Carmical v. Craven Reply Brief for Appellant

    IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF NORTH CAROLINA 

WESTERN DIVISION 
CIVIL ACTION NO. 5-96-C-115-BR(3)

HAZARD CANNON, et al., 

Plaintiffs,

v.

NC STATE BOARD OF EDUCATION,
et al.,

Defendants,

and

DURHAM COMMITTEE ON THE 
AFFAIRS OF BLACK PEOPLE, et al.,

Defendant-
Intervenors

Irving Joyner 
N.C. State Bar #  7830 
1512 S. Alston Avenue 
Durham, North Carolina 27702 
Telephone: (919) 560-6293

Elaine R. Jones
Director- Counsel 

Norman J. Chachkin 
Jacqueline A. Berrien 
NAACP Legal Defense and 
Educational Fu n d , Inc.

99 Hudson Street, 16th fl.
New York, New York 10013 
Telephone: (212) 219-1900

MEMORANDUM IN SUPPORT 
OF DEFENDANT-ENTERVENORS’ 
MOTION FOR SUMMARY 
JUDGMENT

Adam Stein 
N.C. State Bar #4145 
Ferguson, Stein, Wallas, Adkins, 
Gresham & Sumter, P.A.

312 West Franklin Street 
Chapel Hill, North Carolina 27516 
Telephone: (919) 933-5300

Anita S. Hodgkiss 
N.C. State Bar #  15597 
Ferguson, Stein, Wallas, Adkins, 
Gresham & Sumter, P.A.

741 Kenilworth Avenue 
Charlotte, North Carolina 28204 
Telephone: (704) 375-8461

Attorneys for Defendant-Intervenors



Table of Contents

Table of Authorities......................................................................................................... ii

Statement of Relevant Facts .......................................................................................... 2

ARGUMENT -

Standards for Granting Summary Judgment ................................................................5

I Plaintiffs’ Claims Are Barred By The Doctrine
of Res Judicata....................................................................................................... 5

II The Undisputed Facts Establish That Plaintiffs
Cannot Prevail On Their Shaw v. Reno Claim .................................................16

The law ................................................................................................... 16

The evidence .......................................................................................... 18

III Plaintiffs Cannot Prevail On Their Claim Under
Section 2 Of The Voting Rights Act ................................................................ 24

The prerequisite showing ...................................................................... 25

The "totality of the circumstances" ....................................................... 27

IV There Is No Evidence To Support Plaintiffs’
Constitutional Claims ........................................................................................ 29

Conclusion .....................................................................................................................30

Page

Exhibits (in separate volume)



Table of Authorities

Cases:

Page

Abels v. Renfro Corp.,
335 N.C. 209, 436 S.E.2d 822 (1993), 
affg in part and rev’g in part id., 108
N.C. App. 135, 423 S.E.2d 479 (1992) .........................................................  8-9

Bockweg v. Anderson,
333 N.C. 485, 428 S.E.2d 157 (1993) .......................................... 6, 8, 10, 11, 14

Bush v. Vera,
__ U.S.___ , 116 S. Ct. 1941, 135 L. Ed.
2d 248 (1996) ............................................................................................  17, 18

Cannon v. North Carolina State Bd. of Educ.,
342 N.C. 399, 464 S.E.2d 43 (1995) ................................................  4, 5, 10, 11

Cannon v. North Carolina State Bd. of Educ.
117 N.C. App. 399, 451 S.E.2d 302 (1994),
rev’d 342 N.C. 399, 464 S.E.2d 43 (1995) ........................................ 4, 5, 10, 11

Chrisalis Properties, Inc. v. Separate Quarters, Inc.,
101 N.C. App. 81, 398 S.E.2d 628 (1990),
review denied, 328 N.C. 570, 403 S.E.2d 509 (1991) .................................  7, 8

Clark v. Calhoun County,
88 F.3d 1393 (1996) ......................................................................................  18n

County of Rutherford v. Whitener,
100 N.C. App. 70, 394 S.E.2d 263 (1990) .....................................  9, 13, 14, 15

Crump v. Board of Educ. of Hickory Administrative School Unit,
326 N.C. 60-3, 392 S.E.2d 579 (1990), 
modifying on other grounds and affg id.,
93 N.C. App. 168, 378 S.E.2d 32 (1989) .......................................................  12

- n -



Table of Authorities (continued)

Daly v. Hunt,
93 F.2d 1212 (4th Cir. 1996) ...........................................................................In

Davenport v. North Carolina Dep't of Trans.,
3 F.3d 89 (4th Cir. 1993) ......................................................................  8, 11, 12

Dawson v. Allstate Ins. Co.,
106 N.C. App. 691, 417 S.E.2d 841 (1992) ................................................  7, 10

DeWitt v. Wilson,
856 F. Supp. 1409 (E.D. Cal. 1994), affd in part 
and appeal dismissed in part,__ U.S.___ , 115 S. Ct.
2637, 132 L. Ed. 2d 876 (1995) ......................................................................  18

Growe v. Emison,
507 U.S. 25, 113 S. Ct. 1075, 122 L. Ed. 2d 388 (1993) ...............................  25

Hales v. North Carolina Ins. Guar. Ass'n,
337 N.C. 329, 445 S.E.2d 590 (1994) ................................................................9

Hogan v. Cone Mills Corp.,
63 N.C. App. 439, 305 S.E.2d 213 (1983), 
vacated on other grounds, 315 N.C. 127, 337 
S.E.2d 477 (1985), on remand, 94 N.C. App.
640. 381 S.E.2d 151 (1989), rev'd, 326 N.C.
476, 390 S.E.2d 136 (1990) ......................................................................... 7? 10

Holly Farms Foods v. Kuykendall,
114 N.C. App. 412, 442 S.E.2d 94 (1994) .....................................................  7, 8

Johnson v. DeGrandy,
512 U.S.__ , 114 S. Ct. 2647, 129 L. Ed. 2d
775 (1994) ............................................................................................... 27n, 28

Johnson v. Smith,
97 N.C. App. 450, 388 S.E.2d 582, review denied,
326 N.C. 596, 393 S.E.2d 878 (1990) .............................................................. 15

Page

- iii -



Table of Authorities (continued)

Pape

Maine v. Thiboutot,
448 U.S. 1, 100 S. Ct. 2502, 65 L. Ed. 2d 555 (1980) ...................................  12

Matsushita Elec. Indus. Co. v. Epstein,
__ U.S.___ , 116 S. Ct. 873, 134 L. Ed. 2d 6 (1996) ......................................6

Mears v. Town of Oxford,
762 F.2d 368 (4th Cir. 1985) ......................................................................  9, 14

Miller v. Johnson,
515 U.S.__ , 115 S. Ct. 2475, 132 L. Ed. 2d
762 (1995) .................................................................................................  16. 17

Nash County Bd. of Educ. v. Biltmore Co.,
640 F.2d 484 (4th Cir.), cert, denied, 454
U.S. 878, 102 S. Ct. 359, 70 L. Ed. 2d 188 (1981) ...................................... 6, 8

Northwestern Fin. Group v. County of Gaston,
110 N.C. App. 531, 430 S.E.2d 689, review
denied, 334 N.C. 621, 435 S.E.2d 337 (1993) ...............................  6, 8, 11, 12n

Pearsall v. Phillips,
839 F. Supp. 11 (E.D.N.C.), affd. 1 F.3d 
1234 (4th Cir.), cert, denied, 510 U.S. 998,
114 S. Ct. 565, 126 L. Ed. 2d 464 (1993) ......................................................... 7

Riley v. Murdock,
890 F. Supp. 444 (E.D.N.C.), affd mem., 83 F.3d
415 (4th Cir. 1996), cert, denied,__ U.S.___ ,
__ S. C t.___ , __ L. Ed. 2 d ___ , 1996 U.S. LEXIS
6614 (Nov. 4, 1996) (No. 96-324) .................................................................... 6

Rodgers Builders, Inc. v. McQueen,
76 N.C. App. 16, 331 S.E.2d 726 (1985), 
review denied, 315 N.C. 590, 341 S.E.2d 29
(1986) .................................................................................................  8, 9, 11, 13

- iv -



Table of Authorities (continued)

Pape

Shaw v. Hunt,
__ U .S.___ , 116 S. Ct. 1894, 135 L. Ed. 2d 207
(1996) .......................................................................................................... 16, 17

Shaw v. Reno,
509 U.S. 630, 113 S. Ct. 2816, 125 L. Ed. 2d 511
(1993)   16, 19, 24

Swanson v. Faulkner,
55 F.3d 956 (4th Cir.), cert, denied,__ U.S. ,
116 S. Ct. 417, 133 L. Ed. 2d 335 (1995) ......................................................... 6

Thornburg v. Gingles,
478 U.S. 30, 106 S. Ct. 2752, 92 L. Ed. 2d 25
(1986) .......................................................................................................... 25, 27

Tucker v. Frinzi,
__ N.C.___ , 474 S.E.2d 127 (1996) ..........................................  6, 9, 13, 14, 15

United States v. National Financial Services, Inc.
No. 95-2796, 1196 WL 583557 (4th Cir. October 11,
1996) ............................................................................................................ 5, 24

Wilson v. Eu,
1 Cal. 4th 707, 4 Cal. Rptr. 2d 379, 823 P.2d 545 (1992)...............................  18

Constitution and Statutes:

U.S. Const, art. IV, § 1 .......................................................................................... 29

18 U.S.C. § 1738 ...........................................................................................................6

42 U.S.C. § 1973 ................................................................................................. 24, 25n

42 U.S.C. § 1973(b) ................................................................................................... 27

- v -



Table of Authorities (continued)

42 U.S.C. § 1983 .......................................................................................................... 12

N.C. Gen. Stat. § 115C-68.1 ........................................................................................3

N.C. Gen. Stat. § 115C-68.3 ........................................................................................4

1991 N.C. Sess. Laws ch. 767, codified at
N.C. Gen. Stat. § 115C-68.3 ............................................................................. 4

Legislative Materials:

S. Rep. No. 97-417 (1982) ........................................................................................  28n

Rules:

Fed. R. Civ. P. 26(a)(2) .......................................................................................... 19n

Rule 5.03, United States District Court for the
Eastern District of North Carolina .................................................................. 5

Other Authorities:

46 Am. Jr. 2d Judgments § 532 .................................................................................  13

Page

- vi -



IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF NORTH CAROLINA 

WESTERN DIVISION 
CIVIL ACTION NO. 5-96-C-115-BR(3)

HAZARD CANNON, et al., 

Plaintiffs,

v.

NC STATE BOARD OF EDUCATION,
et al.,

Defendants,

MEMORANDUM IN SUPPORT 
OF DEFEND A YI-INTERVENORS’ 
MOTION FOR SUMMARY 
JUDGMENT

and

DURHAM COMMITTEE ON THE 
AFFAIRS OF BLACK PEOPLE, et al.,

Defendant-
Intervenors

In this action, plaintiffs challenge the districting plan for the consolidated 

Durham County school system on several federal constitutional and statutory grounds, 

all centering upon their claim that the plan is drawn for the purpose of separating 

voters on the basis of race and with the purpose or effect of diluting the voting strength 

of whites in Durham County.1

Defendant-intervenors have moved for the entry of summary judgment dismissing 

all of plaintiffs’ claims in this litigation with prejudice. In this Memorandum, we

Plaintiffs also alleged that "the Durham County Commissions [sic] illegally used 
total voting age population figures in constructing the voting district plan rather than 
registered voters" (Complaint, 1115, at 6). This argument has been conclusively rejected 
by the Fourth Circuit. Daly v. Hunt, 93 F.3d 1212, 1223-28 (4th Cir. 1996).



describe the factual evidence presented to the Court and explain why, considering all 

of that evidence, there are no facts in dispute that are material to plaintiffs* 

constitutional or statutory claims and those claims must, under governing law, be 

resolved in favor of defendants and defendant-intervenors.

Statement of Relevant Facts

Consideration by the Durham County Commissioners of the possibility of 

merging the city and county school systems commenced in the spring of 1988 with the 

creation of a citizen task force to study the question. See Minutes2 at 002-003, 006-011. 

A year later, following completion of the Task Force’s work (see Minutes at 016-017), 

the Commissioners hired consultants to develop a merger plan (id. at 019-020), who 

delivered their recommendations in 1991 (see id. at 025, 033-035). Initially, the 

Commissioners were presented with ten options for the election of a school board of 

either seven or nine members -- either all elected from single-member districts, all 

elected at-large, or some number elected by each method (see id. at 062-068). 

Following a public hearing (see id. at 083-092), the Commissioners formally adopted the 

seven single-member-district plan, by a 3-2 vote, for submission to the State Board of 

Education (see id. at 96). At the request of a committee of the State Board (see id. at 

098-110, 112-117), the Commissioners reconsidered the plan and again decided by a 3-2 

vote to resubmit it to the Board (id. at 117). The State Board rejected the plan because

2"Minutes” citations are to the excerpts from the Minutes of meetings of the 
Durham County Board of Commissioners introduced into evidence at the March 22, 
1996 hearing as Original Defendants’ Ex. 1. Page references are to the Bates-stamped 
numbers below the text of each page.

- 2 -



-  in light of the one-vote margin of approval by the Commissioners (see id. at 118-120)

-  it did not appear to have the support of the entire community. County 

Commissioners Reckhow (a white Commissioner) and Black (an African-American 

Commissioner), who had been on opposite sides of the split vote, then took the 

initiative to attempt to develop alternatives for electing the new school board that might 

meet with the State Board's approval (see id. at 122). One of the alternatives that they 

suggested was a "4-2-1" electoral structure.

Independent of consideration by the Board of Commissioners, State 

Representative Paul Luebke (see id. at 123; Transcript of March 22, 1996 hearing 

("Tr.") at 25-26), requested Gerry Cohen, Director of Legislative Drafting for the North 

Carolina General Assembly, to develop a possible district plan for a 4-2-1 electoral 

structure. This plan was provided to the Commissioners and, following another public 

hearing (Minutes at 129-133), the Board of Commissioners unanimously adopted the 

4-2-1 plan for submission to the State Board of Education (id. at 136), which approved 

it.

On February 13, 1992, Hazard Cannon, Norman Phillips (both of whom are 

named plaintiffs in this action) and Alvin Olds filed a lawsuit in the Superior Court of 

Wake County, North Carolina (No. 92CV-01682) challenging the merger plan and the 

1991 statute (N.C. Gen. Stat. § 115C-68.1) establishing the procedure by which a merger

- 3 -



of school systems could be accomplished by action of a county Board of 

Commissioners.3 On April 14, 1992, the state trial court entered judgment in favor of 

plaintiffs, finding the 1991 statute and the merger plan to conflict with several North 

Carolina constitutional provisions. While Durham County's appeal from that decision 

was pending, the General Assembly enacted 1991 N.C. Sess. Laws ch. 767, codified at 

N.C. Gen. Stat. § 115C-68.3, ratifying and authorizing the Durham consolidation plan 

approved by the State Board of Education along with sixteen other such plans. On the 

basis of this latter statute, the Superior Court ruling in favor of the Cannon plaintiffs 

was ultimately vacated as moot, Cannon v. North Carolina State Bd. of Educ., 342 N.C. 

399, 464 S.E.2d 43 (1995) ("Cannon IF), rev’g id., 117 N.C. App. 399, 451 S.E.2d 302

(1994) (”Cannon F).4

’Plaintiffs in the state court action were represented by present plaintiffs’ attorney, 
John Randall, see 342 N.C. at 399, 464 S.E.2d at 43. Dan Sizemore, one of the 
plaintiffs in this action, is the son-in-law of Hazard Cannon, a plaintiff in both the state 
and federal court litigation (Answers to Interrogatories [Exhibit "1" hereto], at 3 11 11]). 
Sizemore discussed the state court lawsuit with Mr. Cannon in early 1992 (id. at 4 H 15), 
met Mr. Phillips and Mr. Olds "about the time of the original state court lawsuit" (id. 
at 2-3 HU 9, 10), and became a party to this action at the request of Mr. Cannon (id. at 
5 11 16).

4During the course of proceedings in their state court suit, plaintiffs attempted to 
raise the claim that the districting plan constituted racial discrimination against white 
voters (see Complaint (in this case), at 5 11 10). The Supreme Court of North Carolina 
refused to pass upon the issue because plaintiffs had not "filed pleadings in th[e state 
court] matter alleging racial discrimination and thus did not properly present the issue 
for determination by the trial court." 342 N.C. at 399, 464 S.E.2d at 43.

- 4 -



ARGUMENT

Standards for Granting Summary Judgment

The governing standards for determining whether summary judgment is

appropriate were most recently summarized by the Fourth Circuit as follows:

Summary judgments are appropriate in those cases where there is no 
genuine dispute as to a material fact and it appears that the moving party 
is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c); Adickes 
v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). On summary judgment, any 
permissible inferences to be drawn from the underlying facts must be 
viewed in the light most favorable to the party opposing the motion. 
Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587- 
88 (1986). However, where the record taken as a whole could not lead a 
rational trier of fact to find for the non-moving party, disposition by 
summary judgment is appropriate. Id. at 587; Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248-49 (1986).

United States v. National Linancial Services, Inc., No. 95-2796, 1996 WL 583557 (4th Cir. 

October 11, 1996) (attached as Appendix "A"; see Local Rule 5.03).

I

Plaintiffs’ Claims Are Barred 
By The Doctrine of Res Judicata

Plaintiffs claims arise from identical operative facts and concern identical 

asserted rights as the claims at issue in a prior lawsuit (Cannon I and II) that resulted 

in a final judgment on the merits. All of the parties to the present suit were either 

parties to that former litigation or in privity with such parties. The doctrine of res 

judicata therefore bars plaintiffs’ claims, and the Court should accordingly grant 

defendant-intervenors’ motion for summary judgment dismissing plaintiffs’ claims.

- 5 -



The Full Faith and Credit Clause of the U.S. Constitution requires that a federal 

court give the same preclusive effect to a prior state judgment that the judgment would 

receive in that state’s courts. U.S. CONST, art. IV, § 1. See 28 U.S.C. § 1738;

Matsushita Elec. Indus. Co. v. Epstein,__ U.S. ___ , 116 S. Ct. 873, 134 L. Ed. 2d 6

(1996); Swanson v. Faulkner, 55 F.3d 956 (4th Cir.), cert, denied,__ U .S.___ , 116 S.

Ct. 417, 133 L. Ed. 2d 335 (1995). Under North Carolina law, a final judgment on the 

merits in a prior action bars parties to that action or their privies from asserting

identical claims in subsequent litigation. Tucker v. Frinzi,__ N.C.___ , ___, 474 S.E.2d

127, 128 (1996). See Riley v. Murdock, 890 F. Supp. 444, 457 (E.D.N.C.), aff’d mem.,

83 F.3d 415 (4th Cir. 1996), cert, denied,__ U.S.___ , ___S. C t.___ , ___L. Ed. 2d

1996 U.S. LEXIS 6614 (Nov. 4, 1996) (No. 96-324).

The doctrine of res judicata is not merely a "technical rule but a rule of 

‘fundamental and substantial justice,’" which promotes important values of "public policy 

and private peace." Nash County Bd. of Educ. v. Biltmore Co., 640 F.2d 484, 486 (4th 

Cir.), cert, denied, 454 U.S. 878, 102 S. Ct. 359, 70 L. Ed. 2d 188 (1981). By ensuring 

the finality of judgments and preventing repetitive litigation, the doctrine serves the 

dual goals of protecting litigants and preserving judicial economy. Bockweg v. Anderson, 

333 N.C. 486. 491, 428 S.E.2d 157, 161 (1993); Northwestern Fin. Group v. County of 

Gaston, 110 N.C. App. 531, 430 S.E.2d 689, review denied, 334 N.C. 621, 435 S.E.2d 337 

(1993).

- 6 -



For purposes of res judicata, dismissal of a claim with prejudice ordinarily 

constitutes a final judgment on the merits. Dawson v. Allstate Ins. Co., 106 N.C. App. 

691, 417 S.E.2d 841 (1992) (holding claim barred by prior action that was dismissed for 

failure to state claim); Hogan v. Cone Mills Corp., 63 N.C. App. 439, 443, 305 S.E.2d 

213, 215 (1983) ("In general, any dismissal other than a dismissal for lack of jurisdiction, 

for improper venue, or failure to join a necessary party, operates as an adjudication on 

the merits"), vacated on other grounds, 315 N.C. 127, 337 S.E.2d 477 (1985), on remand, 

94 N.C. App. 640, 381 S.E.2d 151 (1989), rev’d, 326 N.C. 476, 390 S.E.2d 136 (1990); 

Pearsall v. Phillips, 839 F. Supp. 11, 13 (E.D.N.C.) (applying North Carolina law to 

preclude claim where prior action dismissed for failure to state claim), aff’d, 1 F.3d 1234 

(4th Cir.), cert, denied, 510 U.S. 998, 114 S. Ct. 565, 126 L. Ed. 2d 464 (1993). In the 

North Carolina courts, dismissal is considered to be with prejudice unless the court 

expressly indicates otherwise. Dawson, 106 N.C. App. at 692, 417 S.E.2d at 842; 

Pearsall, 839 F. Supp. at 13.

A final judgment will bar a party from raising in a subsequent lawsuit any matter 

that could have been raised in the prior action, even if that matter was not actually 

raised. Holly Farms Foods v.Kuykendall, 114 N.C. App. 412, 416, 442 S.E.2d 94, 97 

(1994); Chrisalis Properties, Inc. v. Separate Quarters, Inc., 101 N.C. App. 81, 84, 398 

S.E.2d 628, 631 (1990), review denied, 328 N.C. 570, 403 S.E.2d 509 (1991). This rule 

prevents claim splitting and requires parties to bring all matters arising from a single 

wrong in one action. Holly Farms, 114 N.C. App. at 416, 442 S.E.2d at 97; Chrisalis

- 7 -



Properties, 101 N.C. App. at 84, 398 S.E.2d at 631; Rodgers Builders, Inc. v. McQueen, 

76 N.C. App. 16, 23, 331 S.E.2d 726, 730 (1985), review denied, 315 N.C. 590, 341 S.E.2d 

29 (1986). Preclusion embraces "all material and relevant matters within the scope of 

the pleadings, which the parties, in the exercise of reasonable diligence, could and 

should have brought forward." Holly Farms, 114 N.C. App. at 416, 442 S.E.2d at 97; see 

also Chrisalis, 101 N.C. App. at 84, 398 S.E.2d at 631; Rodgers Builders, 76 N.C. App. 

at 22, 331 S.E.2d at 730.

North Carolina courts have stopped short of adopting the widest possible 

application of the "transactional approach" to res judicata. See Bockweg, 333 N.C. at 

493-95, 428 S.E.2d at 162-63; Northwestern Fin. Group, 110 N.C. App. at 537, 430 S.E.2d 

at 693; see also Davenport v. North Carolina Dep’t of Trans., 3 F.3d 89, 95 (4th Cir. 1993) 

(characterizing North Carolina approach to res judicata as a "cautious and flexible 

adoption[] of the “transactional7 approach"). But the state’s courts have steadfastly held 

that a party may not avoid the effect of res judicata merely "by shifting legal theories or 

asserting a new or different ground for relief’ with respect to the same wrongful act. 

Northwestern Fin. Group, 110 N.C. App. at 538, 430 S.E.2d at 693-94 (<quoting Rodgers 

Builders, 76 N.C. App. at 30, 331 S.E.2d at 735). Where a lawsuit concerns the same 

subject matter, alleges the same set of operative facts, asserts the same primary right, 

and rests upon the same underlying proof as a prior claim, it will amount to an identical 

claim and res judicata will bar relitigation. See Nash County Bd. of Educ., 640 F.2d at 

487-88; cf. Abels v. Renfro Corp., 335 N.C. 209, 219, 436 S.E.2d 822, 828 (1993) (denying

- 8 -



summary judgment where first claim rested on proof that plaintiffs' injuries were 

covered by state workers’ compensation statute and second on proof that plaintiff was 

fired in retaliation for filing workers’ compensation claim), aff’g in part and rev’g in part 

id., 108 N.C. App. 135, 423 S.E.2d 479 (1992); see also Mears v. Town of Oxford, 762 

F.2d 368, 373 (4th Cir. 1985) (applying Maryland law) (finding identical claim where 

prior state action and subsequent federal complaint rested on identical factual 

allegations).

Res judicata applies to persons who were not themselves parties to the prior 

judgment but whose relationship to a party is such that the one represents the same

legal right as the other. Tucker, __  N.C. at __ , 474 S.E.2d at 130; County of

Rutherford v. Whitener, 100 N.C. App. 70, 76, 394 S.E.2d 263, 266 (1990). North 

Carolina courts have applied the notion of privity to determine when a prior judgment 

may preclude claims by persons themselves not parties. Hales v. North Carolina Ins. 

Guar. Ass’n , 337 N.C. 329, 337, 445 S.E.2d 590, 596 (1994). Factors that indicate that 

a litigant was in privity with a party to the prior action and should thus be barred by res 

judicata from relitigating an identical claim include whether that person had active 

control over or representation in the prior action, whether that person had a strong 

interest in its outcome, and whether the same attorney represented parties in both

actions. See Tucker, __ N.C. a t___ , 474 S.E.2d at 130; Rodgers Builders, 76 N.C. App.

at 29-30, 331 S.E.2d at 734.

- 9 -



The judgment of the North Carolina Supreme Court in Cannon II bars plaintiffs' 

claims here. In that case, the trial court granted the defendants' motion to dismiss as 

moot the plaintiffs' challenge to the election plan for the merged Durham City and 

County school systems, a decision ultimately affirmed by the North Carolina Supreme 

Court. 342 N.C. 399, 464 S.E.2d 43 (1995), rev’g 117 N.C. App. 399, 451 S.E.2d 302 

(1994). Since the plaintiffs' claims were dismissed for reasons other than lack of 

jurisdiction, improper venue, or failure to join a necessary party, and since the court did 

not expressly state that its dismissal was without prejudice, the decision in Cannon II 

constitutes a final judgment on the merits. See Hogan, 63 N.C. App. at 443, 305 S.E.2d 

at 215; Dawson, 106 N.C. App. at 692, 417 S.E.2d at 842.

Even though the plaintiffs in Cannon I  and II did not actually litigate the issue 

whether the election plan was racially discriminatory, res judicata nonetheless bars that 

claim here. The North Carolina Supreme Court held that the plaintiffs had waived the 

racial discrimination claim by failing properly to present the issue to the trial court. 342 

N.C. at 399, 464 S.E.2d at 43. Yet, had the plaintiffs acted with reasonable diligence, 

they could have brought that claim in the initial lawsuit. The claims here, which arise 

from the same facts and circumstances, and rest on the same underlying proof, are 

identical with the prior claims, and res judicata thus bars this action.

The decision of the North Carolina Supreme Court in Bockweg v. Anderson is not 

to the contrary. There, the plaintiffs suffered multiple injuries during a course of 

continuing medical treatment. The court declined to preclude a claim under the

- 10 -



transactional theory of res judicata because the two claims arose from separate acts of 

medical malpractice: first, negligent failure to provide adequate nutrition, causing brain 

damage; second, negligent diagnosis and treatment, causing loss of reproductive organs. 

See 333 N.C. at 493, 428 S.E.2d at 162. In the initial action, a jury rendered a verdict 

on the first claim after the parties stipulated to voluntary dismissal of the second. Id. 

The North Carolina Supreme Court held that the prior verdict did not bar a later action 

on the second claim, which arose from a "separate and distinct negligent act leading to a 

separate and distinct injury" and did not represent mere shifting of legal theories or 

remedies sought. Id. at 494, 428 S.E.2d at 163 (emphasis supplied).

In contrast, plaintiffs’ allegations here arise from the same act as the claims in 

Cannon I and II: the establishment of a consolidated school system for Durham County. 

It was that single act which gave rise to all of plaintiffs' claims in the prior and present 

actions. Plaintiffs' mere shifting of legal theories and grounds for relief does not create 

separate claims under the facts here. Cf. Bockweg, 333 N.C. at 494, 428 S.E.2d at 163; 

see Northwestern Fin. Group, 110 N.C. App. at 538, 430 S.E.2d at 693-94; Rodgers 

Builders, 76 N.C. App. at 30, 331 S.E.2d at 735.

Davenport v. North Carolina Dep’t of Trans., in which the Fourth Circuit found 

no claim preclusion under North Carolina law, see 3 F.3d at 96, is also distinguishable. 

In that case, the plaintiff brought two successive claims arising out of his wrongful 

discharge from public employment. In the initial state action, the North Carolina Court 

of Appeals approved an administrative determination that the plaintiff was entitled to

- 11 -



reinstatement with pay. See 3 F.3d at 92. In the subsequent federal suit, plaintiff 

sought damages under 42 U.S.C. § 1983 for deprivation of federal and state 

constitutional rights. Id. at 96. Because the plaintiff could not have fully litigated his 

federal civil rights claim in the state administrative proceeding, and because his remedy 

in that proceeding was limited to reinstatement with pay, the Court of Appeals held 

that it would be unfair to bar the second claim because this would have forced the 

plaintiff to choose between "two remedial paths neither of which would allow fair 

litigation of all claims that otherwise properly could be asserted." Id. at 97.

In contrast, the state court that heard these plaintiffs' claims in the prior 

litigation had concurrent jurisdiction over the present claims. Maine v. Thiboutot, 448 

U.S. 1, 3 n.l, 100 S. Ct. 2502, 2503 n.l, 65 L. Ed. 2d 555, 558 n.l (1980); Crump v. 

Board of Educ. of Hickory Administrative School Unit, 326 N.C. 603, 614-15, 392 S.E.2d 

579, 585 (1990), modifying on other grounds and aff’g id., 93 N.C. App. 168, 378 S.E.2d 

32 (1989). Unlike the plaintiff in Davenport, then, the plaintiffs here could have 

asserted all their claims and obtained all their relief in the prior state court action.5

■This case is also distinguishable from Northwestern Fin. Group v. County of Gaston, 
in which the North Carolina Court of Appeals denied summary judgment on grounds 
of res judicata even though the claim there "ar[o]se out of the same set of facts and 
circumstances" as a prior claim that resulted in a final judgment on the merits. 110 
N.C. App. at 538, 430 S.E.2d at 694. The Northwestern Fin. Group plaintiff "allege[d] 
that its claims for damages [in the second suit] could not have been known until after 
it was granted the mandatory injunction" which it sought in the first action; this fact was 
"pivotal" in the court’s determination that the general rule requiring a plaintiff to seek 
all damages in a single action did not apply. Id. Here, in contrast, the electoral plan 
for the consolidated school board was already in place when plaintiffs brought their 
prior suit; the remedies that plaintiffs seek in this Court thus were available at the time

(continued...)

- 12-



The parties in the present lawsuit are legally identical to the parties bound by the 

prior state court judgment. Of the three present plaintiffs, two -  Hazard Cannon and 

Norman Phillips -  were named plaintiffs in the prior suit. The third current plaintiff, 

Dan Sizemore, is bound by the prior judgment because he is "so identified in interest 

with [plaintiffs in the prior action] that [t]he[y] represent[] the same legal right." County 

of Rutherford, 100 N.C. App. at 76, 394 S.E.2d at 266 (quoting 46 Am. Jur. 2d 

Judgments § 532). Sizemore has a close relationship with plaintiff Cannon, who is his 

father-in-law. See Exhibit 1, at 3 11 11. Both are members of the same political 

organization, "Concerned Citizens of Durham." Id. By Sizemore's own admission, it 

was Cannon who solicited Sizemore to join as a plaintiff in this case. Id. at 5 11 16. 

Sizemore was, however, aware of the state court lawsuit at the time it was commenced 

and discussed that suit "several times with Mr. Cannon early in 1992 and [at other] 

times during 1992 and prior [to] January 1, 1993," id. at 4 11 15. He became acquainted 

with plaintiff Phillips and state court plaintiff Olds at the time the prior lawsuit was 

filed. Id. at 2-3 UH 9, 10. Thus, each of the present plaintiffs had active control or 

representation in the prior action, and a strong interest in its outcome. Cf. Tucker, _

N.C. at __ , 474 S.E.2d at 130. Finally, the same attorney, Mr. John C. Randall,

represented the plaintiffs in the prior action and does so in the instant suit. Cf. Rodgers 

Builders, 76 N.C. App. at 29, 331 S.E.2d at 734. Since the plaintiffs in the two actions 5

5(...continued)
of the first action, and the general rule mandating a single action bars plaintiffs’ claims 
here.

- 13 -



are identical or in privity, they are bound by res judicata based on the prior judgment. 

Bockweg, 333 N.C. at 491, 428 S.E.2d at 161.

The defendants in this suit are likewise identical to or in privity with parties to 

the prior judgment. In the state action, the defendants were the North Carolina State 

Board of Education, the Durham County Board of Commissioners, and the (now 

defunct) Boards of Education for the city and county school units. Here, the 

defendants as originally named were the North Carolina State Board of Education, the 

Durham County Board of Commissioners, the Durham County Board of Elections, the 

President of the North Carolina Senate (Lieutenant Governor), and the Speaker of the 

North Carolina House of Representatives. The fact that plaintiffs named additional 

governmental bodies or officials in the second action does not negate the application 

of res judicata. These additional defendants are in obvious privity with the state and 

local officials who were parties to the prior action, in that they represented the same 

legal interest in sustaining the validity of the statute approving the consolidation and 

were adequately represented in the prior action. See Mears, 762 F.2d at 371 n.3 

(applying Maryland law) (affirming grant of summary judgment on grounds of res 

judicata where defendants not parties to the prior action were sued in their official 

capacity and were in privity with the governmental units sued in the prior action).

Cases such as Tucker, __  N.C. at __ , 474 S.E.2d at 130, and County of

Rutherford, 100 N.C. App. at 76, 394 S.E.2d at 266, in which the courts have found 

different governmental actors not to be privies, are inapposite. In each of those cases,

- 14 -



the defendant sought to bar claims by one government agency on the basis of a prior 

judgment against a different government agency. Unlike the defendants here, the 

governmental plaintiffs in those suits had no control over, or representation in, the 

prior action and the governmental plaintiffs in the prior and successive actions each

represented different substantive legal interests. See__ N.C. a t___ , 474 S.E.2d at 130;

100 N.C. App. at 76, 394 S.E.2d at 266. Moreover, assertion of res judicata by 

defendants against plaintiffs who have had a full and fair opportunity to litigate their 

claims is appropriate even if some of the defendants were not parties or privies of 

parties to the prior action. Cf Johnson v. Smith, 97 N.C. App. 450, 453, 388 S.E.2d 582, 

584 (affirming summary judgment for defendants asserting non-mutual collateral 

estoppel), review denied, 326 N.C. 596, 393 S.E.2d 878 (1990).

The doctrine of res judicata thus bars plaintiffs’ claims in the instant suit because 

they are identical to those in a prior action which resulted in a final judgment on the 

merits. Plaintiffs acting with reasonable diligence could have brought these claims and 

obtained any relief to which they were entitled in that prior litigation. Each party here 

was either a party to or in privity with a party to the prior judgment. Accordingly, the 

Court should grant summary judgment dismissing this suit.

- 15 -



II

The Undisputed Facts Establish That 
Plaintiffs Cannot Prevail On Their 

Shaw v. Reno Claim

This Court held, in denying plaintiffs' request for a preliminary injunction, that 

various allegations of the Complaint "appear to assert a Shaw [v. Reno, 509 U.S. 630, 

113 S. Ct. 2816, 125 L. Ed. 2d 511 (1993)] racial gerrymandering claim," Order of April 

1, 1996, at 11.6 We agree with defendants, as set forth in their motion for summary 

judgment and accompanying brief in support, that since none of the plaintiffs resides 

within the majority-African-American districts that plaintiffs allege were 

"gerrymandered," they have no standing to raise a Shaw claim -  and we do not here 

further brief that issue. Even if that were not the case, however, as we demonstrate 

below plaintiffs will be unable (if a trial were held) to establish the factual predicate for 

their Shaw claim.

The law. Decisions of the Supreme Court since Shaw v. Reno have clarified the 

prerequisites for the "analytically distinct" cause of action, see 509 U.S. at 652, 113 S. 

Ct. at 2830, 125 L. Ed. 2d at 532, recognized in that case. A Shaw plaintiffs burden of

persuasion, Shaw v. Hunt,__ U.S.___ , __ , 116 S. Ct. 1894, 1900, 135 L. Ed. 2d 207,

218-19 (1996), citing Miller v. Johnson, 515 U.S.__ , __ , 115 S. Ct. 2475, 2488, 132 L.

bPlaintiffs allege that the election districts for the school board were drawn "along 
lines of racial residential patterns" (Complaint, H 12, at 6), the "primary rationale for 
the geographical structure of the voting districts was racial" (id., 11 13, at 6), they have 
a right to participate in a "color-blind" election process (id., 11 20, at 10), and there is 
no justification for "racially discriminatory set-aside districts in Durham" (id., If 24 at 
11).

- 16 -



Ed. 2d 762, 779-80 (1995) ("Miller"), is to show that "race for its own sake, and not 

other districting principles, was the legislature’s dominant and controlling rationale in

drawing its district lines," Bush v. Vera,__ U.S.___ , __ , 116 S. Ct. 1941, 1951, 135 L.

Ed. 2d 248, 256 (1996) ('Bush"), quoting Miller, 515 U.S. a t__ , 115 S. Ct. at 2486, 132

L. Ed. 2d at 777, and "that other, legitimate districting principles were "subordinated"

to race." Bush,__ U.S. a t___ , 116 S. Ct. at 1951, 135 L. Ed. 2d at 257, citing Miller,

__ U.S. a t___ , 115 S. Ct. at 2488, 132 L. Ed. 2d at 780. Irregularity of shape may be

evidence of racial purpose, but only if the irregularity resulted from racial factors. See

Bush,__ U.S. a t___ -__ , 116 S. Ct. at 1953-60,135 L. Ed. 2d at 259-68; id. a t__ , 116

S. Ct. at 1969, 135 L. Ed. 2d at 280 (O’Connor, J., concurring).

If plaintiffs carry this burden, "strict scrutiny" applies and the challenged 

districts] can be sustained only if defendants prove that they "are narrowly tailored to

further a compelling state interest." Bush,__ U.S. a t___ , 116 S. Ct. at 1960, 135 L.

Ed. 2d at 268; see id. a t__ , 116 S. Ct. at 1970, 135 L. Ed. 2d at 280-81 (O’Connor, J.,

concurring); Shaw v. Hunt,__ U.S. a t___ , 116 S. Ct. at 1902, 135 L. Ed. 2d at 220-21,

citing Miller, 515 U.S. at __ , 115 S. Ct. at 2490, 132 L. Ed. 2d at 782. (While

defendant-intervenors believe that the 1991 districting plan for the merged Durham 

County school system would easily meet these standards, we do not detail in this 

Memorandum the evidentiary basis that would support that conclusion because plaintiffs 

have not made and cannot make the prerequisite showing required to trigger a "strict 

scrutiny" inquiry.)

- 17 -



It is not enough for plaintiffs to show merely that the decisionmaker intended to

create a majority-minority district, or even that the districting was performed "with

consciousness of race," Bush,__ U.S. a t___ , 116 S. Ct. at 1951, 135 L. Ed. 2d at 257:

States may intentionally create majority-minority districts, and may 
otherwise take race into consideration, without coming under strict 
scrutiny . . . .  [Ojnly if traditional districting criteria are neglected, and 
that neglect is predominantly due to the misuse of race, does strict 
scrutiny apply.

Bush, __  U.S. at __ , 116 S. Ct. at 1969, 135 L. Ed. 2d at 280 (O’Connor, J.,

concurring) (emphasis in original).7 If race was only one factor, not displacing all 

others, that accounted for the configuration of a districting plan, there is no 

constitutional violation. See DeWitt v. Wilson, 856 F. Supp. 1409, 1413 (E.D. Cal. 1994) 

{citing Wilson v. Eu, 1 Cal. 4th 707, 4 Cal. Rptr. 2d 379, 823 P.2d 545 (1992)), aff’d in

part and appeal dismissed in part, __  U.S. __ , 115 S. Ct. 2637, 132 L. Ed. 2d 876

(1995); Bush,__ U.S. a t ___ , 116 S. Ct. at 1969, 135 L. Ed. 2d at 280 (O’Connor, J.,

concurring).

The evidence. Plaintiffs cannot prove their Shaw claim because there is 

overwhelming and uncontradicted evidence that the school board districting plan now

7As Judge Higginbotham of the Fifth Circuit has pointed out, seven members of the 
Supreme Court have rejected the contrary view advocated by Justices Thomas and 
Scalia and have held "that strict scrutiny does not [automatically] apply to all cases 
involving the intentional creation of majority-minority districts." Clark v. Calhoun
County, 88 F.3d 1393, 1404 & n.2 (1996), citing Bush,__  U.S. a t __ , 116 S. Ct. at
1952, 135 L. Ed. 2d at 257, id. a t__ & n.7, 116 S. Ct. at 1977 & n.7, 135 L. Ed. 2d at
290 & n.7 (Stevens, J., dissenting), id. a t__ , 116 S. Ct. at 2007, 135 L. Ed. 2d at 328
(Souter, J., dissenting).

- 18 -



in effect was crafted to meet significant non-racial objectives and comports with 

traditional districting criteria.

In denying plaintiffs’ request for preliminary injunction, this Court held it 

unlikely that plaintiffs would prevail on their Shaw claim, finding that "[a]t the hearing, 

plaintiffs produced no evidence supporting their argument that racial considerations 

predominated. In fact, the evidence suggests otherwise.” Order of April 1, 1996, at 14. 

The period for discovery in this litigation has now closed,8 and it may be said with 

confidence that plaintiffs will have no more evidence at trial than they were able to 

produce at the hearing on preliminary injunction.9 The "report"10 of plaintiffs'

8See Order of April 17, 1996 entered by Hon. Wallace W. Dixon, United States 
Magistrate Judge. Discovery closed October 14, 1996.

^Plaintiffs propounded no interrogatories to any other party; they took no 
depositions of any party or witness. Although they served three requests for admissions 
upon the original defendants herein, defendants responded by objecting to two of the 
three requests and, with respect to the third, admitting limited statistical, 
uncontroverted facts that have little or no bearing upon plaintiffs’ claims. Plaintiffs 
have made no effort to obtain further responses to their Request for Admissions or to 
challenge the asserted privileges. (Defendants’ response to the Request for Admissions 
is appended hereto as Exhibit "2" for the convenience of the Court.)

luOn August 12, 1996 plaintiffs served upon the other parties a document entitled 
"Disclosure of Expert Testimony," purportedly satisfying the requirements of Fed . R. 
Civ. P. 26(a)(2) and indicating plaintiffs’ intent to offer Mr. W.M. Richardson, a real 
estate salesman, assessor and appraiser, to present expert testimony at the trial of this 
cause. The "Disclosure" was not accompanied by "a written report prepared and signed 
by the witness" meeting the requirements of the Rule, but only by a letter from Mr. 
Richardson to plaintiffs’ counsel summarizing work undertaken at the request of 
counsel.

- 19 -



"expert"11 adds nothing to the inadequate showing made by plaintiffs at the preliminary 

injunction hearing.12

Defendant-intervenors, in contrast, not only rely upon the evidence presented at 

the March 22 hearing (which, this Court has already found, suggests that racial 

considerations did not predominate in the drawing of the voting districts for the new 

school board, Order of April 1,1996, at 14), but also submit with this motion additional 

declarations and documentary materials that demonstrate that non-racial factors played 

a dominant role in the design of the school board plan. The uncontroverted evidence 

establishes that the plan reflects the practical compromises among divergent viewpoints 

that had to be fashioned in order to make possible a successful merger of the city and 

county school systems,13 a process that took years to accomplish.14

Mr. Cohen, who drafted the plan, was not asked to create districts having any 

particular racial composition (Tr. 26, 39, 56); instead, his primary charge was to devise 

a compromise between at-large and district election plans, which he understood to be 

the principal difference among supporters and opponents of the original seven-district

nSee supra note 10. Defendant-intervenors do not concede the qualifications of this 
witness to give expert opinions on matters relevant to the issues in this case.

12Plaintiffs’ "Disclosure of Expert Testimony" is appended as Exhibit "3." Mr. 
Richardson's letter offers no opinion at all on the central issue that plaintiffs must 
address: whether race predominated over other factors in the creation of the districting 
plan.

13Supporters of the merger hoped to improve public education for all residents of 
Durham County and understood that this would require broad public support. See 
Declaration of Michael Freemark, M.D., attached hereto as Exhibit "4," 11 4.

14See supra pp. 2-4.

- 20 -



plan (Tr. 38, 41-43, 45; Cohen Dec].1" at 3 11 4). There was widespread support for 

such a compromise, both among the Commissioners and the general public;* 16 support 

for single-member districts did not come exclusively from blacks, nor did only whites 

favor at-large seats providing the opportunity for voters to cast ballots for more than 

one candidate (Freemark Decl., 1H1 5,6).

Cohen's objectives in establishing districts, in addition to meeting one-person, 

one-vote requirements, were to foster support for the merged system by insuring initial 

representation on the new board of residents of both predecessor districts, by including 

some territory from both systems in each district, and by providing opportunities for 

voters to elect multiple candidates on both a district and an at-large basis (Tr. 45-46; 

Cohen Decl. at 3 11 4). For these purposes, he utilized the cores of the former systems 

in fashioning districts for the merged plan, beginning in the central city and then 

exploring combinations of precincts to create four numerically equivalent areas that 

achieved the objectives (Tr. 34, 43; Cohen Decl. at 3-5 UH 5,6).

Cohen deliberately determined to use whole precincts as the building blocks for 

the plan in order to make it easy to understand and administer for the Board of

’"Exhibit "5" hereto is a declaration by Mr. Cohen which supplements his testimony 
at the preliminary injunction hearing.

l6See, e.g., Minutes at 76 (Heron) (discussing possible compromise plans mixing 
district and at-large election); id. at 84 (comment at public hearing in support of mixed 
plan as "good compromise [that] would succeed in unifying the two school systems"), 
85 (speaker urges Commissioners to find compromise between two kinds of plans), 135 
(Commissioners Reckhow and Heron characterize 4-2-1 plan as compromise); Freemark 
Decl., 11 7 (current system is compromise designed to give as many people as possible 
some of what they wanted).

- 21 -



Elections, candidates and voters, and to avoid questions of manipulation that sometimes 

arise where precincts are divided (Tr. 41; Cohen Decl. at 2 11 2).17 Because the 

population of the old city system was predominantly African-American and that of the 

old county system predominantly white, it was evident to Cohen that any new districts 

were likely to be predominantly of one race or the other (Tr. 34-35);18 he therefore 

considered race in configuring the plan to the extent necessary to avoid dilution and to 

insure that the racial group that predominated in each district had a realistic 

opportunity to elect candidates of its choice (Tr. 46, 49; Cohen Decl. at 3 11 4). But 

Cohen responded clearly and consistently on the question of the degree to which racial 

considerations affected the districting plan: race was discussed and considered but was 

neither the only factor nor the dominant factor taken into account (Tr. 32, 39-40). See 

also Tr. 83, 85-86 [former Commissioner Giles: racial composition of districts was not 

most significant concern of Board as merger plan was being developed; she also wanted 

to assure countywide representation], 99-101 [former Commissioner Bell: racial

17Numerous Durham County voting precincts had previously been split between the 
former city and county school systems. See the table submitted as Exhibit "6," based 
upon a comparison of election returns (contained in Exhibit "7" submitted herewith) for 
the October 11,1983 city school board contest and the May 8,1984 county school board 
races [see Exhibit "7," at 018, 022 (Bates-stamped numbers at bottom of page)]. As 
defendant-intervenors’ expert witness, Dr. Gerald Webster, indicates, splitting voting 
precincts causes confusion and is regarded as a districting practice to be avoided unless 
necessary (see Webster Report, submitted herewith as Exhibit "8," at 17) ("Webster 
Report").

!8Cohen believes that in light of the demographic distribution of population in 
Durham County, any plan drawn to create four equipopulous districts for the county 
would have produced one or more majority-African-American districts (Cohen Decl. 
at 5 11 7). This perception is confirmed by Dr. Webster {see Webster Report at 9-10).

- 22 -



composition of districts not dominant consideration of Board of Commissioners]; 

Minutes at 095 [Bell: plan should provide "representation for all sections of the 

County"], 130 [Commissioner Black’s principles for acceptable plan included 

"countywide representation"]).

Any irregularity in the shape of the four base districts in the plan results from 

adherence to precinct boundaries (Cohen Deck, at 2-3 11 3; Webster Report at 16)19 

and pursuit of the non-racial objectives identified by the Commissioners and Mr. 

Cohen. This is evident even with respect to features of the plan upon which plaintiffs' 

designated expert focused his attention.20 Under these circumstances, plaintiffs raise

19Thus, for example, the "finger" of District 2 pointing to the southwest along Hope 
Valley Road and Third Fork Creek (see Ex. "A" to Cohen Deck) is Precinct No. 9, 
formerly divided between the city and county systems along Cornwallis Road.

20For example, Richardson's letter (see supra note 10 and accompanying text) asserts 
that District 2 "comprises mostly densely populated areas in or near the downtown, but 
excludes such white voter areas as [the] Duke University west . . . campus are[a] . . .  as 
well as Trinity Park just north of the Duke east campus." Even if that were the case 
(which it is not), non-racial goals account for the configuration of the districts in the 
areas identified by Richardson. The Duke University west campus, for instance, is 
mostly within Precinct No. 5, which is in District 2 and which was previously split 
between the city and county systems (see supra note 17 and Exhibit "6" submitted 
herewith). Reuniting Precinct No. 5 and including it within District 2 brought a 
substantial number of former county system residents into a district whose core was the 
old city system, consistent with the objectives of Mr. Cohen and the County 
Commissioners (see supra pp. 21-23). Similarly, the Trinity Park area "just north of the 
Duke east campus" is divided among Precinct No. 1 (which had been entirely within the 
old city system), Precinct No. 2 (which was formerly split between the city and county 
districts), and Precinct No. 7 (which also had been entirely within the city unit). Placing 
whole Precincts 1 and 2 within District 3 thus included a substantial number of former 
city residents in a district whose core was the old county unit. The balance of the 
Trinity Park neighborhood, in Precinct No. 7, is within District 2.

- 23 -



no serious factual claim that race "predominated" in the construction of the Durham 

County school board electoral plan.21

Because "the record taken as a whole could not lead a rational trier of fact to 

find for the" plaintiffs, United States v. National Financial Services, Inc., 1996 WL 

583557, at *3, summary judgment should be granted in favor of defendants and 

defendant-intervenors on the Shaw claim.

Ill

Plaintiffs Cannot Prevail On Their 
Claim Under Section 2 Of The 

Voting Rights Act

In its ruling on plaintiffs' motion for preliminary injunction, this Court

summarized the legal principles defining the elements of a valid claim under Section 2

of the Voting Rights Act of 1965, 42 U.S.C. § 1973 (Order of April 1, 1996, at 7-9) and

then held that there was "considerable doubt as to whether plaintiffs can prove the

required preconditions for a Section 2 claim":

For example, plaintiffs introduced no evidence tending to show that white 
voters are politically cohesive. Moreover, there is considerable doubt as 
to whether plaintiffs can establish that the totality of the circumstances 
support their claim. For example, plaintiffs did not introduce evidence 
likely to establish past discrimination touching on the rights of whites to 
participate in the democratic process, that whites bear the effects of 
discrimination so as to hinder their ability to participate effectively in the

21 It is not without significance that plaintiffs have retained no expert nor offered any 
alternative election plan to demonstrate the validity of their contention that a districting 
arrangement based upon factors other than race would produce results markedly 
different from the plan adopted by the Board of Commissioners and authorized by the 
North Carolina General Assembly.

- 24 -



political process, that political campaigns have been characterized by overt 
or subtle racial appeals, or that there is a lack of responsiveness on the 
part of elected officials to the needs of whites.

(Id. at 9.) It remains the case that the only evidence available to be introduced at a trial

of this cause defeats, rather than supports, a putative Section 2 claim by plaintiffs.

The prerequisite showing. The threshold elements of a Section 222 violation

that a plaintiff must establish are: "First, ‘that [the protected group] is sufficiently large

and geographically compact to constitute a majority in a single-member district’; second,

'that it is politically cohesive’; and third, 'that the [other group] majority votes

sufficiently as a bloc to enable it . . . usually to defeat the minority’s preferred

candidate[s].’" Growe v. Emison, 507 U.S. 25, 39, 113 S. Ct. 1075, 1084, 122 L. Ed. 2d

388, 403 (1993), quoting Thornburg v. Gingles, 478 U.S. 30, 50-51, 106 S. Ct. 2752, 2765-

66, 92 L. Ed. 2d 25, 46-47 (1986). The "protected group" whose Section 2 rights

plaintiffs allege are violated under the school board election plan consists of white

“ Section 2 of the Act, 42 U.S.C. § 1973, provides, in pertinent part:

(a) No voting qualification or prerequisite to voting or standard, 
practice, or procedure shall be imposed or applied by any State or political 
subdivision in a manner which results in a denial or abridgement of the 
right of any citizen of the United States to vote on account of race or 
color . . . .

(b) A violation of subsection (a) of this section is established if, 
based on the totality of circumstances, it is shown that the political 
processes leading to nomination or election in the State or political 
subdivision are not equally open to participation by members of a class of 
citizens protected by subsection (a) of this section in that its members 
have less opportunity than other members of the electorate to participate 
in the political process and to elect representatives of their choice.

- 25 -



voters.23 However, plaintiffs admit that whites "have been able to elect candidates of 

their choice in county-wide elections."24 To the extent that school board candidates 

preferred by some whites (apparently including plaintiffs) were not elected in 1992 

under the plan that plaintiffs challenge, the facts lend no support to a claim that blacks 

in Durham County "voted sufficiently as a bloc . . .  to defeat [such] candidate[s]."

For example, county registration statistics from dates prior to and following the 

May 5, 1992 school board election indicate that there were more than twice as many 

white as black registered voters.25 Two white candidates ran for the at-large seat on 

the board, Joy Baldwin and Kathryn Meyers. Even assuming that Joy Baldwin was the 

"candidate of choice" of many Durham County whites,26 27 the fact is that Ms. Meyers 

won 54% of the total vote, including substantial numbers of votes in heavily white 

precincts2 and was elected by white, as well as black, voters.

Furthermore, although analysis of election returns using bivariate ecological 

regression and extreme (or homogeneous) case analysis is a standard approach to

23See Complaint, at 8 11 16 (alleging "dilution and abridgement of voting rights of 
the non-black registered voters and voting age population of Durham County"); id. at 
10-11 11 24 (referring to "racial discrimination against the white voters of Durham").

~4See Exhibit 2 (Response to Request for Admission), at 2 H 5.
2"See Exhibit 7 submitted herewith, at 045, 051.

20Kathryn Meyers was endorsed by defendant-intervenor Durham Committee on the 
Affairs of Black People, see Tr. 86-87.

27For example, Precinct 43 (Durham Academy Gymnasium), had 2,497 white 
registered voters and 58 black registered voters as of January 2, 1992, and 2,570 white 
registered voters and 61 black registered voters as of May 28, 1992. See Exhibit 7, at 
45, 51. Kathryn Meyers received 569 votes from this precinct in the 1992 election. See 
id. at 50.

- 26 -



proving racially polarized voting behavior and vote dilution in Section 2 cases, see, e.g., 

Thornburg, 478 U.S. at 52-53, 61-74, 106 S. Ct. at 2767, 2772-78, 92 L. Ed. 2d at 47-48, 

53-61, plaintiffs have not designated any expert witness to perform or report on such 

an analysis. In short, plaintiffs have no proof at all of the prerequisites to a successful 

Section 2 claim on behalf of white voters in Durham County school board elections.28

The "totality of the circumstances." Not only must plaintiffs establish the 

threshold showing, but they must also demonstrate by probative evidence that, 

considering the "totality of the circumstances," white voters "have less opportunity than 

other members of the electorate to participate in the political process and to elect 

representatives of their choice," 42 U.S.C. § 1973(b). This Court set out, in its ruling 

on the preliminary injunction motion, the kinds of evidence typically considered in the * 4

2sUnder the school board election plan (Original Defendants’ Ex. 9 at 3/22/96 
hearing), four of the seven members of the board are to be elected from geographic 
areas that contain white population and voting-age population majorities (Districts 3,
4, B. and the at-large seat elected from the entire county). Thus, if white voters were 
perfectly cohesive politically, voting for the same candidates, they would be an effective 
voting majority in four (or 57%) of the seats. Inasmuch as the total population of the 
county according to the 1990 Census was 60% white, the plan provides "substantial
proportionality, " see Johnson v. DeGrandy, 512 U.S.__ , __ , 114 S. Ct. 2647, 2658, 129
L. Ed. 2d 775, 793 (1994), for white voters (see Tr. 45 [Cohen]). Although "substantial 
proportionality" is not a "safe harbor" against a claim of vote dilution, it is a significant 
factor weighing against such a finding unless it is overcome by "evidence otherwise 
indicating that . . . voters in [the plaintiff] group have ‘less opportunity than other 
members of the electorate to participate in the political process and to elect
representatives of their choice.’" DeGrandy, 512 U.S. a t__ , 114 S. Ct. at 2663, 129 L.
Ed. 2d at 799.

- 27 -



"totality of the circumstances" analysis. See Order of April 1, 1996, at 7-8.29 Plaintiffs 

have no such evidence to present. There is, for example, no history of voting-related 

discrimination against whites in North Carolina or in Durham County. Plaintiffs do not 

allege that elections in Durham have been racially polarized; to the contrary, they allege 

that white voters in Durham "have been more than fair to black candidates for public 

office," Complaint, at 11 H 24, and that "the Durham Committee on the Affairs of Black 

People .. . has been highly successful in influencing the election of both black and white 

public office holders . . . ." Id. See also defendant-intervenors’ Ex. 5, 3/22/96 hearing 

(affidavit of Lavonia Allison), at 5 f 12 (Durham Committee has endorsed both black 

and white candidates), indicating that white voters have not been excluded from any 

candidate slating process. Plaintiffs cannot demonstrate that any voting procedures or 

practices that enhance the opportunity for discrimination against whites have been 

implemented in Durham County.

In sum, plaintiffs had no proof of either the threshold Section 2 factors or of 

matters relevant to the "totality of the circumstances" analysis at the time of the 

preliminary injunction hearing and they have no such proof now. Plaintiffs’ 

dissatisfaction stems not from any structural inability of white voters to elect candidates 

of their choice, but rather from the success of the Durham Committee on the Affairs 

of Black People in "pull[ing], haul[ing] and trading] to find common political ground," 

DeGrandy, 512 U.S. a t__ , 114 S. Ct. at 2661, 129 L. Ed. 2d at 796 with a majority of

~9See also S. Rep. No. 97-417, at 28-29 (1982) (listing "[tjypical factors" illustrative 
of minority vote dilution and relevant to Section 2 liability determination).

- 28 -



all voters in Durham County. At the preliminary injunction hearing, plaintiffs' counsel

explained plaintiffs’ Section 2 claim as follows:

MR. RANDALL: What we’re saying is, part of the package
showing the blacks are able to and do elect the candidates of their choice.
The Black Committee, in fact, dominates the scene, occupies it like a 500 
pound gorilla.

(Tr. 110-11.) Whatever else it may be, this is not a valid basis for relief under Section 

2 of the Voting Rights Act, and plaintiffs’ claim under the Act should be dismissed.

IV

There Is No Evidence To Support 
Plaintiffs’ Constitutional Claims

Finally, plaintiffs have alleged that the districting plan violates their rights under 

the Privileges and Immunities Clause, U.S. CONST., art. IV, § 2, and the Fifth, 

Fourteenth and Fifteenth Amendments to the Constitution. We outlined the difficult 

burden of proof that plaintiffs must meet to establish intentional discrimination -  a 

required element of a Fourteenth or Fifteenth Amendment claim -- in our 

Memorandum in Opposition to Motion for Preliminary Injunction, at 10-13, and we 

respectfully refer the Court to that discussion.30 Plaintiffs have undertaken no 

discovery of any kind since the preliminary injunction hearing, much less discovery that 

in any way suggests they are aware of probative evidence on these issues. Summary 

judgment dismissing these claims is therefore also appropriate.

30As we said there (at 10 n .ll) concerning the claims under the Privileges and 
Immunities Clause and the Fifth Amendment, "[t]he inapplicability of these provisions 
to the facts of this case is patent and requires no discussion."

- 29 -



Conclusion

For the foregoing reasons, summary judgment in favor of defendants and 

defendant-intervenors should be granted, dismissing plaintiffs’ claims with prejudice.

Respectfully submitted,

Irving Joyner 
N.C. State Bar #  7830 
1512 S. Alston Avenue 
Durham, North Carolina 27702 
Telephone: (919) 560-6293

Elaine R. Jones
Director- Counsel 

Norman J. Chachkin 
Jacqueline A. Berrien 
NAACP Legal Defense and 
Educational Fu nd , Inc.

99 Hudson Street, 16th fl.
New York, New York 10013 
Telephone: (212) 219-1900

Adam Stein 
N.C. State Bar #4145 
Ferguson, Stein, Wallas, Adkins, 
Gresham & Sumter, P.A.

312 West Franklin Street 
Chapel Hill, North Carolina 27516 
Telephone: (919) 933-5300

Anita S. Hodgkiss 
N.C. State Bar #  15597 
Ferguson, Stein, Wallas, Adkins, 
Gresham & Sumter, P.A.

741 Kenilworth Avenue 
Charlotte, North Carolina 28204 
Telephone: (704) 375-8461

Attorneys for Defendant-intervenors

- 30-



APPENDIX A



(Cite as: 1996 WL 583557 (4th Cir.(Md.))

UNITED STATES of America, Plaintiff-Appellee,
v.

NATIONAL FINANCIAL SERVICES, INCORPORATED, a corporation; 
Robert J. Smith, individually and as an officer of said corporation;

N. Frank Lanocha, Defendants-Appellants.

No. 95-2796.
United States Court of Appeals, Fourth Circuit.

Argued May 8, 1996.
Decided Oct. 11, 1996.

ARGUED: Matthew Scott Sturtz, Joseph William Hovermill, Miles & Stockridge,
P C., Baltimore, MD, for Defendants-Appellants. Jacqueline H. Eagle, Office of 

Consumer Litigation, Civil Division, United States Department of Justice, Washington, 
D.C., for Plaintiff-Appellee. ON BRIEF: Christopher W. Keller, Thomas E. Kane, 

Division of Credit Practices, Federal Trade Commission, Washington, D.C., for
Plaintiff-Appellee.

Before RUSSELL and ERVIN, Circuit Judges, and NORTON, United States District 
Judge for the District of South Carolina, sitting by designation.

Affirmed by published opinion. Judge ERVIN wrote the opinion, in which Judge 
RUSSELL and Judge NORTON joined.

OPINION

ERVIN, Circuit Judge:

*1 National Financial Services, Inc. (NFS), Robert J. Smith, and N. Frank Lanocha are 
debt collectors who, primarily on behalf of companies selling magazine subscriptions, send 
out computer-generated dunning letters en masse. They appeal the imposition of civil 
penalties for violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 
1692 et seq., and the Federal Trade Commission Act (FTCA), 15 U.S.C. §§ 45(m) and 
53(b). The appellants object, first to the grant of summary judgment against them, 
contending that they raised material issues of fact for trial. Second, they argue that the 
district court abused its discretion when it determined that NFS and Smith must pay a civil 
penalty of $500,000 and that Lanocha must pay $50,000. We affirm.

I. Background

NFS is a collection agency primarily serving magazine subscription clearinghouses. 
According to Robert J. Smith, the owner and president of NFS, the company handled

A-l -



about 2,200,000 accounts each year in 1986 and 1987. About half of NFS’s accounts were 
placed by American Family Publishers (AFP). Every few weeks, AFP would provide NFS 
with magnetic tapes containing the names, addresses, and unpaid balances-averaging about 
$20.00-for 5,000 to 70,000 delinquent accounts. NFS fed that data into its computer, which 
merged the customer information onto pre-printed collection notices, or "dunning letters". 
The text of the letters, prepared by Smith, varied over time. A representative letter 
examined by the district court specified a deadline for payment, and then stated:

[I]t is now being processed by our NATIONWIDE COLLECTION 
AGENCY DIVISION to enforce IMMEDIATE PAYMENT from you. 
Notification is hereby given that the date assigned above is your 
DEADLINE.

If you fail to pay your bill by the DEADLINE, we will then take the 
appropriate action. Remember your attorney will also want to be paid. An 
envelope is enclosed for your payment.

Our AUDIOTEX telecommunications system remain on line to answer 
your inquiry, twenty-four hours per day, seven days per week. Call anytime 
(301) 366-3217. YOUR ACCOUNT WILL BE TRANSFERRED TO AN 
ATTORNEY IF IT IS UNPAID AFTER THE DEADLINE DATE!!!

The back of the letter included a "validation notice," which read: If you do not dispute 
the validity of this debt or any portion of it within 30 days after receipt of this notice, we 
will assume it is valid. If you dispute the validity of this debt or any portion of it in writing 
within 30 days we will mail verification of the debt to you. At your written request, within 
the 30 days, we will provide you with the name and address of the original creditor if 
different from the current creditor.

Those consumers who contested the amount owed were removed from the NFS system.

Customers who did not pay after receiving a series of the NFS "deadline notices"-about 
85*% of the accounts-received one or more form letters on the letterhead of "N. Frank 
Lanocha, Attorney at Law." Lanocha was selected by Smith in response to AFP’s 
suggestion that attorney letterhead notices would increase collection rates. Lanocha, who 
had no separate agreement with AFP relating to collection letters, prepared the text and 
gave a copy to Smith. Smith would feed the "attorney at law" dunning text into the NFS 
computer, merge it with the AFP data, and mail out the letters. Several versions of these 
letters were sent on AFP accounts between 1983 and 1991. Four "Attorney at Law" letters 
contained in the record included the following text:

*2 PLEASE NOTE I AM THE COLLECTION ATTORNEY WHO 
REPRESENTS AMERICAN FAMILY PUBLISHERS. I HAVE THE 
AUTHORITY TO SEE THAT SUIT IS FILED AGAINST YOU IN THIS

A-2 -



MATTER.... UNLESS THIS PAYMENT IS RECEIVED IN THIS OFFICE 
WITHIN FIVE DAYS OF THE DATE OF THIS NOTICE, I WILL BE 
COMPELLED TO CONSIDER THE USE OF THE LEGAL REMEDIES
THAT MAY BE AVAILABLE TO EFFECT COLLECTION....

*  *  *

I am the collection attorney hired by American Family Publishers to 
protect their interests in the United States. I have filed suits and obtained 
judgments on small balance accounts just like yours. My authority to collect
these accounts includes the enforcement of judgments ...

*  *  *

LAW OFFICES-DEMAND NOTICE. YOU HAVE TEN DAYS TO 
PAY YOUR BILL IN FULL. CONTINUED FAILURE TO PAY WILL 
RESULT IN FURTHER COLLECTION ACTIVITY. ONLY YOUR
IMMEDIATE PAYMENT WILL STOP FURTHER LEGAL ACTION.

*  *  *

YOUR ACCOUNT MAY NOW BE FOR SALE.... ACCOUNTS, LIKE 
YOURS, THAT ARE SOLD ... RUN THE RISK THAT THE BUYER 
WILL FILE SUIT AGAINST THEM. JUDGMENT CAN RESULT IN 
ASSETS BEING SEIZED. INSTRUCTIONS HAVE BEEN GIVEN TO 
TAKE ANY ACTION, THAT IS LEGAL, TO ENFORCE PAYMENT.

The notices were not signed by Lanocha. Nor did he receive or review the information 
on the AFP computer tapes-either in general or in relation to any particular account. 
Lanocha did not read or review the letters prepared by the NFS computers under his name. 
He did not have a list of customers who received his letters. According to AFP’s Vice 
President of Finance, Stephen F. McCarthy, Lanocha did not confer with AFP regarding 
the text of the letters and, in fact, had no contact with AFP regarding any aspect of the 
collection activities from 1983 until 1990. McCarthy declared that AFP never paid Lanocha 
any money for any purpose. Lanocha did not forward payments or reports on collections 
to AFP. Rather, NFS paid AFP half of each account collected and, in its monthly 
performance reports to AFP, made no distinction between payments received from the NFS 
letters and payments from the "attorney at law" collections.

Although Lanocha filed fifteen lawsuits in 1984, he did not file any lawsuits during the 
1989 to 1991 period of time covered by this prosecution. Smith and Lanocha have had a 
long history of dealings with the Federal Trade Commission (FTC). In February 1980, in 
response to consumer complaints, the FTC sent NFS an access letter seeking to review the 
company’s debt collection practices. After Smith and Lanocha provided information and 
documents, the FTC recommended the elimination of references to "legal proceedings," 
"legal costs," "court costs," and the possibility that NFS and Lanocha would "recommend 
court action." The FTC found that the letters created a false impression that NFS played 
a role in whether a consumer was sued and misrepresented Lanocha’s role in the process. 
In September 1981, Smith wrote to the FTC that the attorney letters would be 
discontinued, and enclosed revised collection notices. The FTC responded that the new

A-3 -



notices still misrepresented the intent to sue, and asked NFS to immediately implement the 
changes it suggested. Smith responded that NFS would not purchase new forms until 
March 1992. The FTC began an investigation in 1987. On January 29, 1990. the 
Commission informed counsel for Smith and Lanocha that it was preparing to recommend 
a complaint be issued, and offered an opportunity to discuss settlement. The case was 
subsequently referred to the Department of Justice. On January 25, 1991, the Government 
filed an action for civil penalties and injunctive relief against NFS, Smith and Lanocha, 
alleging violations of 15 U.S.C. §§ 1692e(5), 1692e(10), and 1692g. The defendants moved 
for summary judgment and, in turn, the government moved for partial summary judgment. 
The district court granted the government’s motion, finding that the defendants had 
improperly threatened consumers with legal action (under § 1692e(5)), had made false 
threats to sue (under § 1692e(10)), and had sent notices containing contradictory 
information about a consumer’s time to dispute the debt (under § 1692g). The court then 
ordered the parties to submit memoranda on the appropriate remedies and what, if any, 
issues remained for a jury.

*3 In response, the government asked for an injunction and at least $1.5 million in civil 
penalties. The government also moved to reopen discovery on remedies, and discovery was 
reopened for sixty days. The government conducted additional discovery during that time, 
but the defendants did not. The defendants also refused to provide any financial 
information until after the court determined that they had the requisite knowledge to 
support the assessment of penalties. The government moved to compel, and the court 
granted the motion.

On December 20, 1993, the court entered an order of permanent injunction against the 
defendants. On November 18, 1994, a hearing was conducted on the assessment of 
penalties. On July 20, 1995, the court found that the defendants’ actions were deliberate, 
repeated, and numerous; that the violations produced substantial benefits to the defendants; 
and that the conduct constituted violations of Lanocha’s professional responsibilities.

Accordingly, the court imposed civil penalties of $500,000 on Smith and NFS and $50,000 
on Lanocha.

II. Summary Judgment

[1] The defendants contend that they were entitled to a jury trial to resolve disputed 
issues of material fact regarding whether their notices improperly threatened debtors under 
§§ 1692e(5) and (10), and whether the debt validation notices were effectively conveyed 
under § 1692g. We review the district court’s grant of summary judgment de novo. 
Pittman v. Nelms, 87 F.3d 116, 118 (4th Cir.1996). Summary judgments are appropriate 
in those cases where there is no genuine dispute as to a material fact and it appears that 
the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes 
v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). On 
summary judgment, any permissible inferences to be drawn from the underlying facts must

A-4 -



be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. 
Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 
L.Ed.2d 538 (1986). However, where the record taken as a whole could not lead a rational 
trier of fact to find for the non-moving party, disposition by summary judgment is 
appropriate. Id. at 587, 106 S.Ct. at 1356; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 
248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986).

A. 15 U.S.C. §§ 1692e(5), (10)

[2][3] The FDCPA protects consumers from abusive and deceptive practices by debt 
collectors, and protects non-abusive debt collectors from competitive disadvantage. 15 
U.S.C. § 1692e. Section 1692e forbids the use of "any false, deceptive, or misleading 
representation or means" in debt collection, and provides a non-exhaustive list of prohibited 
conduct, including:

(5) The threat to take any action that cannot legally be taken or that is not 
intended to be taken.

*  *  *

*4 (10) The use of any false representation or deceptive means to collect 
or attempt to collect any debt or to obtain information concerning a 
consumer.

Thus, collection notices violate § 1692e(5) if (1) a debtor would reasonably believe that 
the notices threaten legal action; and (2) the debt collector does not intend to take legal 
action. Most courts that have considered the issue have applied a "least sophisticated 
debtor" standard in evaluating violations of § 1692e(5). See Russell v. Equifax A.R.S., 74 
F.3d 30. 34 (2nd Cir.1996); Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1028 (6th 
Cir.1992); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.1991); Jeter v. Credit Bureau, 
760 F.2d 1168, 1172-75 (11th Cir.1985) (deciding that Congress intended FDCPA to apply 
same standard as FTC Act, which was enacted to protect unsophisticated consumers, not 
only reasonable consumers who could otherwise protect themselves in the market place); 
Baker v. G.C. Services Corp., 677 F.2d 775, 778 (9th Cir.1982); Dutton v. Wolhar, 809 
F.Supp. 1130, 1141 (D.Del.1992) (applying least sophisticated debtor standard to section 
1692e(10) claim); Wright v. Credit Bureau of Georgia, Inc., 555 F.Supp. 1005, 1007 
(N.D.Ga.1983) (adopting "least sophisticated" reader test of the FTCA rather than the 
"reasonable consumer" test developed under the Truth in Lending Act); Bingham v. 
Collection Bureau, Inc., 505 F.Supp. 864, 870 (D.N.D.1981) (least sophisticated reader); 
see also Bustamante v. First Fed. Sav. & Loan Ass’n, 619 F.2d 360, 364 (5th Cir.1980) 
(applying "reasonable consumer" standard includes protection for the "unsophisticated or 
uneducated consumer"). But see Swanson v. Southern Oregon Credit Service, Inc., 869 
F.2d 1222, 1227 (9th Cir.1988); Blackwell v. Professional Business Services, of Georgia, Inc., 
526 F.Supp. 535, 538 (N.D.Ga.1981) (applying "reasonable consumer" test).

A-5 -



In the instant case, the district court preferred the "least sophisticated debtor" standard. 
[FN1] As the Second Circuit has explained, evaluating debt collection practices with an eye 
to the "least sophisticated consumer" comports with basic consumer-protection principles: 
The basic purpose of the least-sophisticated-consumer standard is to ensure that the 
FDCPA protects all consumers, the gullible as well as the shrewd. This standard is 
consistent with the norms that courts have traditionally applied in consumer-protection law. 
More than fifty years ago, the Supreme Court noted that,

[t]he fact that a false statement may be obviously false to those who are 
trained and experienced does not change its character, nor take away its 
power to deceive others less experienced. There is no duty resting upon a 
citizen to suspect the honesty of those with whom he transacts business.
Laws are made to protect the trusting as well as the suspicious.

*5 Clomon v. Jackson, 988 F.2d 1314, 1318 (2nd Cir.1993) (quoting Federal Trade 
Commission v. Standard Education Society, 302 U.S. 112, 116, 58 S.Ct. 113, 115, 82 L.Ed. 
141 (1937)). While protecting naive consumers, the standard also prevents liability for 
bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of 
reasonableness and presuming a basic level of understanding and willingness to read with 
care. Id. at 1319.

The district court first examined the collection notices to assess whether they threatened 
legal action. Looking at the NFS notices, the district court found that both a reasonable 
and the "least sophisticated" debtor would perceive the language, "YOUR ACCOUNT 
WILL BE TRANSFERRED TO AN ATTORNEY IF IT IS UNPAID AFTER THE 
DEADLINE DATE," to mean that the account would receive different treatment from an 
attorney than it did from NFS. Because to most consumers, the relevant distinction 
between a collection agency and an attorney is the ability to sue, the court reasoned that 
the debtor would understand the disparate treatment to be the institution of suit. Similarly, 
the court found that the language, "remember your attorney will want to be paid," implies 
that the consumer will need a lawyer to defend himself or herself against a debt collection 
law suit.

Turning to the Lanocha letterhead notices, the district court concluded that they also 
threatened legal action.

The court further found that NFS and Smith had no intention of taking legal action at 
the time the notices were sent, because NFS had no internal procedure to get authorization 
to file suit. "In fact," the court found, based on Smith’s testimony, "NFS repeatedly 
conveyed its belief in the impracticality of filing suit when pressed by AFP to do so." 
Although there occurred some discussion with AFP regarding the general merits and 
mechanics of instituting legal actions, such conversations never concerned any particular 
debtor. Thus, the district court concluded that NFS’s notices violated section 1692e(5) of 
the FDCPA.

A-6 -



Similarly, the court further found that Lanocha did not intend to take legal action against 
any debtor who received one of his letters. Lanocha had filed no lawsuits during the period 
of time covered by this lawsuit. [FN2] Although Lanocha had had discussions with AFP 
regarding the mechanics of suing on a large-scale, and actually investigated various state 
small-claims procedures, Lanocha admitted that he had concluded that such an endeavor 
was not feasible. No evidence showed that Lanocha discussed with AFP which accounts 
warranted legal action. Thus, the district court concluded that Lanocha’s letter also 
violated section 1692e(5) of the FDCPA.

On appeal, the defendants argue that their notices did not threaten legal action because 
they never state that a suit "will be" filed, or "is going to be" filed. All of their statements 
were open to interpretation, they contend. With regard to the NFS notices, they argue, for 
example, that referring a matter to an attorney does not necessarily imply that a legal 
action will be filed, but merely implies that the lawyer will consider whether to institute a 
proceeding against a consumer. [FN3] The defendants aver that a reasonable consumer 
might conclude that he would not be sued because of the small balance involved. [FN4] 
Concerning the statement, "remember your attorney will want to be paid," the defendants 
assert that they simply stated an irrefutable fact: a debtor weighing the risks of nonpayment 
may need to consult counsel, who will charge a fee. And if the debtor is sued, he or she 
will incur legal fees. While the defendants are literally correct, we do not believe that any 
consumer could reasonably believe that NFS intended to provide a public service by 
informing him about the basic functions and fee requirements of attorneys.

*6 [4] With regard to the Lanocha letters, the defendants argue that they never say that 
a suit "will be" filed, or "is going to be" filed, but simply that Lanocha had the authority to 
do so. Their argument continues, he simply states that he will "consider" bringing a suit, 
not that he will do so. The statement, "only your immediate payment will stop further legal 
action," was used by Lanocha only after AFP advised him that it wanted to sue all the 
debtors across the country. And Lanocha’s statements that, "I have filed suits ..." and "I will 
consider the use of legal remedies ..." were merely factual statements of the common tasks 
performed by attorneys. Based on these assertions, they contend that this disagreement as 
to the meaning of the language of the notices is a question of fact for the jury. We 
disagree. The letters connote that a real attorney, acting like an attorney, has considered 
the debtor’s file and concluded in his professional judgment that the debtor is a candidate 
for legal action. Using the attorney language conveys authority, instills fear in the debtor, 
and escalates the consequences. [FN5]

The defendants also insist that the letters were sent with the intention of bringing suit. 
They protest that NFS was simply a conduit for the desires of its client, and that it 
reasonably believed that AFP might take legal action against the debtors. AFP repeatedly 
stated its desire to sue the delinquent customers. Discussions between AFP and Smith and 
AFP and Lanocha concerned filing thousands of lawsuits. At one point, AFP indicated that 
it intended to sue all of the debtors. The defendants concede that NFS never intended to 
file suit, and indeed could not file suit against AFP’s debtors. But the defendants argue

A-7 -



that NFS was merely conveying the intentions of its client, AFP. A jury could reasonably 
conclude, the argument runs, that NFS reasonably believed that lawsuits might be instituted 
if the account was turned over to Lanocha. Similarly, the defendants aver that a jury could 
reasonably find that Lanocha believed that AFP intended to file suit against some or all of 
its debtors, because he had discussions with AFP regarding the mechanics of filing suits on 
small balances in various states.

The fact that Lanocha filed 15 suits in 1984 (before the period covered by this lawsuit) 
means nothing in the context of the literally millions of notices sent out for years afterward. 
Lanocha had no real involvement with sending the letters. He never reviewed the files and 
he wasn’t involved in deciding when or to whom letters were sent. He exercised no 
judgment with regard to the files, he didn’t see the letters, didn’t sign them, and didn’t even 
know their identities. Likewise, even if Lanocha tossed around the idea with AFP of 
singling out some debtors for suit in particular regions in order to make examples out of 
them, there is no evidence that a determination to sue was actually made or even 
considered with regard to any of the millions of customers who received the N. Frank 
Lanocha correspondence. And even if it were remotely credible that AFP intended to sue 
every debtor, there is no evidence that AFP ever took any step toward that goal. An 
inchoate "intention" to someday sue "all debtors" cannot establish blanket justification for 
six years of sending millions of threatening letters. There must be a particularized intention 
to sue a particular debtor if he or she does not pay.

*7 Smith knew that filing lawsuits was not viable, and knew that neither NFS, nor 
Lanocha, nor AFP would in fact file lawsuits against the customers receiving the notices. 
Likewise. Lanocha knew that filing suit would be impracticable and burdensome. He knew 
that AFP had no intention, because he in fact filed no suits.

With these arguments, the defendants ask this court to adopt a hyper-literal approach 
which ignores the ordinary connotations and implications of language as it is used in the 
real world. We decline to do so. We concur with the district court’s analysis of the 
notices, and conclude that the defendants’ notices threatened to take legal action which 
they had no intention of taking, in violation of § 1692e(5). No reasonable juror could 
conclude that those statements were not meant to make debtors fear that they would be 
sued. To find otherwise would undermine the consumer protection goals of the statute and 
permit debt collectors to get away with accomplishing the threat under the flimsy disguise 
of "statements of fact." As we have said before in the context of § 1692g, "[tjhere are 
numerous and ingenious ways of circumventing [the law] under a cover of technical 
compliance. [The defendants have] devised one such way, and we think that to uphold it 
would strip the statute of its meaning." Miller v. Payco-General American Credits, Inc., 943 
F.2d 482, 485 (4th Cir. 1991). Here, we have an obvious intention to make debtors afraid 
that they would be sued, an effective tactic no doubt, but one which violates the law.

[5][6][7] Because we concur with the district court’s finding that the notices falsely 
threatened legal action, we concur with the court’s conclusion that the defendants also

A-8 -



violated § 1692e(10), which prohibits "the use of any false representation or deceptive 
means to collect or attempt to collect any debt...." Courts have consistently found that 
falsely representing that unpaid debts would be referred to an attorney for immediate legal 
action is a deceptive practice. Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1175 (11th 
Cir.1985). Reference to an attorney in a letter to a debtor is a false threat of suit where 
the attorney has not been retained to collect a particular debt and has reached no 
determination that a suit would be filed if payment is not made. Masuda v. Thomas 
Richards & Co., 759 F.Supp. 1456, 1459-61 (C.D.Cal.1991). The false representation that 
a lawyer may be called in may unjustifiably frighten an unsophisticated consumer into 
paying a debt that he or she does not owe. Id. Of course, the test is the capacity of the 
statement to mislead; evidence of actual deception is unnecessary. The district court 
considered the impact of the defendants’ notices on the "least sophisticated consumers," and 
correctly concluded that the false threats that legal action would be taken also violated § 
1692e(10).

B. § 1692g

*8 [8] Section 1692g requires a debt collector to provide, in its initial communication with 
a consumer or within five days of that time, a debt validation notice informing the 
consumer of his or her right to dispute the validity of the debt. The statute requires the 
written notice to include, among other information:

a statement that unless the consumer, within thirty days after receipt of the 
notice, disputes the validity of the debt, or any portion thereof, the debt will 
be assumed to be valid by the debt collector.

15 U.S.C. § 1692g(a)(3). To be adequate, the "validation notice" must be placed in such 
a way to be easily readable, and must be prominent enough to be noticed by an 
unsophisticated consumer. The notice also must not be overshadowed or contradicted by 
other messages. The district court held that the NFS deadline notice and two of the 
Lanocha letterhead notices, [FN6] violated § 1692g(a) because they either demanded 
payment in ten days, or demanded "immediate payment." The deadlines-generally ten days 
from the date of the notice-conflicted with the thirty days allowed in the validation notice 
itself, which was printed on the back of the form. The court also noted that the bold 
commanding type of the dunning text overshadowed the smaller, less visible, validation 
notice printed on the back in small type and light grey ink.

The district court’s decision was compelled by Miller v. Payco-General American Credits, 
Inc., 943 F.2d at 484.

The defendants raise no issue of fact concerning the district court’s determination that 
the conflicting time requirements in the text of the notice and the validation notice violate 
the Act.

A-9 -



III. Civil Penalties

[9] The FDCPA provides for enforcement as though it were an FTC rule. 15 U.S.C. § 
16921(a). Thus FDCPA violations can be punished under the Federal Trade Commission 
Act, which provides that the Government may impose civil penalties of up to $10,000 per 
each violation on

any person, partnership or corporation which violates any [ ] rule ... with 
actual knowledge or knowledge fairly implied on the basis of objective 
circumstances that such act is unfair or deceptive and is prohibited by such 
rule.

15 U.S.C. § 45(m)(l)(A). The United States sought civil penalties totalling $1,500,000.

The defendants argue that they had no actual notice that the precise language they were 
using violated the FDCPA. Whether a defendant has violated a rule with actual or implied 
knowledge is based on objective factors. A defendant is responsible where a reasonable 
person under the circumstances would have known of the existence of the provision and 
that the action charged violated that provision. S.Rep. No. 1408, 93rd Cong., 2nd Sess. 4, 
1974 U.S.C.C.A.N. 1772. It is undisputed that the defendants were aware of the relevant 
provisions of the FDCPA and had extensive interaction with the FTC concerning how to 
comply with it.

The defendants argue that they were entitled to a jury trial on "the disputed question of 
their state of mind." Smith testified that he did not believe that the notices violated the 
Act. The defendants concede they knew that the FDCPA prohibited threats of legal action 
not intended to be taken, but claim that they honestly believed that the NFS letters were 
compliant, and believed that AFP intended to take legal action. Smith submitted an 
affidavit attesting that the FTC saw "nothing wrong" with his notices. The FTC did not 
inform them that the letters violated the Act until three years after the investigation began. 
Similarly, the defendants argue that there is a genuine issue of material fact about whether 
Lanocha knowingly violated the Act, and they assert that he honestly believed that his 
notices accurately reflected AFP’s intentions. *9 [10] Civil penalty assessments are 
reviewed for abuse of discretion. United States v. Reader’s Digest Ass’n, 662 F.2d 955, 969 
(3d Cir. 1981). The district court considered: (1) the good or bad faith of the defendants, 
(2) the injury to the public, (3) the defendants’ ability to pay, (4) the benefits derived from 
the violations, and (5) the necessity of vindicating the authority of the FTC. F.T.C. v. 
Hughes, 710 F.Supp. 1524, 1529 (N.D.Tex.1989).

Addressing the defendants’ good faith, the district court found that the defendants’ 
actions were knowing and deliberate. They engaged in multiple violations over many years, 
knowing that the Act prohibits threats of legal action not intended to be taken. Lanocha 
admitted that he concluded that a plan to sue all the AFP debtors would be too 
burdensome, and Smith testified that he was aware of the economic impracticality of filing

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suit. The defendants contend that there is abundant evidence of their good faith, including 
consulting an attorney to ensure their compliance, cooperating with the FTC, compliance 
with industry standards concerning the validation notices, and relying on the statements by 
AFP’s vice-president that AFP intended to file suit against every debtor.

[11] Turning to injury to the public, the government need not prove actual harm to 
consumers in order to assess penalties. United States v. Reader’s Digest Ass’n Inc., 494 
F.Supp. 770 (D.Del.1980), affd, 662 F.2d 955 (3d Cir.1981), cert, denied, 455 U.S. 908, 102 
S.Ct. 1253, 71 L.Ed.2d 446 (1982). Threats of legal action are likely to be intimidating to 
consumers, and cause distress and anxiety. Stress resulting from false threats of suit has 
been recognized as a compensable injury in private suits under the FDCPA. See e.g., 
Carrigan v. Central Adjustment Bureau, 502 F.Supp. 468 (N.D.Ga.1980). Consumers might 
elect to pay a debt that they do not owe in order to avoid the threatened lawsuit. The 
court concluded that the millions of notices sent out bearing the violative language caused 
significant injury to the public. Injury also could result from the failure to supply proper 
validation notices adequately advising of the right to challenge a debt. The government 
submitted evidence establishing that the defendants sent out millions of notices containing 
the offending language, including the records of UARCO, a printing company that supplied 
NFS with many of its debt collection forms, and the declaration of David Dammen, 
UARCO’s district manager. (J.A. 808). From UARCO, NFS purchased nearly 3,000,000 
NFS deadline notice forms pre-printed with language the district court found violated the 
FDCPA, and from 1986 to 1990, it purchased more than 9,000,000 Lanocha Letterhead 
forms. The government also submitted AFP performance data indicating that NFS mailed 
millions of notices to consumers whose names were supplied by AFP. (J.A. 771). These 
figures, which were not disputed by defendants, do not include notices mailed to consumers 
on other accounts. (J.A. 1149, 1155-58, 1161, 1164-65). The defendants submitted no 
documentation of how many collection notices were sent and did not challenge UARCO’s 
records. In response to government requests for actual figures regarding the number of 
notices sent, Smith and Lanocha provided nothing. Their failure to rebut creates an 
adverse inference. Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.1995).

*10 Turning to the benefits received by the defendants, the defendants assert that it is 
"unclear" how much income each defendant earned from the AFP- related collection 
activities. But they offered no declarations or documents to establish the amounts of 
income each received.

The FTC Act authorizes a civil penalty of up to $10,000 for each violation of the FDCPA. 
A separate violation occurs every time a prohibited threat or misrepresentation is made, 
or each time the required validation notice is not provided. Thus, each of the millions of 
collection letters that threatened suit was a separate violation of 15 U.S.C. §§ 1692e(5) and 
(10), and each letter with a defective validation notice was a separate violation of § 1692g. 
The government requested a penalty of at least $1,500,000. In light of the millions of 
accounts involved, and the fact that most accounts received more than one letter, the 
district court would have been within its discretion to impose penalties far greater than

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$550,000. Although the penalty was larger than in most other FDCPA cases, the large 
scale of the violations justifies the penalty. Without a real sting, the defendants would be 
unlikely to be deterred from violating the Act, in light of the substantial profit to be made 
using aggressive and improper collection practices.

IV.

The district court was correct in finding that the defendants were guilty of violating the 
applicable laws and did not abuse its discretion in awarding civil penalties in the amounts 
imposed upon NFS, Smith, and Lanocha. Accordingly, the decision of the district court is

AFFIRMED.

FN1. However, the court also found that the appellants’ notices violated the FDCPA 
when viewed under a slightly higher, "reasonable debtor" standard.

FN2. Lanocha filed actions against fifteen debtors in 1984, but was unable to recall 
whether they resulted in payment.

FN3. Throughout their brief, the defendants seem to argue that they did not threaten 
to sue, rather they threatened to consider to sue. In light of the fact that no suit was ever 
filed, and Lanocha never reviewed any file, that threat was also false.

FN4. This argument does not help the defendants, because it implies that although a 
suit was threatened, a consumer might disregard it in realization that the small balance 
makes a suit unlikely. In fact, some of the language in the Lanocha letters seems to be 
aimed at preventing that reasonable conclusion. For example, "I have filed suits and 
obtained judgments on small balance accounts just like yours."

FN5. Because we affirm the district court’s finding that Lanocha violated § 1692e(5) 
and (10), we do not address the alternative ground that he violated § 1692e(3), which 
prohibits "[t]he false representation or implication that any individual is an attorney or that 
any communication is from an attorney." See Avila v. Rubin, 84 F.3d 222 (7th Cir.1996) 
(holding that mass-produced dunning letters bearing facsimile of attorney’s signature 
created false and misleading impression that communications were "from" attorney); 
Clomon v. Jackson, 988 F.2d 1314 (2d Cir.1993) (where attorney had no direct personal 
involvement in the mailing of collection letters, use of his letterhead and facsimile of his 
signature violated the FDCPA).

FN6. The district court denied the government’s motion for summary judgment with 
regard to certain other of the Lanocha letters, which the court found did not contain the 
contradictory language and misleading type disparity.

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