court of Appeals’ judgment is by order “Not to be

Published” and by rule it is not to be cited. D.C. Cir.

Local Rules 8(f) and 13(c). App. 19a.

Were Supreme’s case the only instance of miscarriage of

justice by disposition without a statement of reasons, this

petition for certiorari would not be filed. As bitter as it is

for Supreme to have the facts of its defense decided dif-

ferently by the same judge on the same evidence, and as

confusing and frustrating as it is for Supreme to have the

Court of Appeals rule that its defense should not be decid-

ed by the jury and then for the same Court of Appeals,

albeit a different panel, to affirm without explanation

when the District Court itself again found the facts,

Supreme knows that this honorable Court can only con-

sider cases of special and general importance.

However, Supreme’s case is not unique. What happened

to Supreme in this case is happening in many other cases in

many other courts of appeals throughout the country. The

practice of deciding cases with one word orders of affir-

mance or reversal without any statement of reasons is, un-

fortunately, widespread. Supreme’s case is a clear and

egregious set of facts which provides the vehicle for this

Court to appraise the practice among courts of appeals of

deciding cases without any statement of reasons and tell

the courts of appeals that care must be exercised to use the

one-word disposition without explanation in only the few

cases to which it properly applies.

The courts of appeals have powers and procedures to

dispose of routine and simple cases without oral argument

or briefs. Rule 2 of the Rules of Appellate Procedure per-

mits courts of appeals to suspend the rules “in the interest

of expediting decision.” Local rules of the courts of ap-

7

peals provide for motions for summary affirmance or

reversal. Therefore. if a case in a court of appeals reaches

briefs and oral argument, presumably there are issues of

substance which require full debate. In those cases which

have been permitted to proceed to briefs and oral argu-

ment, one would anticipate that rarely would a court of

appeals decide the case without giving reasons, even if the

reasons are in a short memorandum which is unpublished.

The time and effort devoted by the parties and the court

would appear to require some statement of explanation of

the decision.

Yet the fact is, and this is why certiorari should be

granted, that Supreme’s case is but one of thousands of

cases which are disposed of every year by courts of appeals

without a reasoned opinion after full briefs. Indeed, in the

three statistical years of 1976, 1977 and 1978, the Annual

Reports of the Director of the Administrative Office of the

United States Courts reveal that out of a total of 29,601

cases h-ard orally or after submission on briefs there were

8,707 cases disposed of by courts of appeals without a

signed or reasoned opinion. 1976 Report, p. 72a; 1977

Report, p. 179; 1978 Report, p. 169.' When 29.4% of all

Cases Disposed of Without Written Opinion

after Oral Hearing or Submission on Briefs

1976 1977 1978

TOTAL 2,749 3,871 2,087

Circuit:

District of Columbia 91 374 126

First 7 43 24

Second 6 167 63

Third 408 768 522

Fourth aS 32 16

Fifth 300 666 481

Sixth 421 305 598

Seventh 8 116 11

Eighth 7 65 30

Ninth 821 1,131 176

Tenth 18 204 40

8

cases disposed of after oral hearing or submission on

briefs are unaccompanied by a reasoned decision, the pro-

blem is serious, substantial and of such national import as

to justify consideration by this honorable Court.

The practice of disposing of cases without opinion grew

out of the efforts of the Judicial Conference to meet the

problems of burgeoning law libraries and overworked

judges by recommending that courts of appeals limit the

publication of their opinions.2 This recommendation

resulted in the adoption of local rules permitting disposi-

tion by summary order. The courts of appeals have used

these local rules to dispose of a large number of cases

without giving the parties, the court below, the bar or the

public any hint as to the court’s reasoning.

Analyses of summary dispositions by courts of appeals

have revealed that, like Supreme’s case, they hide inconsis-

tent decisions. Gardner, Ninth Circuit’s Unpublished Opi-

nions: Denial of Equal Justice?, 61 A.B.A.J. 1224 (1975);

Morrison, Decisions Without Reasons: A Crisis in the DC

Circuit, 1 District Lawyer No. 1, 36 (1976). The practice of

issuing decisions without stating reasons has _ been

uniformly condemned. The criticisms are based on:

1) The destruction of the integrity of the judicial pro-

cess. There is a danger that if reasons are not stated, the

decision was reached without reasons or with inadequate

reasons.

?Reynolds and Richman, The Non-Precedential Precedent, Limited

Publication and No-Citation Rules in the United States Courts of Ap-

peals, 78 Col.L.Rev. 1167, 1168-72 (1978).

‘Reynolds and Richman, The Non-Precedential Precedent, 78

Col.L.Rev. 1167, 1173-76 (1978); Note, Unreported Decisions in the

United States Courts of Appeals, 63 Cornell L. Rev. 128, 134-35

(1977); CARRINGTGN, MEADOR, ROSENBERG, JUSTICE ON APPEAL, 10

(West Publishing, 1976); Haworth, Screening and Summary Pro-

cedures in the United States Courts of Appeals, 1973 Wash.U.L.Q.

257, 272-73.

9

2) The need to assure litigants and the public that the

determination emerged at the end of a reasoning process

rather than an imperious ukase without a nod to law or a

need to justify. Justice must not only be done but it must

also appear to be done. One word disposition of cases in-

vites the suspicion that the court has not adequately con-

sidered the case or has reached its judgment through im-

permissible means. A court asks too much when it asks

that its decision be accepted as the correct result achieved

after reasoned deliberation if no reasons at all appear.

3) This Court is left with an insufficient record on

which to base a decision. Taylor v. McKeithen, 407 U.S.

191, 193-94 (1972).

These criticisms have led to the unanimous condemna-

tion of the growing practice of one-word dispositions by

commentators,‘ lawyers,’ and judges. The problem is

constitutional. In Supreme’s case, the affirmance without

explanation deprived Supreme of due process of law

guaranteed by the Fifth Amendment to the Federal Con-

stitution. Supreme was also deprived of its statutory right

to a decision. The requirement in 28 U.S.C. § 46(c) that

cases “shall be heard and determined” means a reasoned

determination which must be explained at least by memo-

randum however brief and even unpublished.

This Court has held that a decision of an administrative

agency which is not explained is not a valid decision. Af-

4See note 3, supra.

‘Hearings Before the Comm’n on Revision of the Federal Court Ap-

pellate System, 451-52, 555 (2d Phase 1974-1975).

‘Jd. at 826, 1107; Commission on Revision of the Federal Court

Appellate System, Structure and Internal Procedures: Recommenda-

tions for Change, 49-53 (1975); Leventhal, Appellate Procedures:

Design, Patchwork, and Managed Flexibility, 23 U.C.L.A. L. Rev.

432, 436, 438, 440, 441 (1976).

10

chison, Topeka & Santa Fe Ry. Co. v. Wichita Board of

Trade, 412 U.S. 800, 807-09 (1973); Secretary of Agri-

culture v. United States, 347 U.S. 645, 652-54 (1954);

S.E.C. v. Chenery Corp., 318 U.S. 80, 94 (1943). The

same principle of due process applies to a court decision in

a case like Supreme’s.

The requirement for a reasoned decision is especially ap-

plicable to Supreme’s case because there were inconsistent

decisions by different panels of the same Court of Appeals

in the same case. The Court of Appeals was required to

reconcile inconsistent decisions between panels of its own

court. Wisniewski v. United States, 353 U.S. 901, 902

(1957).

As revealed in the growing body of legal literature on

one-word dispositions by courts of appeals, there is in-

creasing concern with abuses of the rules permitting un-

published opinions which were designed to economize

judicial time by adumbrating opinion writing. The abuses

recorded in the legal literature are focused in Supreme’s

case: It is impossible to reconcile the decision of the first

panel that the District Court erred in itself finding the

facts with the decision of the second panel affirming the

District Court after it found the facts itself on the same

evidence in completely contradictory ways. Only the se-

cond panel can explain how it reached its decision but the

second panel did not do so. This Court is unable to exer-

cise its power and responsibility of review. The decision of

the Court of Appeals is a non-decision.

CONCLUSION

It is because there are so many non-decisions by the

courts of appeals that the Court should grant this petition

and issue a writ of certiorari to the Court of Appeals. The

11

mounting clamor against the abuses of the no-opinion

rules of the courts of appeals deserves this Court’s atten-

tion. The instant case focuses all of the abuses. It is the

perfect vehicle for examination of the administration of

the no-opinion rules of the courts of appeals and, if the

rules have been abused as so many believe they have been

abused, the reversal of the unexplained judgment in

Supreme’s case will advise the courts of appeals that con-

stitutional limits can be transgressed and more selectivity

should ‘* exercised in the use of one-word decisions

without explanation.

Respectfully submitted,

Robert M. Beckman

1001 Connecticut Avenue, N.W.

Washington, D.C. 20036

Attorney for Petitioner

April 18, 1980

APPENDICES

Opinion of the District Court Granting Summary

Judgment for Defendant on the Issue of Defen-

dant’s Defense, March 9, 1976.

Judgment of Circuit Judges McGowan, Tamm and

Robinson Remanding for Trial of Defendant’s

Defense, November 14, 1977.

Memorandum Opinion of the District Court Grant-

ing Summary Judgment for Plaintiff on the Issue

of Defendant’s Defense, August 18, 1978.

Judgment of Circuit Judges Wright, Robb and

Corcoran Affirming Without Opinion the Sum-

mary Judgment for Plaintiff on Defendant’s

Defense, December 11, 1979.

CADC Order denying Petition for Rehearing,

January 21, 1980

CADC Order denying Petition for Rehearing en

banc, January 21, 1980

APPENDIX A

la

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

THE WALTER M. BALLARD

)

COMPANY ) Civil Action

Plaintiff ) No. 75-2019

)

vs ) Filed

) Mar. 9, 1976

SUPREME EQUIPMENT & ) James F. Davey

SYSTEMS CORPORATION ) Clerk

)

Defendant )

OPINION

Plaintiff, the Walter M. Ballard Company (Ballard) fil-

ed a complaint for breach of contract and fraud arising

out of an alleged agreement between Ballard and defen-

dant, Supreme Equipment & Systems Corporation (Su-

preme), whereby Ballard was to be paid a commission of

10% of the value of sales of Supreme’s products to agen-

cies of the federal government of which Ballard was the

procuring cause. Supreme filed a motion to dismiss the

complaint on the ground that the alleged agreement is void

and unenforceable.' Ballard filed a brief in opposition to

the motion to dismiss and an affidavit of Walter M. Bal-

lard, Ballard’s president. The matter was heard at oral

argument on March 4, 1976, and an Order was issued

dismissing the complaint with prejudice. In accordance

with that Order, the Court enters the following opinion.

‘Supreme also moved to dismiss on the ground that Ballard had not

qualified to do business in the District of Columbia. Subsequently,

Ballard qualified in the District of Columbia and this issue was not

pressed further. Hill-Lanham, Inc. v. Lightview Development Corp.,

163 F.Supp. 475, 483 (D.D.C. 1957); Federal Looseleaf Corp. v.

Woodhouse Stationery Co., 163 F.Supp. 482, 483 (D.D.C. 1958).

Findings of Fact

The following sets forth the relevant facts of the case as

alleged by the plaintiff. On a motion to dismiss, the Court

accepts the allegations of the complaint as true.?

Ballard, with its predecessors in interest, has been

engaged in selling office products and systems for more

than sixty years in the District of Columbia. Ballard has

sold office equipment to government agencies, as well as

to private commercial purchasers. Ballard has served as a

consultant and supplier of office equipment for numerous

manufacturers in the United States.

Supreme is a manufacturer and distributor of filing

cabinets. In the late fall of 1973, Supreme approached

Ballard to request Ballard to sell Supreme’s equipment to

private industry and to government agencies. It was con-

templated that in the commercial field, Ballard would

function as a jobber, purchasing Supreme’s equipment at

wholesale and reselling it at retail. However, as to con-

tracts with the federal government, sales were to be made

directly by the defendant with the plaintiff receiving com-

missions equal to ten percent of the value of the sales of

which Ballard was the procuring cause. Pursuant to the

agreement, Ballard diligently undertook to represent the

defendant in the sale of its products to IRS and filed a

GSA registration form to give notice that a commission

was to be received from an IRS contract.

On or about April 25, 1975, Supreme informed Ballard

that Supreme was unable to complete any sales of its pro-

duct to the IRS as a result of the refusal of the General

Services Administration (GSA) to allow ikS to complete

this purchase. Relying on these representations, “Ballard

‘ ?The Court has similarly considered the affidavit of Walter M.

Ballard.

3a

discontinued its ongoing efforts, commenced in February

1974,to assist in the consummation of sales to IRS, as well

as other government agencies in this product.”

Without the aid or knowledge of Ballard, Supreme suc-

cessfully negotiated with GSA an agreement whereby

Supreme’s specially designed “privacy file” was placed on

GSA’s New Item Introductory Schedule. From this list

federal agencies could and did place orders directly with

Supreme for these files.

Ballard requested Supreme to pay commission of 10%

of the value of privacy files ordered by IRS field offices

from Supreme pursuant to the GSA New Item Introduc-

tory Schedule. Supreme refused to pay the requested com-

missions and this suit was brought by Ballard for 10% of

the gross amount of all sales of products by Supreme to

the Internal Revenue Service pursuant to the GSA New

Item Introductory Schedule, for 10% of the gross amount

of all sales of products to all other agencies of the federal

government pursuant to the GSA New Item Introductory

Schedule, for commissions for future sales, and for

punitive damages.

Conclusions of Law

It is fundamental that an agreement to pay a contingent

fee to procure a contract with the federal government to

furnish supplies is void as against public policy and unen-

forceable in the courts. Providence Tool Company v.

Noris, 2 Wall 45, 69 U.S. 45 (1864); LeJohn Manufactur-

ing Company v. Webb, 222 F.2d 48 (D.C.Cir. 1955);

Bradley v. American Radiator and Standard Sanitary Cor-

poration, 159 F.2d 39 (2nd Cir. 1947); Silverman v.

Osborn Register Co., 155 F.2d 879 (D.C.Cir. 1946), 41

C.F.R. § 1-1.5. Although unquestionably harsh at times,

the rule has been uniformly applied to assure the preven-

4a

tion of undue influence in obtaining government contracts

and unnecessary expenditures of public funds.

An exception, however, embodied in the Federal Pro-

curement Regulations and narrowly construed by the

courts is available to a bona fide, established commercial

or selling agent maintained by the contractor for the pur-

pose of drumming up business generally. The exception is

not applicable to an agent employed or maintained to pro-

cure a specific contract. It is within this provision that

Ballard seeks to qualify.

As developed by counsel at oral hearing, the facts of this

case do not support the kind of continuing relationship

which would bring this case within the narrow exception.

Ballard’s contingent fee agreement was for a specific con-

tract for the sale of a special “privacy file” to IRS. When

the efforts to procure an IRS contract failed, Ballard ceas-

ed its efforts on behalf of Supreme. Ballard’s other ac-

tivities on behalf of Supreme were to attempt to sell its

products as a middleman, buying Supreme’s product and

reselling them at a mark-up to government and private

purchasers. Furthermore, no continuing relationship on a

broad basis has been shown. Accordingly, the Court con-

cludes that the arrangement which Ballard seeks enforced

here falls within the rule prohibiting commission agree-

ment on sales to the federal government. LeJohn, supra;

Bradley, supra. See Reynolds v. Goodwin-Hill Corpora-

tion, 154 F.2d 553 (2nd Cir. 1946).

Lastly, Supreme has requested this Court to award at-

torney’s fees under the narrow exception for vexations and

unfounded litigation. Alyeska Pipeline Service Co.

v. Wilderness Society, 421 U.S. 240 (1975). Although the

controlling principle in this case as established in Pro-

vidence Tool Company, supra, is specific, the applicability

of the exceptions thereto, which hinge on each new set of

5a

facts, is not unnecessarily debatable. The Court, there-

fore, finds the awarding of counsel fees inappropriate in

this action.

June L. Green

JUNE L. GREEN

U.S. District Judge

APPENDIX B

He Nadia!

No. 76-1904 September Term, 1977

Civil 75-2019

The Walter M. Ballard Company United States Court

a body corporate, Appellant of Appeals

for the District of

v. Columbia Circuit

Supreme Equipment & Systems Filed Nov. 14, 1977

Corporation George A. Fisher

a body corporate Clerk

Appeal from the United States District Court for the

District of Columbia.

Before: MCGOWAN, TAMM and ROBINSON, Circuit

Judges

JUDGMENT

This cause came on to be heard on the record on appeal

from the United States District Court for the District of

Columbia, and was argued by counsel.

On consideration thereof It is ordered and adjudged by

this Court that the judgment of the District Court appeal-

ed from in this cause is hereby reversed and this case is

remanded for further proceedings, for the reasons set

forth in the attached memorandum.

Per Curiam

For the Court

/s/ George A. Fisher

George A. Fisher

Clerk

Bills of costs must be filed within 14 days after

entry of judgment. The Court looks with disfavor

on motions to file bills of costs out of time.

8a

MEMORANDUM

The issues raised by appellant’s complaint filed in the

District Court turn upon an application of the federal pro-

curement regulations embodying the policy, originally for-

mulated by the Supreme Court, Providence Tool Co. v.

Norris, 69 U.S. 45 (1864), against contracts to procure

government business for contingent fees. 41 C.F.R. §

1-1.500. The regulations except from such policy “bona

fide commercial or selling agencies maintained by the con-

tractor for the purposes of securing business” (504-3), and

identify the specific factors to be taken into account in

deciding whether the exception applies (504-5).

Appellee’s response to the complaint was a Rule 12(b)(6)

motion to dismiss for failure to state a claim. Appellant’s

opposition to the motion was accompanied by an affidavit

by its president asserting certain facts. Thus the District

Court, in ruling on the motion to dismiss, was in effect

dealing with a motion for summary judgment.

At oral argument held on the motion, appellee made

clear that its motion rested upon the theory that, assuming

the facts to be as stated in the complaint and affidavit, the

claim was barred by reason of the public policy reflected in

the procurement regulations. The District Court’s opinion

reveals clearly that it embraced that theory in its grant of

the motion.

However, certain of appellant’s allegations of fact do, at

the least, raise substantial issues relating to the availability

of the exception contained in the regulations. The District

Court in its opinion granting the motion does not, how-

‘Appellant moved for reconsideration, supplying two more af-

fidavits by its personnel. That motion was denied, but appellee

represents that, for present purposes, it does not dispute the facts

alleged in those affidavits.

9a

ever, accept these allegations as true; and indeed finds the

facts to be otherwise. This is notably true of such matters

as whether the relationship between appellant and appellee

was broad and continuing, how to characterize the con-

tractual arrangement between the parties, and whether this

arrangement would have operated to increase the cost to

the government of the materials supplied by appellee.

Because the District Court did not grant the motion by

reference to the facts accepted by appellee, it had to and

did stray into the forbidden area of resolving disputed

questions of fact. Accordingly, its action cannot be left

undisturbed.

APPENDIX C

a

lla

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

[Filed Aug. 18, 1978

‘ James F. Davey, Clerk]

j WALTER M. BALLARD CO. )

é )

Plaintiff )

)

Vv. ) Civil Action

) No. 75-2019

SUPREME EQUIPMENT AND )

| SYSTEMS CORPORATION )

; )

: Defendant )

| MEMORANDUM OPINION

i

This matter is before the Court on defendant’s motion

for judgment notwithstanding the verdict, or in the alter-

native, for a new trial. Rule 50(b) Fed.R.Civ.P.

Plaintiff, a dealer and distributor of office equipment

and filing systems, filed this action for breach of contract

and fraud arising out of an alleged agreement between

plaintiff and defendant, a manufacturer of such equip-

ment, whereby plaintiff was to be paid a commission of

10% of the value of sales of defendant’s products (privacy

files) to agencies of the federal government! for which

plaintiff was the procuring cause. On March 4, 1976,

following the submission of written briefs by the parties

and oral arguments, this Court entered an order granting

defendant’s motion to dismiss for failure to state a claim

on which relief could be granted and dismissing the com-

plaint with prejudice. In accordance therewith, the Court

‘Specifically, this case involves sales to the Internal Revenue Service

(IRS). However, in attempting to consummate the sales at issue, it was

necessary for the parties to negotiate with the General Services Ad-

ministration (GSA) as well.

ee

Mth Spb int

12a

issued an opinion on March 9, 1976. On November 14,

1977, the United States Court of Appeals for the District

of Columbia Circuit reversed this Court’s judgment and

remanded it ror further proceedings “[b]ecause the District

Court did not grant the motion by reference to the facts

accepted by appellee, [and] it had to and did stray into the

forbidden area of resolving disputed questions of fact.”

Memorandum, at 2.

Accordingly, this matter came on for a trial by jury on

May 17, 18 and 19, 1978. Pursuant to the jury’s verdict,

judgment was entered for plaintiff on May 24, 1978 in the

amount of $60,162.

With regard to the instant motion, the standard for

granting a motion for jugment n.o.v. is the same as that

for a directed verdict: “The question is not whether there is

literally no evidence supporting the party against whom

the motion is directed but whether there is evidence upon

which the jury could properly find a verdict for that party.

In determining whether the evidence is sufficient the court

is not free to weigh the evidence or to pass on the credibili-

ty of witnesses. Instead it must view the evidence most

favorably to the party against whom the motion is made

[here, plaintiff] and give that party the benefit of all

reasonable inferences from the evidence.” 9 Wright &

Miller, Federal Practice and Procedure: Civil § 2524, at

543-545 (1971).

Defendant has moved in the alternative for a new trial.

The grounds for this aspect of defendant’s motion are the

same as those applicable to a motion under Rule 59,

Fed.R.Civ.P. Rule 59 invokes the discretion of the trial

court to grant a new trial if, inter alia, the verdict is against

?This amount represented 10% of the gross sales of defendants’

privacy file to the IRS in 1975.

13a

the weight of the evidence or a question of law arises out

of substantial error in the refusal to give an instruction.

Montgomery Ward & Co. v. Duncan, 311 U.S. 243 (1940);

11 Wright & Miller, Federal Practice & Procedure: Civil §

2805, at 37-38 (1971). In deciding if the verdict is contrary

to the weight of the evidence, this Court will not set aside a

jury verdict unless it is clearly erroneous. McCarthy v.

Cahill, 249 F.Supp. 194, 197 (D.D.C. 1966). Otherwise, it

is loath to interfere with the jury’s role as the trier of fact.

For the reasons set forth below, the Court denies both

aspects of defendant’s motion.

First, the Court finds that there was sufficient evidence

adduced at trial to support a verdict for plaintiff so that

such a result was not clearly erroneous. Giving plaintiff

the benefit of all reasonable inferences, it was possible for

the jury to conclude that: (1) there was an agency (dealer)

relationship between plaintiff and defendant that plaintiff

was to act for the benefit of defendant in accordance with

defendant’s instructions; (2) such a relationship was es-

tablished pursuant to an oral contract between authorized

reprsentatives of the parties;? (3) plaintiff did not at any

time abandon its efforts to complete the transaction until

it was told by defendant that “the deal was off”; (4) since

this instruction was communicated to plaintiff at the same

time that defendant was negotiating with the Charles G.

Stott Company in an attempt to complete the sale, such

misrepresentations negated any allegations that plaintiff

abandon the negotiations; and (5) despite the fact that the

transaction was finally consummated by a second dealer,

Charles G. Stott Company, plaintiff could be considered

Morton Basist, authorized representative of defendant, and the

late Walter M. Ballard, plaintiffs president, had orally agreed that

plaintiff would receive a commission equal to 10% of the gross

amount of all sales to the federal government which plaintiff was able

to generate.

14a

the “procuring cause” of the sale of defendant’s products

because it found a purchaser who was ready, willing and

able to buy the product. Thus, the success of the sale was

directly attributable to its efforts.

The Court further finds that there was no factual

dispute as to whether plaintiff met the requirements of 41

C.F.R. § 1-1.5, ef seq.* and accordingly, the Court did not

err in refusing to submit the matter to the jury.°

That plaintiff was a “ ‘bona fide established commercial

selling agency, maintained by the contractor for the pur-

pose of securing business’ ”, 41 C.F.R. § 1-1.504-5, was

made clear by testimony which supported the relevant fac-

tors to be considered. First, the compensation arrange-

ment agreed upon by the parties was typical of such ar-

rangements and thus could not be characterized as “ine-

quitable and exorbitant in relation to the services actually

rendered.” 41 C.F.R. § 1.504-5(b)(1). Second, it was clear

that plaintiff had “adequate knowledge of the products

and the business of the concern represented, as well as

other qualifications necessary to sell the products or ser-

vices on their merits.” 41 C.F.R. § 1-1.504 (b)(2). This was

due to its experience and expertise in the sale of office

equipment generally and in the sale of such products to the

federal government in particular. It was undisputed that

‘This subpart prescribes the use by executive agencies of the “cove-

nant against contingent fee” which is applicable to all contracts for the

procurement of personal property. Pursuant to this covenant, which is

included in every negotiated or advertised contract, “[t]he Contractor

warrants that no person or selling agency has been employed or retain-

ed to solicit or to secure this contract upon an agreement or understan-

ding for a commission, percentage, brokerage, or contingent fee ex-

cept . . . bona fide established commercial or selling agencies main-

tained by the Contractor for the purpose of securing business.” 41

C.F.R. § 1-1.503.

‘Defendant submitted a proposed jury instruction which the Court

declined to give.

15a

plaintiff is an established business concern which has

regularly conducted this sort of business for a number of

years. 41 C.F.R. § 1-1.504-5(b)(4). Finally, the parties in-

tended their relationship to be a continuing one. It was not

established solely in contemplation of the privacy file sales

that are the subject of this suit. 41 C.F.R. § 1-1.504-5(b)

Rather, plaintiff was to act as defendant’s agent in the pro-

motion and sale of its entire span of products both to com-

mercial concerns and to the government. This relationship

has continued until as recently as last year. See defendant’s

exhibit #5. 41 C.F.R. § 1.1-504-5(b)(5).° In addition, the

GSA representative testified unequivocally that the rela-

tionship between the parties herein with regard to the

challenged sales was neither unusual nor improper. In

fact, it was a similar relationship which defendant had

with Stott to whom it did pay a commission.

In short, the relationship between plaintiff and defen-

dant was such that the objectives of 41 C.F.R. § 1.5 —

“the prevention of improper influence in connection with

the obtaining of government contracts, the elimination of

arrangements which encourage the payment of inequitable

and exorbitant fees bearing no reasonable relationship to

the services actually performed, and the prevention of un-

warranted expenditures of public funds” — have been

met. Thus, the Court concluded that there was nothing

®It is admitted that the parties had established a different method of

compensation for commercial sales (50% of the list price). The Court

determined that this was irrelevant to its analysis of this factor. Addi-

tionally, 41 C.F.R. § 1-1.505-4(b)(5) states in pertinent part: “The fact

that a selling agency confines its selling activities to the field of

government contracts does not, in and of itself, disqualify it under the

covenant. The fact, however, that the selling agency is employed to

secure business generally, that is, to represent the concern in connec-

tion with sales to the government as well as regular commercial sales

to non-government activities is a factor entitled to favorable con-

sideration. . . .”

16a

presented in this regard that would permit reasonable

minds to differ and accordingly, it was not a proper ques-

tion to be put to the jury.

For the foregoing reasons, defendant’s motion for a

judgment notwithstanding the verdict and its alternative

motion for a new trial are both denied. An appropriate

order is entered herewith.

/s/ June L. Green

JUNE L. GREEN

U.S. District Judge

DATED: August 17, 1978

3 hai Dee rian E>

17a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

[Filed Aug. 18, 1978

James F. Davey, Clerk]

THE WALTER M. BALLARD

COMPANY

Plaintiff

Vv. f Civil Action

No. 75-2019

SUPREME EQUIPMENT AND

SYSTEMS CORPORATION

Defendant

ORDER

Upon consideration of defendant’s motion for judg-

ment notwithstanding the verdict, or in the alternative for

a new trial, plaintiff's opposition thereto, and the entire

record herein, the Court having concluded that there was

sufficient evidence adduced at trial to support a verdict for

plaintiff and that it was not substantial error to refuse to

give the jury an instruction regarding the requirements of

41 C.F.R. § 1-1.5 ef seq., it is by the Court this 17th day of

August 1978,

ORDERED that defendant’s motion for judgment not-

withstanding the verdict is hereby denied; and it is further

ORDERED that defendant’s motion for a new trial is

hereby denied.

/s/ June L. Green

JUNE L. GREEN

U.S. District Judge

APPENDIX D

19a

NOT TO BE PUBLISHED — SEE LOCAL RULE 8 (f)

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 78-2264 September Term, 1979

[Filed Dec. 11, 1979

George A. Fisher

Clerk]

The Walter M. Ballard Company, Civil Action No. 75-2019

a body corporate

Vv.

Supreme Equipment & Systems Corporation,

a body corporate,

Appellant

Appeal from the United States District Court for the Dis-

trict of Columbia

Before: WRIGHT, Chief Judge, ROBB, Circuit Judge

and CORCORAN‘, Senior United States Dis-

trict Judge for the District of Columbia

JUDGMENT

This cause came on fur consideration on the record on

appeal from the United States District Court for the

District of Columbia and was argued by counsel. While

the issues presented occasion no need for an opinion, they

have been accorded full consideration by the Court. See

Local Rule 13(c).

On consideration of the foregoing, it is

20a

ORDERED AND ADJUDGED, by this Court, that the

judgment of the District Court appealed from in this cause

is hereby affirmed.

Per Curiam

For the Court:

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

*Sitting by designation pursuant to 28 U.S.C. § 294(c).

Bills of costs must be filed within 14 days after

entry of judgment. The Court looks with disfavor

upon motions to file bills of costs out of time.

APPENDIX E

2la

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 78-2264 September Term, 1979

[Filed Jan 21, 1980

George A. Fisher

Clerk]

The Walter M. Ballard Company Civil Action No. 75-2019

a body corporate

V.

Supreme Equipment & Systems Corporation

a body corporate,

Appellant

BEFORE: Wright, Chief Judge; Robb, Circuit Judge;

and Corcoran*, Senior Judge, United States

District’: Court for the District of Columbia

ORDER

Upon consideration of appellant’s (Supreme Equipment

& Systems Corp.) petition for rehearing, it is

ORDERED, by the Court, that appellant’s aforesaid

petition for rehearing is denied.

Per Curiam

FOR THE COURT:

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

*Sitting by designation pursuant to Title 28 US.C. §292(a).

APPENDIX F

23a

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA

[Filed Jan 21, 1980

George A. Fisher, Clerk]

No. 78-2264 September Term, 1979

The Walter M. Ballard Company Civil Action No. 75-2019

a body corporate

V.

Supreme Equipment & Systems Corporation

a body corporate,

Appellant

BEFORE: Wright, Chief Judge; McGowan, Tamm,

Robinson, MacKinnon, Robb, Wilkey, Wald,

and Mikva, Circuit Judges

ORDER

The suggestion for rehearing en banc filed by appellant

(Supreme Equipment & Systems Corp.) having been trans-

mitted to the full Court and no judge in regular active ser-

vice having requested a vote with respect thereto, it is

ORDERED, by the Court, en banc, that appellant’s

aforesaid suggestion for rehearing en banc is denied.

Per Curiam

FOR THE COURT:

/s/ George A. Fisher

GEORGE A. FISHER

Clerk