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524278-3519

BEER, District Judge. Alken-Ziegler, Incorporated, (Company) appeals from the district court’s grant of summary judgment affirming an arbitration award in favor of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and Local Union 985 (Union). For the following reasons, we find that, even in light of our deferential review, the arbitrator disregarded the provisions of the labor contract. Therefore, we reverse the district court’s decision and vacate the arbitration award. I The Company and the Union were parties to a labor contract effective December 15, 1999. In March, 2001, the Company notified the Union that it would be closing its Novi plant and that it would be necessary to terminate all of the employees at the facility. As a result of the plant closing on October 17, 2001, all but one employee was terminated during the calendar year, 2001. The Company refused to pay vacationpay benefits to employees who did not work for the Company on January 1, 2002. The Union filed a grievance. Article 16 (61) of the labor agreement sets forth the eligibility requirement for payment of vacation benefits: (a) Employees shall be eligible for vacations, time off and vacation pay as set forth below. (b) For purposes of eligibility, the vacation year will be considered the calendar year period from January 1st to December 31. (c) An employee covered by the agreement who is actually working on January 1st of any year and who has at least six (6) months seniority and has' worked at least eight hundred (800) hours from and after January 1st of the previous year shall be paid the equivalent of two-and-one half (2-1/2) days vacation pay. ijs ifc tjc % (f) Employees with twelve (12) months or more of seniority who have worked more than eight hundred (800) hours, but less than sixteen hundred (1600) hours, during the vacation year, shall receive a pro-rated vacation pay on the basis of the ratio of their actual hours to sixteen hundred (1600) hours, but not to exceed the full vacation pay to which they were entitled by reason of their seniority and hours worked as set forth above. (g) Vacation pay will be computed on a straight time forty (40) hour basis including applicable shift premium. The employee’s hour basis including applicable shift premium. The employee’s hourly rate in effect when vacation is taken will be used to compute vacation pay. If an employee is laid off after six (6) months service, their vacation pay will be pro-rated same as above. Pursuant to Article 5 of the labor contract, the parties arbitrated the grievance. At the arbitration the Union asserted that because it was not the employees’ fault that they were unable to work the full year, the employees were entitled to their vacation pay. The arbitrator granted the grievance, allowing all plaintiffs, who, but for being laid off, would have been able to continue employment and thereby qualify for vacation benefits. The arbitrator reasoned that “[i]t would be unreasonable to cause such forfeitures particularly where an employee has no control over the situation.” The Company filed a complaint in the district court asserting that the arbitrator’s award contradicted the clear, mandatory commands of the labor contract, which required that an employee be “actually working” for the Company as of January 1, 2002, to receive vacation pay. The district court granted the Union’s motion for summary judgment and upheld the arbitrator’s award. The Company appealed. II

3088069-19872

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge TRAXLER and Senior Judge WILLIAMS joined. OPINION WILKINSON, Circuit Judge: The plaintiff in this case alleges that defendant fiduciaries breached their duty to him by failing to implement the investment strategy he had selected for his em ployee retirement account. Relying on two separate provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1132(a)(2) and 1132(a)(3) (2000), he seeks recovery of the amount by which his account would have appreciated had defendants followed his instructions. The district court concluded that his complaint did not request a form of relief available under ERISA, and it therefore granted defendants’ motion for judgment on the pleadings. We affirm. Section 1132(a)(2) provides remedies only for entire plans, not for individuals. And while § 1132(a)(3) does in some cases furnish individualized remedies, the Supreme Court’s decisions in Mertens v. Hewitt Associates, 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), and Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), compel the conclusion that it does not supply one here. Plaintiff has alleged no unjust enrichment, unlawful possession, or self-dealing on the part of defendants, and the remedy he seeks falls outside the scope of the “equitable relief’ that § 1132(a)(3) authorizes. I. DeWolff, Boberg & Associates, Inc. is a nationwide management consulting firm organized under the laws of South Carolina. It administers, and is thus a fiduciary of, an ERISA-regulated 401(k) retirement savings plan in which its current and former employees participate. The plan permits participants who so desire to manage their own accounts by selecting from a menu of various investment options. Plaintiff James LaRue has participated in this 401(k) plan since 1993. He alleges that in 2001 and 2002, he directed DeWolff to make certain changes to the investments in his plan account, but that these directions were never carried out. In 2004, he brought suit against DeWolff and the plan, claiming that this omission amounted to a breach of fiduciary duty. According to the complaint, his “interest in the plan ha[d] been depleted approximately $150,000.00” as a result of defendants’ failure to follow his instructions. To recover for this loss, the complaint sought “appropriate ‘make whole’ or other equitable relief pursuant to [29 U.S.C. § 1132(a)(3)].” Defendants subsequently filed a Rule 12(c) motion for judgment on the pleadings, contending that plaintiffs requested remedy was not available under § 1132(a)(3). The district court agreed, and thereafter dismissed the case with prejudice. Plaintiff appeals. We review de novo a district court’s decision to grant judgment on the pleadings. See Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir.2002). II. In enacting ERISA, Congress sought to uniformly regulate the wide universe of employee benefit plans. See Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). A salient feature of this effort was the careful delineation of civil remedies available to litigants seeking to enforce their rights under such plans. See id. at 208-09, 124 S.Ct. 2488. Congress broadly preempted previously available state-law causes of action, see 29 U.S.C. § 1144(a), and set forth in a single section of ERISA the exclusive list of civil actions available to parties aggrieved by a statutory violation, see id. § 1132(a); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). Section 1132(a) stops short of providing ERISA complainants with a full arsenal of relief. ERISA is “an enormously complex and detailed statute that resolve[s] innumerable disputes between powerful competing interests&emdash;not all in favor of potential plaintiffs.” Mertens v. Hewitt Assocs., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). Its civil enforcement provision in particular attempts to settle “a tension between the primary ERISA goal of benefiting employees and the subsidiary goal of containing pension costs.” Id. at 262-63, 113 S.Ct. 2063 (internal quotation marks and alterations omitted). Congress has consequently made various “policy choices” resulting in “the inclusion of certain remedies and the exclusion of others.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). Interpretation of § 1132(a) is therefore no easy task. As the Supreme Court’s ERISA decisions have repeatedly cautioned, “vague notions of a statute’s ‘basic purpose’ are ... inadequate to overcome the words of its text regarding the specific issue under consideration.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 220, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (internal quotation marks omitted); Mertens, 508 U.S. at 261, 113 S.Ct. 2063 (same). Section 1132(a) represents an “interlocking, interrelated, and interdependent remedial scheme” that “provide [s] strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). With these constraints in mind, we consider whether the statute’s text provides the particular relief at issue here. III. Plaintiff first suggests that remuneration of his plan account finds express authorization in the text of 29 U.S.C. § 1132(a)(2). That subsection allows for a civil action “by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title.” Section 1109, in turn, provides that [a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this sub-chapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate.... 29 U.S.C. § 1109(a). Plaintiffs argument regarding the applicability of § 1132(a)(2) is made for the first time on appeal. Even if the argument were not therefore waived, see, e.g., Jones v. Liberty Mut. Ins. Co. (In re Wallace & Gale Co.), 385 F.3d 820, 835 (4th Cir.2004), he could not succeed on the merits. Recovery under this subsection must “inure[ ] to the benefit of the plan as a whole,” not to particular persons with rights under the plan. Russell, 473 U.S. at 140, 105 S.Ct. 3085 (emphasis added); see also Coyne & Delany Co. v. Blue Cross & Blue Shield of Va., Inc., 102 F.3d 712, 714 (4th Cir.1996). “A fair contextual reading of the statute makes it abundantly clear that its draftsmen were primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than with the rights of an individual beneficiary.” Russell, 473 U.S. at 142, 105 S.Ct. 3085 (footnote omitted). It is difficult to characterize the remedy plaintiff seeks as anything other than personal. He desires recovery to be paid into his plan account, an instrument that exists specifically for his benefit. The measure of that recovery is a loss suffered by him alone. And that loss itself allegedly arose as the result of defendants’ failure to follow plaintiffs own particular instructions, thereby breaching a duty owed solely to him. We are therefore skeptical that plaintiffs individual remedial interest can serve as a legitimate proxy for the plan in its entirety, as § 1132(a)(2) requires. To be sure, the recovery plaintiff seeks could be seen as accruing tp the plan in the narrow sense that it would be paid into plaintiffs personal plan account, which is part of the plan. But such a view finds no license in the statutory text, and threatens to undermine the careful limitations Congress has placed on the scope of ERISA relief. This case is much different from a § 1132(a)(2) action in which an individual plaintiff sues on behalf of the plan itself or on behalf of a class of similarly situated participants. See Smith v. Sydnor, 184 F.3d 356, 363 (4th Cir.1999); see also In re Schering-Plough Corp. ERISA Litig., 420 F.3d 231, 233, 235 (3d Cir.2005); Kuper v. Iovenko, 66 F.3d 1447, 1452-53 (6th Cir.1995). In such a case, the “remedy will undoubtedly benefit [the plaintiff] and other participants in the [p]lan,” but “it does not solely benefit the individual participants.” Smith, 184 F.3d at 363 (emphasis added); see also Roth v. Sawyer-Cleator Lumber Co., 61 F.3d 599, 605 (8th Cir.1995) (permitting recovery for losses to the plan but not losses to the individual plaintiff beneficiaries for defendants’ alleged breach of fiduciary duty). Here, by contrast, plaintiff seeks to particularize the recovery to himself. Section 1132(a)(2) is not a proper avenue for him to obtain such relief. rv. We thus turn to plaintiffs second theory of relief, which relies on a different ERISA remedial provision, 29 U.S.C. § 1132(a)(3). That section authorizes a civil action by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. Plaintiff contends that the “make whole” relief he seeks constitutes one of the forms of “other appropriate equitable relief’ that the provision authorizes. A. In construing the scope of § 1132(a)(3), the Supreme Court has stressed that the term “equitable” is one of limitation. In Mertens v. Hewitt Associates, the Court held that the phrase “equitable relief’ refers only to “those categories of relief that were typically available in equity” in the days of the divided bench. 508 U.S. at 256, 113 S.Ct. 2063; see also Sereboff v. Mid Atl. Med. Servs., Inc., — U.S.-,-, 126 S.Ct. 1869, 1873, 164 L.Ed.2d 612,- (2006). The Court reasoned that other sections of ERISA expressly refer to “equitable or remedial relief,” 29 U.S.C. § 1109(a), and “legal or equitable relief,” e.g., id. § 1132(g)(2)(E), thereby demonstrating that “equitable relief’ connotes only a subset of the full palliative spectrum. See Mertens, 508 U.S. at 258, 113 S.Ct. 2063. The Court refused to “read the statute to render the modifier superfluous,” id., a construction that would undermine Congress’s exclusive remedial scheme by opening a back door through which uninvited remedies might enter, id. at 257, 113 S.Ct. 2063. The particular definition of “equitable” that the Court has adopted finds support in a well-known principle of statutory construction. “The maxim noscitur a sociis, that a word is known by the company it keeps, while not an inescapable rule, is often wisely applied where a word is capable of many meanings in order to avoid the giving of unintended breadth to the Acts of Congress.” Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307, 81 S.Ct. 1579, 6 L.Ed.2d 859 (1961). Section 1132(a)(3) expressly mentions the right to “enjoin” certain acts or practices “or ... to obtain other appropriate equitable relief’ (emphasis added). The understanding of what “equitable” means in this context is necessarily informed by its association with injunctive relief, the quintessential exemplar of a remedy that equity alone would typically provide. Determining the applicability of § 1132(a)(3) therefore requires a court to examine whether the form of relief a plaintiff seeks is, like an injunction, historically one that a court of equity rather than a court of law would have granted. See Sereboff, 126 S.Ct. at 1874. The Supreme Court has, in addition to injunctions, listed mandamus and restitution as examples of traditional equitable remedies. See Mertens, 508 U.S. at 256, 113 S.Ct. 2063. Subsequent decisions of both the Supreme Court and this court have been wary of expanding the list beyond these archetypes and them closely related kin. See, e.g. Varity Corp. v. Howe, 516 U.S. 489, 495, 515, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (reinstatement to a plan); Griggs v. E.I. Dupont de Nemours & Co., 385 F.3d 440, 449 (4th Cir.2004) (rescission); Denny’s, Inc. v. Cake, 364 F.3d 521, 526 n. 6 (4th Cir.2004) (declaratory relief incident to an injunction). B. Mertens and its progeny compel the conclusion that the remedy plaintiff desires falls outside the scope of § 1132(a)(3). As in Mertens, although he “often dance[s] around the word,” what plaintiff “in fact seek[s] is nothing other than compensatory damages — monetary relief for all losses ... sustained as a result of the alleged breach of fiduciary duties.” 508 U.S. at 255, 113 S.Ct. 2063. “Money damages are, of course, the classic form of legal relief,” id., and have therefore remained conspicuously absent from the list of traditional equitable remedies available under § 1132(a)(3), id. at 256. While that list does include “restitution,” id., this form of recovery is not so broad as to include the compensatory relief that plaintiff seeks. As the Supreme Court explained in Great-West Life & Annuity Insurance Co. v. Knudson, “not all relief falling under the rubric of restitution is available in equity.” 534 U.S. at 212, 122 S.Ct. 708. In particular, “for restitution to lie in equity,” as opposed to at law, “the action generally must seek not to impose personal liability on the defendant, but to restore to the plaintiff particular funds or property in the defendant’s possession.” Id. at 214, 122 S.Ct. 708; see also id. at 214, 122 S.Ct. 708 n. 2 (noting a single “limited exception” applicable to “an accounting of profits”). The Supreme Court’s most recent § 1132(a)(3) decisions demonstrate how the absence of unjust possession is fatal to an equitable restitution claim. In Knudson, the Court denied a restitutionary remedy under § 1132(a)(3) where “ ‘the funds to which petitioners claimed an entitlement’ were not in Knudson’s possession, but had instead been placed in a ‘Special Needs Trust’ under California law.” Sereboff, 126 S.Ct. at 1874 (quoting Knudson, 534 U.S. at 207, 214, 122 S.Ct. 708) (internal alterations omitted). More recently in Sereboff v. Mid Atlantic Medical Services, Inc., the Court allowed a claim for equita ble restitution to proceed where “Mid Atlantic sought specifically identifiable funds that were within the possession and control of the Sereboffs.” Id. (internal quotation marks omitted). The Court in Sere-boff reaffirmed the possession requirement it had announced in Knudson, but found that the “impediment to characterizing the relief in Knudson as equitable [was] not present” in the Sereboffs’ case. Id. The impediment is, however, present in this case, and it precludes plaintiff from recovering under an equitable restitution theory. Plaintiff does not allege that funds owed to him are in defendants’ possession, but instead that these funds never materialized at all. He therefore gauges his recovery not by the value of defendants’ nonexistent gain, but by the value of his own loss — a measure that is traditionally legal, not equitable. See, e.g., Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 944 (8th Cir.1999); see also Sereboff, 126 S.Ct. at 1874 (claim may be characterized as legal if plaintiff does not “seek to recover a particular fund from the defendant”). Thus, at core, he seeks “to obtain a judgment imposing a merely personal liability upon the defendants] to pay a sum of money.” Knudson, 534 U.S. at 213, 122 S.Ct. 708 (internal quotation marks omitted). As Knudson explained, historically “[s]uch claims were viewed essentially as actions at law,” and they are therefore unavailable under § 1132(a)(3). Id. C. Plaintiff attempts to avoid this conclusion by arguing that his requested “make whole” relief represents something entirely different from the types of remedies that we or the Supreme Court have hereto-fore considered in the context of § 1132(a)(3). In particular, he emphasizes that this case involves a situation where a participant or beneficiary is suing a fiduciary for a breach of fiduciary duty. In his view, the scope of “equitable” remedies available in such a case is broader than when a fiduciary sues a beneficiary (as was the case in Knudson and Sereboff) or when a beneficiary sues a non-fiduciary (as was the case in Mertens). Unlike either of those scenarios, the argument goes, this case can be analogized to a common law breach-of-trust action by a beneficiary seeking to recover lost trust profits, a remedy that trust treatises have labeled “equitable.” See Restatement (Second) of Trusts §§ 197, 205(c) (1959); see also George Gleason Bogert & George Taylor Bogert, The Law of Trusts & Trustees § 861 (rev.2d ed.1995). The governing precedent, however, does not point as plaintiff suggests. In fact, Mertens squarely “rejected the claim that the special equity-court powers applicable to trusts define the reach of [§ 1132(a)(3) ].” Knudson, 534 U.S. at 219, 122 S.Ct. 708; see Mertens, 508 U.S. at 256-57, 113 S.Ct. 2063. While the generally exclusive jurisdiction of equity courts over breach-of-trust suits renders all remedies in such cases “equitable” in the sense that a court of equity has power to grant them, “equitable” in the context of § 1132(a)(3) has a narrower meaning. Mertens, 508 U.S. at 256, 113 S.Ct. 2063. Under Mertens, “the relevant question is ... whether a given type of relief was available in equity courts as a general rule,” Rego v. Westvaco Corp., 319 F.3d 140, 145 (4th Cir.2003) (emphasis added), rather than merely in the context of “the particular case at issue,” Mertens, 508 U.S. at 256, 113 S.Ct. 2063. “Equitable relief’ therefore does not encompass the “many situations — not limited to those involving enforcement of a trust — in which an equity court could,” by virtue of its jurisdiction over the claim at issue, “grant legal remedies which would otherwise be beyond the scope of its authority.” Id. (internal quotation marks omitted). That plaintiff can analogize this suit to a common law breach of trust action therefore proves of no avail in characterizing the relief he seeks as equitable. Plaintiff admits that he lacks support for the notion that “make whole” relief was available in equity outside the context of trusts. It is therefore impossible for us to conclude that such relief “was available in equity courts as a general rule,” Rego, 319 F.3d at 145. The Sixth Circuit has reached a similar conclusion in a case presenting facts nearly identical to those .before us here. In Helfrich v. PNC Bank, Kentucky, Inc., 267 F.3d 477 (6th Cir.2001), a beneficiary of an employee 401(k) plan sued a plan fiduciary for failing to comply with written directions to roll over his assets into a specific set of mutual funds. Id. at 479-80. The plaintiff asserted an entitlement to the difference between the “amount he would have earned” had the fiduciary followed his instructions and “the amount he in fact earned” as a result of the fiduciary’s alleged breach of duty. Id. at 480. The court concluded that his requested remedy was unavailable under § 1132(a)(3). Id. at 481-83. It found that the plaintiff could not style his relief as “restitution” when he was measuring recovery by his own losses rather than the defendant’s gains, id. at 482-83, and it rejected a strict congruence between § 1132(a)(3) and the common law of trusts, id. at 482 (citing Mertens, 508 U.S. at 256, 113 S.Ct. 2063). It therefore dismissed the suit because “ERISA does not permit plan beneficiaries to claim money damages from plan fiduciaries.” Id. at 482.

3601688-11825

PER CURIAM: The uncommon crime of looting is at the nub of this appeal. We affirm. Operation Just Cause Airman First Class Manginell was a security policeman at Norton Air Force Base, California. He was selected for temporary duty during Operation Just Cause, a military expedition in Panama against hostile forces loyal to General Manuel Noriega. Manginell was assigned to guard the captured Tocumen International Airport in Panama City. General Noriega’s troops in the area continued to resist. While serving as a night guard to secure a warehouse at Tocumen airport, Manginell appropriated a camera and four watches. At trial, Manginell pleaded guilty to two specifications of looting under Article 103, UCMJ, 10 USC § 903. The prosecution prepared a detailed brief supporting the providence of Manginell’s guilty pleas to looting. After completing his inquiry, the military judge found Manginell guilty in accordance with his pleas . Before us, Manginell argues that looting requires a taking accompanied by force or violence. Since that requirement was missing here, he insists that his conviction must fall. Historical Analysis Looting is a military offense rooted deeply in both the law of chivalry and the law of war. Winthrop calls particular attention to a clearcut prohibition of looting in Article of War XXV of King James II in 1688. His famous treatise also notes American milestones: (1) Brigadier General Wayne’s 1779 capture of Stoney Point—Congress approved the division of captured military stores among “the gallant troops;” (2) 1864 Civil War rewards to militiamen dispersing “bushwhackers”—watches and arms were viewed as trophies; and (3) a long history of prize payments in the United States Navy. See Winthrop, Military Law and Precedents (1920 ed.) 557; see also Dudley, Military Law and the Procedure of Courts-Martial (1915) 333-334. In the 1921 and 1928 Manuals for-Courts-Martial, looting and similar conduct was punishable under Articles of War 79 and 80. Research reveals few cases under those articles. Among them is an opinion crucial to our analysis, United States v. Ruppel, 61 Bd.Rev. 291, 306 (1946). The Board of Review assessed misconduct of an officer in post-war Austria. Reasoning in part from the laws of war, the Board commented that neither force nor violence was necessary to convict of looting. Good arguments can be made that the Ruppel analysis is dicta. Such arguments are academic in light of what occurred next. In the 1951 Manual for Courts-Martial, looting was prohibited by Article 103, a hybrid of old Articles of War 79 and 80. Ruppel is specifically cited in the legislative history for the proposition that looting need not necessarily be accompanied by force or violence. See Legal and Legislative Basis, Manual for Courts-Martial 1951, 262. Despite that language, a 1950’s Air Force benchbook listed “force or violence” as a necessary predicate to prove looting. See Court-Martial Instruction Drafting Guide, Department of the Air Force, Article 103.7 By 1971, however, “force or violence” was neither listed as an element nor defined. See Air Force Manual 111-2, Court-Martial Instructions Guide, Instruction 3-59 (16 October 1971). In contrast, the Army apparently continued to find force or violence an indispensable requirement. See, e.g., DA Pam 27-9, Military Judges’ Guide, Instruction 4-59 (May 1969). That situation remains virtually unchanged in the current Army iteration. See DA Pam 27-9, Military Judges’ Benchbook, Instruction 3-59 (May 1982). The Army Benchbook “may be used as a procedure guide” for Air Force courts-martial. Air Force Regulation 111-1, Military Justice Guide, para. 12-3 (30 September 1988). The 1984 Manual for Courts-Martial fails to mention “force or violence” as either an element or part of the definition of looting. Since 1951, a handful of modern courts-martial have included looting as an incidental offense among others but there has been no solid analysis of that crime. The Manual lists three elements for the sort of looting alleged here: (a) that the accused engaged in the act by unlawfully seizing or appropriating certain property, public or private; (b) that it was located in enemy or occupied territory; and (c) that it was left behind or owned by the enemy, an occupied state, an inhabitant of the occupied state, or the like. See MCM, Part IV, para. 27b(4) (1984). Holding We hold that the appellant was properly convicted of looting. The current Manual for Courts-Martial lists three elements for this crime. They are found here. The definition of “looting,” to mean unlawfully seizing property by force or violence as contained in the Military Judges’ Bench-book, need not be followed; the Benchbook is not mandatory for Air Force trials. Freed of that consideration, we may accept the analysis offered in Ruppel and adopted by those who created the new Article 108. See Legal and Legislative Basis, Manual for Courts-Martial 1951, 262. In addition, the term “looting” is clearly defined at MCM, Part IV para. 27c(4) as “unlawfully seizing or appropriating property.” It was further defined for purposes of this case in the trial counsel’s brief written to show the propriety of accepting the guilty plea: “to carry off as loot or booty.” We thus view this appellant’s guilty plea to looting as intelligent and knowing. He had no quarrel with the Government’s definition of the crime, which we find correct. The approved sentence is a bad conduct discharge, six months confinement, forfeiture of $400.00 per month for six months, and reduction to airman basic. In addition to taking the camera and watches, Manginell was also found guilty (in accord with his pleas) of larceny of a California vehicle registration sticker and a minor dereliction of duty. We think the sentence entirely appropriate ... perhaps even generous. The findings of guilty and the sentence are correct in law and fact and, upon the basis of the entire record, are AFFIRMED. Senior Judge KASTL (dubitante): While we affirm, I am not particularly pacific about the ultimate fairness of the result. Yes, Manginell is technically guilty; but I hold considerable reservations about the situation: I say the “wide-open” Air Force definition of looting fails to distinguish between: (a) minor misconduct such as taking a watch or an enemy handgun as a war trophy; and (b) serious crime, such as an unprincipled use of force or violence so outrageous that it merits a possible maximum sentence of life imprisonment. The decision to prosecute this case as looting fails to rest on a rational standard which separates the serious from the everyday offense. The prosecution convinced the military judge to depart from the Air Force’s usual reliance on DA Pam 27-9, Military Judges’ Benchbook. Instead, the prosecutor turned to the Manual for Courts-Martial discussion. That omits the requirement for “force and violence.” To my mind, such an approach offers the convening authority unlimited discretion to charge larceny or looting. Without articulable standards, it thus leaves to caprice whether one particular accused will face five years and another a life sentence. One might respond that several areas of the law give the Government an election— e.g., assault and aggravated assault; or various degrees of homicide. But such examples are grounded in objective degrees of culpability, measured by relatively clear-cut standards. In contrast, the difference between larceny and looting—if the prosecution argument is correct—is quixotic. In sum, I think the prosecution’s theory sets too low a standard for the Air Force— virtually every appropriation where one can postulate an “enemy” lurking somewhere in the vicinity creates the opportunity to charge looting, with its possible lifetime sentence. Here is a shapeless legal concept which fails to distinguish between the truly egregious and the routine. I would make three further points: 1. We have decided at least three other cases in recent months concerning security policemen who stole while acting as guards during Operation Just Cause. Specific citations are unnecessary; the point is that all the others passed muster as simple larce nies of private property. I see nothing to distinguish today’s case as factually more serious. What logical reason is there to treat similar accuseds in a dissimilar fashion? 2. At the end of the day, a court-martial order should reflect precisely what an accused did, not distort the record. See United States v. Blucker, 30 M.J. 690, 691 (A.C.M.R.1990). Here, others involved with larceny during Operation Just Cause will receive a court-martial order showing they were thieves. Manginell will have an order to inform potential employers that he was guilty of something akin to a war crime. His conduct differs little from the other airmen ... but his record now is facially far more reprehensible. 3. While Manginell’s conduct adds up to “looting” in the Air Force, the definition is chameleonic. In the next contested case, what should a careful military judge do if the accused pleads not guilty and requires the Government to define “looting?” Is the Manual definition all encompassing? Why is the standard different between the Army and the Air Force? The Bouvier, Ballentine, and Black legal dictionaries contain no definition of “looting.” Neither is there useful analysis in American Jurisprudence or Corpus Juris Secundum. We have used the word as a noun, to mean “ill-gotten gains.” See United States v. Weems, 13 M.J. 609, 610 (A.F.C.M.R.1982). Civilian courts often use the word “looting” as a synonym for “larceny.” See Miller v. Alabama, 405 So.2d 41 (1981); Arizona v. Gunter, 100 Ariz. 356, 414 P.2d 734 (1966). Sometimes, it envisions “civil disorder” or vandalism, as in Shankles v. Costa Armatori, 722 F.2d 861, 863 (1st Cir.1983). Still other times, “looting” is taken to mean action occurring during a tumult or riot. See YMCA v. United States, 395 U.S. 85, 89 S.Ct. 1511, 23 L.Ed.2d 117 (1969) (rioting and looting during a prior United States expedition in Panama); Annot., 39 A.L.R. 4th 1170 (1985). Finally, the word sometimes suggests a completely different concept—“insider” skimming of a corporation. See United States v. Feldman, 853 F.2d 648 (9th Cir.1988). To repeat for emphasis, it seems irrational that Army and Air Force warriors engaging together in combat operations should be judged by different standards for the same wrongdoing. I suggest that the Code Committee established under Article 67(g), UCMJ, 10 USC § 867(g) reexamine Article 103 and the Manual with an eye to refining for all the definition of “looting.” The legislative history is thin. Ruppel is scant authority, and I surmise there has been little modern thought to this subject. Judge KASTL participated prior to his retirement. . The Government had charged the same actions alternatively as larceny under Article 121, UCMJ, 10 USC § 921. During the court-martial, the prosecutor stated that he had no authority to withdraw the two specifications but that the Government elected to offer no evidence on them. The military judge found the appellant not guilty of these alternative larceny offenses. . The Guide lists no year of publication. Major General Reginald C. Harmon is listed as The Judge Advocate General. Since the Guide was intended for use with the 1951 Manual, its publication probably is between 1951 and General Harmon’s retirement in March 1960. . See, e.g., United States v. Wolfe, 37 C.M.R. 571 (A.B.R.1966) (deployment of 82d Airborne Division to Dominican Republic; looting incidental to other issues). See also Philos, Handbook of Court-Martial Law (1951) 410. . We have no particular concern with the concept of "time of war" vis-a-vis the Panamanian expedition. See MCM, App. 21, Rule 103, A21-5 to 21-6 (1984).

8928789-13581

SELYA, Circuit Judge. Defendant-appellant José Guzmán asserts that the Supreme Court’s decision in United States v. Booker, — U.S. -, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), entitles him to resentencing under non-mandatory sentencing guidelines. Employing the plain error analysis applicable to unpreserved claims of Booker error, we conclude that the appellant suffered no cognizable prejudice resulting from the application of a mandatory guidelines system. Accordingly, we affirm his sentence. I. Background On November 10, 1994, a federal grand jury handed up a multi-count indictment charging the appellant with one count of conspiracy to possess cocaine base with intent to distribute, seven counts of possessing with intent to distribute, distributing, and aiding and abetting the distribution of cocaine base, and one count of conspiracy to acquire firearms in exchange for illegal drugs. See 21 U.S.C. §§ 841(a)(1), 846; 18 U.S.C. §§ 2, 371. These charges stemmed from the appellant’s alleged participation, with four code-fendants, in the sale of crack cocaine to undercover officers on eleven separate occasions and the coconspirators’ plan to acquire weapons from those officers in exchange for drugs. After negotiating a plea agreement, the appellant pleaded guilty to all counts. The district court convened a disposition hearing on February 9, 1996, and sentenced the appellant to a 240-month incarcerative term (a term that was within the applicable guideline sentencing range of 210 to 262 months). The appellant challenged that sentence but, after some procedural skirmishing (not relevant here), a panel of this court affirmed it. United States v. Guzman, 132 F.3d 31 (1st Cir.1997) (unpublished table decision). On October 7, 1998, the appellant filed a habeas petition, see 28 U.S.C. § 2255, in which he claimed, among other things, that his sentence had been illegally imposed. The district court wisely appointed counsel, who filed an amended section 2255 petition. On June 4, 2002, the court granted the amended petition; it found that defense counsel’s failure at sentencing to present humanizing evidence and to argue for a sentence at the low end of the guideline sentencing range constituted ineffective assistance. See Guzmán v. United States, No. 98-12086, slip op. at 1 (D.Mass. June 4, 2004) (unpublished). Accordingly, the court vacated the appellant’s sentence. The district court convened a new sentencing hearing on June 18, 2004. This time, the court imposed a 210-month in-carcerative term. That term was at the nadir of the guideline sentencing range. This timely appeal followed. II. Analysis In this venue, the appellant challenges his 210-month sentence. This challenge devolves from Booker, in which the Supreme Court held that a defendant’s Sixth Amendment right to trial by jury is violated when his sentence is imposed under a mandatory guidelines system that gives decretory significance to judge-found facts. 125 S.Ct. at 756. The appellant argues that because he was resentenced prior to the Booker decision and under the mandatory guidelines system then in effect, his sentence is unconstitutional. The appellant did not make anything resembling a Sixth Amendment objection at the time of his resentencing, so his claim of error is unpreserved. The appellant concedes that point, but he mounts an aggressive attack on this court’s standard of review for unpreserved claims of Booker error. In the course of that attack, he maintains both that the articulation of the plain error test, as set forth in United States v. Antonakopoulos, 399 F.3d 68, 75 (1st Cir.2005), and its progeny, should not apply to him and that, in all events, the application of that test violates due process. In his view, we ought to abandon Antonakopoulos and instead adopt one of two alternate approaches. We first repulse the appellant’s assault on Antonako-poulos and then, applying our wonted standard of review, determine whether he is entitled to the relief that he seeks. A. Standard of Review Where, as here, a claim of Booker error has not been preserved, it is deemed forfeited and we must apply the plain error standard, as articulated in United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). See Booker, 125 S.Ct. at 745; United States v. Heldeman, 402 F.3d 220, 223-24 (1st Cir.2005). In order to establish entitlement to relief under that stringent test, an appellant must show “(1) that an error occurred (2) which was clear or obvious and which not only (3) affected [his] substantial rights, but also (4) seriously impaired the fairness, integrity, or public reputation of judicial proceedings.” United States v. Duarte, 246 F.3d 56, 60 (1st Cir.2001). In Antonakopoulos, this court addressed the application of the plain error test in the context of unpreserved claims of Booker error. 399 F.3d at 75. We explained that a Booker error occurs not when the judge finds facts necessary to the sentencing determination but, rather, when the defendant is sentenced under a mandatory guidelines system that gives decretory significance to judge-found facts. Id. Thus, in the hindsight provided by Booker, the first two prongs of the plain error test are met when the defendant shows that the sentencing court treated the guidelines as mandatory rather than advisory. Id. With respect to the third plain error prong, the defendant bears the burden of showing that, had the error not occurred, there is a “reasonable probability” that he would have received a lesser sentence. Id. Under that standard, “the probability of a different result is sufficient to undermine confidence in the outcome of the proceeding.” Id. at 78 (quoting United States v. Dominguez Benitez, 542 U.S. 74, 124 S.Ct. 2333, 2340, 159 L.Ed.2d 157 (2004)). This means that the defendant must persuade the court that were it not for the then-mandatory nature of the sentencing guidelines, it is reasonably likely that the district court would have imposed a more lenient sentence. The appellant makes a twofold rejoinder to this format. First, even though he did not preserve his claim of Booker error, he nonetheless asseverates that the Duarte plain error test, adopted in Antonakopou-los, should not apply to his case because he could not reasonably have anticipated the “dramatic transformation in sentencing law” wrought by Booker. Requiring such “clairvoyance,” the appellant says, violates his due process rights under the Fifth Amendment. We reject these importunings. As a general rule, “a criminal defendant must seasonably advance an objection to a potential constitutional infirmity in order to preserve the point.” Derman v. United States, 298 F.3d 34, 44 (1st Cir.2002). While a narrow exception to this principle applies where “objections or defenses ... were not known to be available at the time they could first have been made,” Bennett v. City of Holyoke, 362 F.3d 1, 7 (1st Cir.2004) (internal quotation marks omitted), that exception is pertinent only if “(i) at the time of the procedural default, a prior authoritative decision indicated that the defense was unavailable, and (ii) the defense became available thereafter by way of supervening authority.” Id. Alternatively stated, the exception applies only when the futility of raising an objection or defense was unequivocally apparent at the time in question. That is clearly not the case here. At the time of the appellant’s resentencing, the constitutionality of the sentencing guidelines was a hot-button issue in criminal law circles. The Supreme Court’s decision in Apprendi v. New Jersey, 530 U.S. 466, 490, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), had paved the way for a Sixth Amendment challenge to the federal sentencing guidelines. Moreover, a closely related issue, involving state sentencing guidelines, was pending before the Supreme Court — an issue that the Court resolved, favorably to the defendant, in Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). The bottom line is that, at the time the district court resentenced the appellant, the constitutionality of the guidelines was very much in play. Under these circumstances, there is no principled basis for excusing the appellant’s procedural default. See United States v. Del Rosario, 388 F.3d 1, 13-14 & n. 8 (1st Cir.2004) (rebuffing a similar argument). The second facet of the appellant’s rejoinder is equally unavailing. He entreats us to modify our approach to forfeited errors in the Booker context and adopt either the presumption-of-prejudice approach, see United States v. Barnett, 398 F.3d 516, 526-28 (6th Cir.2005), or the automatic-remand approach, see United States v. Crosby, 397 F.3d 103, 117-18 (2d Cir.2005). We decline this invitation. We recognize that the courts of appeals have taken a variety of approaches to the treatment of unpreserved claims of Booker error. In a multi-panel circuit, however, newly constituted panels ordinarily are constrained by prior panel decisions directly (or even closely) on point. See Eulitt v. Me. Dep’t of Educ., 386 F.3d 344, 349-50 (1st Cir.2004) (discussing the law-of-the circuit doctrine); United States v. Rodriguez, 311 F.3d 435, 438-39 (1st Cir.2002) (similar). So it is here: we are firmly bound by this court’s prior panel opinions, such as Heldeman and Antonakopoulos. To be sure, there are two narrow exceptions to this iteration of the law-of-the-circuit principle. Under the first of these exceptions, “[a]n existing panel decision may be undermined by controlling authority, subsequently announced, such as an opinion of the Supreme Court, an en banc opinion of the circuit court, or a statutory overruling.” Williams v. Ashland Eng’g Co., 45 F.3d 588, 592 (1st Cir.1995). Under the second exception, which operates in instances that fairly may be described as hen’s-teeth rare, authority that postdates the original decision, although not directly controlling, may nevertheless offer a compelling reason for believing that the former panel, in light of new developments, would change its collective mind. See id. Neither of these exceptions is apposite here. See United States v. Villafane-Jimenez, 410 F.3d 74, 85 (1st Cir.2005) (per curiam) (rejecting a similar entreaty to revisit Antonakopoulos ); United States v. Bailey, 405 F.3d 102, 114 (1st Cir.2005) (same). Thus, there is no justification for this panel to reconsider the recent decisions in the Heldemarr-Antonakopoulos line of cases. B. The Merits. Because a forfeited Booker error engenders review for plain error, the four-part Duarte test applies. See United States v. González-Mercado, 402 F.3d 294, 302 (1st Cir.2005); Antonakopoulos, 399 F.3d at 75. The Booker error that transpired here constitutes a clear and obvious sentencing error; thus, the first two prongs of the plain error test are satisfied. See United States v. Martins, 413 F.3d 139, 153 (1st Cir.2005); Antonakopoulos, 399 F.3d at 75. Turning to the third prong, we must inquire whether the appellant has pointed to circumstances creating a reasonable probability that the district court would have levied a more lenient sentence had it not been constrained by the then-mandatory guidelines system. We have said that we will not be overly stringent in assessing a defendant’s attempt to make that showing. See Heldeman, 402 F.3d at 224. Still, the defendant must point to something concrete, whether or not in the sentencing record itself, that provides a plausible basis for such a finding. The appellant essays two arguments in support of a finding of prejudice. He first notes that a district court, post -Booker, is required to account for all the factors enumerated in 18 U.S.C. § 3553(a). See Booker, 125 S.Ct. at 764-67. Building on this foundation, he posits that his sentence “would have looked quite different” had this been done. This argument misapprehends a defendant’s burden on plain error review. It is not enough for a defendant to show that he was not given the benefit of a sentence fashioned under advisory guidelines; rather, he must offer some reasonable indication that the sentencing court, freed of the shackles forged by mandatory guidelines, would have fashioned a more favorable sentence. See Heldeman, 402 F.3d at 224; Antonakopoulos, 399 F.3d at 75. Therefore, the inherent uncertainty about how the sentencing court would have exercised its newfound discretion when weighing the section 3553(a) factors under an advisory guidelines system is not enough to enable a defendant to carry his burden. That reality disposes of the appellant’s argument. While he describes at some length the vistas that the district court is now permitted to explore, he points to no specific circumstances signaling that the court’s deliberations with respect to the section 3553(a) factors would likely have yielded a lower sentence. Thus, his argument falls short of passing the third prong of the plain error test. The appellant next contends that had the district court sentenced him under an advisory guidelines system, it probably would have given him a lower sentence based on the poverty and the difficulties with cultural assimilation that he faced as a child, his current family circumstances, and the likelihood that he will be deported upon the completion of his sentence. In support of this contention, the appellant cites the fact that the district court sentenced him at the bottom of the applicable guideline range and argues that the court might have granted a further reduction had it not been constrained by a mandatory guidelines system.

4062190-28220

ORDER AND JUDGMENT TERRENCE L. O’BRIEN, Circuit Judge. Dale Ilgen pled guilty to possession of child pornography in violation of 18 U.S.C. § 2252A(a)(5)(B). He was sentenced to 78 months imprisonment, the bottom of the guideline range. He appeals from that sentence, claiming it is substantively unreasonable. We affirm. I. FACTUAL BACKGROUND On July 31, 2007, a federal agent, using a computer program called Limewire, discovered a file available for download containing the text “shx kid” (which is text known to be associated with child pornography) on a computer assigned the Internet Protocol (IP) address of 75.166.30.3. Upon further investigation, he learned the computer had 489 files with filenames describing child pornography available for download. He downloaded eleven of these files; ten of them contained child pornography. He eventually traced the IP address to Ilgen and his residence in Parker, Colorado. On December 19, 2007, agents executed a search warrant at Ilgen’s residence. They seized a computer containing 1,627 images and twenty-three videos of child pornography. Some of the images show prepubescent children being sexually penetrated (orally, anally and vaginally) by adults; other images depict a nude prepubescent female tied and bound. The images and videos were sent to the National Center for Missing and Exploited Children, which identified 324 images and four videos as being from a “known” series, ie., child pornography in which the victim has been identified. Agents interviewed Ilgen on the day they executed the search warrant. In his plea agreement, he admitted he made the following statements to the agents: (1) he owned the computer; (2) he lived alone and was the only one who had access to the computer; (3) he had made files available for sharing and understood others could access these files; (4) he used the Internet, in particular Limewire, to search for, access and download child pornography; and (5) he had approximately 1,000 pictures and ten videos of child pornography on his computer the day it was seized. According to the agents’ notes, Ilgen also told them he had purchased a membership to a child pornography website at $9.99 per month in June or July 2007. He said he downloaded material from that site on to his computer and sometimes placed it on a compact disc (CD). He had also subscribed to another child pornography website in March 2007 at $29.99 per month; he cancelled that membership in June or July 2007. He stated he viewed both male and female pornography but preferred viewing females between the ages of 4 and 25. Ilgen was arrested on June 19, 2008. In his post-arrest interview, he again explained he used Limewire to download child pornography. While he initially used it to download music, he eventually searched for “teenage girls” and child pornography “came up.” (R. Vol. 4 at 18.) He admitted he had about 1,000 images and ten videos of child pornography on his computer when it was seized and he was aware these items were accessible to others using Limewire. He also said the youngest victims in his collection of child pornography were “around 4 to 5 years of age.” (Id. at 19.) He described the period during which he was downloading child pornography as the “deepest darkest hole” he had ever been in and he would “not go back to that hole again.” (Id. at 18.) He said he was not sure why he downloaded such a large amount of child pornography as it was not a fantasy for him. He admitted, however, to masturbating while looking at child pornography. A week later Ilgen was released on bond under the supervision of Pretrial Services. Among other conditions, Ilgen was ordered to (1) participate in a home detention electronic monitoring program, (2) not access or subscribe to the Internet, (3) not possess or view child pornography, and (4) have no unsupervised contact with minors, including his minor daughter. He complied with all conditions. II. PROCEDURAL BACKGROUND A. Indictment and Plea Ilgen was indicted with transporting (Count 1), distributing (Count 2) and possessing (Count 3) child pornography. He entered into a plea agreement with the government, agreeing to plead guilty to Count 3 in exchange for the government’s dismissal of the remaining counts. The district court accepted Ilgen’s guilty plea. During the change of plea hearing, however, Ilgen displayed a noticeable tremor. The court called it to the attention of the attorneys and informed them it wanted a complete understanding of it prior to sentencing. It said it was “not going to send a debilitated individual to the mercies of the Bureau of Prisons” and wanted the parties to look into alternatives to prison. (R. Vol. 2 at 20.) The court referred the parties to its previous decision in United States v. Rausch, wherein the court sentenced the defendant (also charged with possession of child pornography) to home confinement because he needed a kidney transplant and it did not feel he would receive one if imprisoned. 570 F.Supp.2d 1295 (D.Colo.2008). The court also expressed that it would not act as a mere “rubber stamp” of the guidelines: “I don’t frankly give a goddamn what the Guidelines say because they treat — all cats are black as far as they’re concerned. There aren’t any gray ones.... [They have] turned human judgment into a mechanical judgment.... I won’t do it.” (R. Vol. 2 at 22-23.) B. Ilgen’s Mental Evaluations Ilgen began therapy with Craig David Lounsbrough, a licensed professional counselor, in July 2008. Lounsbrough diagnosed Ilgen with anxiety and depression. He opined: [F]rom a clinical perspective!,] incarceration would clearly not appear in the patient’s best interest and would likely not provide [him] the appropriate resources that he appears to require in order to deal with the above listed diagnostic issues. Additionally, such a course of action would likely not serve society and the larger public as the testing data indicates that the patient does not present as a threat nor do his diagnostic issues suggest the likelihood of any future threat. Finally, given the severity of the patient’s diagnostic issues, incarceration will likely result in exacerbation of the patient’s depression and anxiety, potentially creating major mental health issues for the patient. (R. Vol. 1 at 76.) In May 2009, Ilgen underwent a psychiatric evaluation conducted by Dr. Karen Fukutaki. Ilgen told Fukutaki he began using Limewire to download music but typed “adult pom” into the search engine because he was “just curious.” (R. Vol. I at 65.) He said that led to him downloading child and adult pornography but “[i]t was [a] game to see if I could download more than someone else....” (Id.) When asked whether he viewed the child pornography, he said he saw only one or two images. He said the images disturbed him and he was outraged that anyone could have produced such material. He denied being sexually stimulated by the child pornography and knowing it was illegal to download and share child pornography. Noting that these statements conflicted with his previous statements to the agents, Fukutaki reported: “[I]t ... appears he minimized his behavior in his report to me.” (Id. at 71.) In the end, Fukutaki diagnosed Ilgen with depression which, combined with Ilgen’s low self-esteem and social isolation, “probably contributed to his making a poor choice to download child pornography.” (Id.) She said he would benefit from treatment. While Lounsbrough had opined that Ilgen was not a threat to the public or predisposed to harming children, the government was concerned with this opinion because Lounsbrough was not an evaluator approved by the Colorado Sex Offender Management Board (SOMB) and had not utilized testing designed to evaluate sexual deviancy. Therefore, the government filed a motion requesting Ilgen be ordered to undergo a sex offense-specific evaluation by an SOMB-approved evaluator. The court granted the motion. Ilgen underwent that evaluation -with John Davis, who heard a similar story as that told to Fukutaki. When asked to explain the contradictory statements he made to the agents, Ilgen claimed he had told them he had viewed and subscribed to adult pornography websites. He also denied ever masturbating while viewing child pornography. Nevertheless, he was sorry for downloading child pornography and making it available to others. He did not believe he needed treatment in relation to his offense and claimed he would never do it again. After performing a number of tests, Davis determined Ilgen’s risk of sexual reoffense was “low to low moderate.” (R. Vol. 5 at 116.) But the risk assessment was made “without objective verification of self-reported sexual history information. ...” (Id. at 114.) C. Ilgen’s Physical Condition Ilgen has a history of a tremor. In July 2008, he began seeing Dr. John Willard for anxiety, depression and an increase in his tremor. Willard opined Ilgen would “have an extremely difficult time” in prison and prison would detrimentally affect Ilgen’s physical and mental well-being. (R. Vol. I at 117.) Willard referred Ilgen to Dr. Jeff Tam Sing, a neurologist, concerning the tremor. Because Sing found no medical reason for the tremor, he diagnosed Ilgen with conversion disorder, a kind of hysterical neurosis in which emotional conflicts are repressed and converted into symptoms of illness. D. Presentence Report A Presentence Report (PSR) was prepared. The probation officer determined the base offense level was 18. See USSG § 2G2.2(a)(l). She recommended the base offense level be enhanced by (1) two levels because the offense involved images of prepubescent minors who had not attained the age of 12, see USSG § 2G2.2(b)(2); (2) four levels because the offense involved material portraying sadistic or masochistic conduct or other depictions of violence, see USSG § 2G2.2(b)(4); (3) two levels because the offense involved the use of a computer, see USSG § 2G2.2(b)(6) and (4) five levels because the offense involved 600 or more images, see USSG § 2G2.2(b)(7)(D). These enhancements resulted in an adjusted offense level of 31. After applying a three-level downward adjustment for acceptance of responsibility, the total offense level was 28. Because Ilgen had no criminal history, his Criminal History Category was I. Based on a total offense level of 28 and a Criminal History Category of I, the probation officer determined the advisory guideline range was 78 to 97 months imprisonment. Attached to the PSR were (1) letters of support from Ilgen’s parents, his sister and two uncles, several members of his church, and a personal friend, as well as Ilgen’s own statement; (2) Victim Impact Statements (VIS) from several of the victims portrayed in the pornography found in Ilgen’s possession and their families; and (3) reports from Lounsbrough, Fukutaki, Davis, Willard and Sing outlining their findings and opinions. E. Ilgen’s Objections to the PSR and Motion for Downward Variance Ilgen objected to the PSR. Relevant here, he denied telling the arresting agents that he had purchased memberships to child pornography websites; he claimed he told them he had subscribed to adult pornography websites. He also denied telling them he had masturbated while viewing child pornography. Ilgen also filed a motion for a downward variance to probation under 18 U.S.C. § 3553(a). He said a variance from the advisory guideline range was warranted because that range resulted from USSG § 2G2.2, which Ilgen argued was not entitled to deference because it was not the product of empirical study and expert analysis by the United States Sentencing Commission but rather “Congressional hysteria.” (R. Vol. 1 at 49.) He also maintained a downward variance to probation was appropriate under the § 3353(a) factors. With regard to the nature and circumstances of the offense, Ilgen said: For at least one year and possibly longer, [Ilgen], in the privacy of his small condominium, used a single computer to download! ] child pornography. He never chatted with anyone on the internet regarding the images he possessed, never used the material to entice a child, nor did he produce, distribute, or trade any of the images. Mr. Ilgen has never had inappropriate contact with a child. (R. Vol. I at 54-55.) As to the history and characteristics of the defendant, he emphasized he was a doting father, had worked for thirty years at the same company (until he lost his job due to his arrest) and had no criminal history. He also pointed to the fact he suffers from a tremor that worsens with stress and Dr. Willard’s con cern that incarceration would negatively affect his health and well-being. Finally, Ilgen argued a sentence of probation would satisfy the need for the sentence imposed to reflect the seriousness of the offense, promote respect for the law and to provide just punishment, afford adequate deterrence and protect the public. He emphasized that “[p]robation is not a free ride;” probationers are required to follow special conditions, conditions he is already required to follow and to which he has complied. (R. Vol. I at 57.) He also pointed to his strong support network which included his family, his therapists and the members of his church. Ilgen further claimed he was not a threat to the public as there was no evidence he is psychologically predisposed to harming a child. F. Government’s Response to Ilgen’s Motion for Downward Variance The government opposed Ilgen’s motion for a variance and requested a sentence within the guideline range. It said Congress conducted extensive research and involved the Sentencing Commission when it fashioned § 2G2.2. The government also argued the § 3553(a) factors did not warrant a variance. Ilgen’s offense involved a large number of photographs and videos which depicted prepubescent children being sexually penetrated by adults and tied and bound; he also made these items available to others. And despite Ilgen’s attempts to characterize his offense as “victimless,” it was far from it. (R. Vol. 1 at 138.) Indeed, he had 324 images and four videos with known victims. The VIS demonstrate the horror of the victims’ abuse and the pain they and their families continue to suffer due in large part to the fact the abuse continues to be viewed by individuals, like Ilgen, for their own personal gratification. As to the history and characteristics of the defendant, the government argued there was no medical cause for Ilgen’s tremor and therefore no apparent treatment for it. While Ilgen claims to have suffered from the tremor prior to his arrest, he never sought treatment for it and it did not appear to have impacted his ability to work or to perform daily tasks. And there was no evidence the tremor had become debilitating or otherwise affected his ability to function; its worsening was obviously due to stress from this case. The government also claimed Ilgen’s depression and anxiety should not preclude a sentence of imprisonment. These conditions did not arise until after execution of the search warrant at his residence. Therefore, they did not appear to be chronic but rather rationally related to his arrest and conviction. According to the government, a sentence of probation would undermine the seriousness of the offense, especially given Ilgen’s failure to accept full responsibility for his actions or the impact they have had on others; indeed, he had retracted the confession he made to the agents. This lack of insight places the community at risk and requires incarceration. Moreover, a sentence of probation would not act as a deterrent — the lighter the punishment for possessing child pornography, the greater the customer demand for it, which in turn leads to more being produced. G. Sentencing The district court overruled Ilgen’s objections to the PSR. It then turned to the PSR’s guideline calculations. It said the child pornography guidelines “are in a deplorable state.” (R. Vol. 3 at 115.) It also criticized the guidelines in general for failing to consider each defendant separately and turning the sentencing process into a “mechanistic exercise” of trying “to pound square pegs into round holes.” (Id. at 116.) Nevertheless, the court determined the guideline range, which had been properly calculated in the PSR, provided for a just sentence in this case. Therefore, the court denied Ilgen’s motion for a downward variance. The court then analyzed the § 3553(a) factors. It determined the nature and circumstances of the offense required a severe sentence: “[Tjhis is a horrible crime, many, many victims, most of whom are never going to appear in court but are going to carry with them the dehumanization that this kind of perversion has inflicted upon them.” (R. Vol. 3 at 117.) As to the history and characteristics of the defendant, the court said Ilgen needed treatment for a significant period of time and that treatment could be provided by the prison. The court also determined a severe sentence was necessary in order for the sentence to reflect the seriousness of the offense. It pointed to the fact the offense conduct (1) had continued over a period time and (2) involved participation and distribution, not just voyeurism or passivity. While the court was not persuaded that punishment had any deterrent effect on others, it did believe it had a deterrent effect on the defendant being sentenced — at least for the period of time they are in prison. In the end, the court sentenced Ilgen to 78 months imprisonment, the bottom of the guideline range. In closing, it made the following remarks: Mr. Ilgen has stated in a letter to me that he now recognizes the wrongs he has done and that he has learned a valuable lesson, that he has already been deprived of opportunities to share basic and fundamental human experiences with his family and that he will never again commit the crime for which he has been convicted because he values those experiences so highly and ... does not want to continue losing them. I accept this representation. And I hope that Mr. Ilgen never again engages in this despicable behavior. I am up to a point willing to grant that under more favorable circumstances, it is highly unlikely that he would ever have come before a court as a convicted criminal. I am willing to a point to grant that he is not a hard-core criminal who is usually indifferent to the plights and sufferings of others. For the sake of argument, I will assume that it was nothing more than misfortune that made him a willing participant in the moral muck of child pornography. There still remains the unalterable fact that he carried out and actively supported an illegal industry that treats children like so much garbage, and it is not a nursery that our society is willing to accept. Just as Mr. Ilgen supported and carried out the policy and practice of victimizing children for perverted satisfaction, I will support and carry out society’s strong determination that he does not deserve to be free to live among us without paying the price for his criminal conduct. This is the ... determinative reason ... why I am sentencing Mr. Ilgen to prison. (R. Vol. 3 at 124-25.) III. STANDARD OF REVIEW We review sentences for reasonableness. United States v. Alapizco-Valenzuela, 546 F.3d 1208, 1214 (10th Cir.2008). Reasonableness review consists of both a procedural and a substantive component. Id. “The procedural component focuses on the manner in which the sentence was calculated, and the substantive component concerns the length of the sentence actually imposed.” United States v. Masek, 588 F.3d 1283, 1290 (10th Cir.2009) (quotations omitted). Ilgen does not dispute the procedural reasonableness of his sentence; his claim is limited to substantive reasonableness. “We review sentences for substantive reasonableness under an abuse-of-discretion standard.” United States v. Middagh, 594 F.3d 1291, 1294 (10th Cir.2010). “A district court abuses its discretion when it renders a judgment that is arbitrary, capricious, whimsical, or manifestly unreasonable.” United States v. Muñoz-Nava, 524 F.3d 1137, 1146 (10th Cir.2008) (quotations omitted). We must determine “whether the length of the sentence is reasonable given all the circumstances of the case in light of the factors set forth in 18 U.S.C. § 3553(a).” Alapizco-Valenzuela, 546 F.3d at 1215 (quotations omitted). In doing so, “[w]e may not examine the weight a district court assigns to various § 3553(a) factors, and its ultimate assessment of the balance between them, as a legal conclusion to be reviewed de novo. Instead, we must give due deference to the district court’s decision that the § 3553(a) factors, on a whole, justify the [sentence imposed].” United States v. Smart, 518 F.3d 800, 808 (10th Cir.2008) (quotations omitted). IV. DISCUSSION Ilgen complains his sentence is substantively unreasonable for several reasons. First, he says the court’s determinative reason for the sentence — society’s determination that child pornography crimes require severe punishment — would apply equally to any person convicted of a child pornography offense. Therefore, the sentence does not reflect an individualized sentencing process as required by § 3553(a) and precedent. See Gall v. United States, 552 U.S. 38, 50, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007) (stating sentencing courts may not presume the guideline range is reasonable but rather “must make an individualized assessment based on the facts presented”). Moreover, the question is not whether society has determined punishment is necessary but rather tvhat punishment is appropriate. He contends a lower prison sentence or probation would have severely punished him for his first and only offense. This argument is belied by the record, which clearly shows the court imposed a sentence that it believed was appropriate under the circumstances of this case. The court ensured it had a full understanding of Ilgen’s tremor. It was also well aware of his psychological problems and his representation that he would not reoffend. It further acknowledged it had read the numerous letters in support of Ilgen, as well as the reports from his doctors and evalu ators. But individualized sentencing does not mean looking only to mitigating factors; it also requires consideration of aggravating factors, including the offense conduct. Here, the court did so and reasonably emphasized its very serious nature. Ilgen had a large number of images and videos of child pornography downloaded on his computer; some of these images and videos depicted horrid sexual abuse of very young children. He also made these images and videos available to others. The court noted the long-term damage of Ilgen’s conduct to the victims. As one victim said in her VIS: “When I was told how many people had viewed these images and videos, I thought my pulse would stop. Thinking about all those sick perverts viewing my body being ravished and hurt like that makes me feel like I was raped by each and every one of them.” (R. Vol. 5 at 48.) Ilgen also objects to the court’s treatment of the guidelines. At the change of plea hearing and at sentencing, the court criticized the guidelines, in particular, § 2G2.2. Yet, the court sentenced Ilgen within the guideline range. He says “[t]he court’s simultaneous disdain for and adherence to ... § 2G2.2 does not provide a reasonable basis for [the] sentence imposed by the court.” (Appellant’s Opening Br. at 36.) We disagree. The court’s criticisms of the guidelines demonstrate its recognition that it was not bound to follow them. That being so, the fact it nevertheless sentenced Ilgen within the guideline range reflects its belief that the sentence resulting from the guidelines was appropriate under the circumstances of the case. In fact, as the court informed the parties, it had previously rejected the guideline range in two child pornography cases. But it also distinguished those cases, saying it varied in those cases “primarily because of the [need for the defendant to receive] constant medical care.” (R. Vol. 3 at 115.) Specifically, as to Rausch, the court said it involved “exigent circumstances” and neither party “should draw any conclusion from it that ... the same sentence would be imposed in other cases.” (Id. at 116.) Obviously, the court did not find exigent circumstances here, especially given there was no medical cause or treatment for Ilgen’s tremor. Ilgen also says his sentence is unreasonable because the district court may have erroneously limited its sentencing discretion to choosing between a guideline sentence and probation (the sentence he requested in the district court). While the court said a below guideline sentence was not appropriate, Ilgen says it is unclear (given other comments by the court) whether it was referring to all below-guideline sentences or merely probation. We see no error. As Ilgen acknowledges, the court said a “below the Guideline statutory sentence [was] not appropriate” in this case. (R. Vol. 3 at 116.) That obviously means all below-guideline sentences, not just probation, and we decline to infer a more limited meaning. While the court made certain comments regarding why a prison sentence was appropriate, they were obviously made in response to Ilgen’s argument for a sentence of probation. Finally, Ilgen claims the district court did not reasonably balance the § 3553(a) factors. While it determined he needed treatment and could receive that treatment in prison, it also acknowledged Ilgen had made progress in treatment while on home detention. As to the deterrent effect, Ilgen says he was not in need of deterrence — he was 53-years-old at the time of sentencing, had no criminal record and the court accepted his statement that he would not reoffend. But, in any event, deterrence certainly did not support the lengthy sentence imposed. Ilgen also claims his 78-month sentence creates an unwarranted disparity, as the trend in Colorado, as well as nationally, is for a below-guideline sentence in child pornography cases. Indeed, according to Ilgen, there are a growing number of cases where probation is being imposed. He says this trend demonstrates that the guideline ranges in child pornography cases often result in a sentence greater than necessary under § 3553(a). Ilgen has a tough row to hoe. Because he was sentenced within the advisory guideline range, the sentence is entitled to a presumption of reasonableness. See United States v. Lewis, 594 F.3d 1270, 1277 (10th Cir.), cert. denied, — U.S. -, 130 S.Ct. 3441, 177 L.Ed.2d 347 (2010). Little need be said. While Ilgen can rebut that presumption by showing his sentence is unreasonable in light of the § 3553(a) factors, id., he has failed to do so. The district court’s consideration of the § 3553(a) factors primarily focused on the serious nature of the crime. “But a reasonable sentencing judge need not give equal weight to all factors. The heinous nature of the offense in itself can justify a harsh sentence.” Id. In any event, the court also considered the other factors, including the history and characteristics of the defendant and the need for the sentence imposed to afford adequate deterrence. Ilgen criticizes the court’s balancing of these factors but we see no abuse of discretion. The fact Ilgen made progress while on home detention does not necessarily justify a lower prison sentence, especially when the court has determined he can continue to receive treatment while in prison. Ilgen’s claim he is not in need of deterrence has some support in the record, in particular his lack of criminal record and Davis’ opinion that Ilgen’s risk of sexual reoffense is “low to low moderate.” (R. Vol. 5 at 116.) On the other hand, it also appears Ilgen’s criminal behavior was not new as he had been possessing child pornography since 2003, four years before he got caught. See supra n. 6. Moreover, Davis’ risk assessment is suspect because it was based in part on Ilgen’s self-report, which included his statements that he had not subscribed to child pornography websites and had not masturbated to child pornography. These statements are in direct conflict with his earlier statements to the agents.

1537726-12834

DIANE P. WOOD, Circuit Judge. After bouncing between psychiatric diagnoses that found him alternately competent and incompetent to stand trial, Seth Bonsu was eventually found competent and tried and convicted by a jury of one count of conspiring to distribute heroin in violation of 21 U.S.C. § 846, and seven counts of distributing heroin in violation of 21 U.S.C. § 841. He now insists that the government coerced him to testify falsely before the grand jury. In addition, he argues that there was insufficient evidence to sustain his conspiracy conviction and that he was improperly denied a reduction in his sentence pursuant to the “safety valve” provisions of 18 U.S.C. § 3553(f) and U.S. Sentencing Guidelines (U.S.S.G.) § 5C.1. Finally, he asserts that he is entitled to a downward departure from the Sentencing Guidelines because his mental illness, which was eventually diagnosed as brief Psychotic Disorder, an Axis I diagnosis listed in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-IV), 302 (4th ed.1994), was what caused him to cease cooperating with the authorities and thus his case falls outside the “heartland” of cases that the Guidelines contemplate. Finding no merit to any of these contentions, we affirm Bonsu’s sentence and conviction. I The son of prominent members of the Ghanian community in Chicago, Seth Bon-su strayed from course and chose to engage in the illegal drug business, despite the fact that he came close to completing a bachelor’s degree in aeronautics at St. Louis University in Missouri. The government discovered him when it retained a paid informant to ensnare some Nigerian heroin traffickers. With the help of the informant, Bonsu sold or delivered small quantities of heroin on at least five occasions, not realizing that his customers were aligned with the government. His career ended on January 14,1998, when he attempted to close a major sale of heroin. Just after he handed over two samples of a promised four— to six-kilogram batch of heroin, FBI agents closed in and arrested him. Four to six kilograms was a large amount for Bonsu, and he had been compelled to piece together his supplies from a variety of middlemen, none of whom was willing to furnish the entire amount on his own. The government relied on the group sale aspect of the deal to support its charge that Bonsu and the others were involved in a drug conspiracy. Bonsu’s cooperation with the government began the moment he was arrested. As FBI agents listened, he placed a phone call to a co-conspirator from the Mc-Donalds where he had been arrested. The agents also learned valuable information from Bonsu’s pager and his address book, both of which they had seized at the time of the arrest. Bonsu continued to cooperate after his arrest by meeting four or five times with the government to proffer information and to place additional phone calls to individuals who soon became co-defendants. All of this preceded Bonsu’s grand jury testimony. Before the grand jury, Bonsu read a prepared statement spelling out the details of his drug dealing. His testimony proceeded without incident, and the government and Bonsu then hammered out the details of a plea agreement that put him in the ballpark for a sentence that would have been half of the mandatory minimum ten-year term provided by the statute. That benefit, however, was contingent upon his continued cooperation. Bonsu was set to testify against his co-conspirators at their trial when things began to unravel. First, Bonsu indicated that he was dissatisfied with the private lawyer whom his family had retained after he fired his public defender (a step he took right before the plea agreement was signed). Then, on the eve of his co-conspirators’ trial, Bonsu’s privately retained lawyer (Lawyer 2) asked the court to con duct a competency evaluation because of Bonsu’s increasingly hostile and irrational behavior. Around this time Bonsu signaled that he was no longer willing to cooperate with the government. Eventually, he filed a pro se motion to withdraw his guilty plea, insisting that the government had coerced him into giving untruthful grand jury testimony. The government responded with its own motion to rescind the plea agreement, in light of Bonsu’s refusal to continue to cooperate. Bonsu then fired his private lawyer and a new public defender (Lawyer 3) was appointed. This arrangement was short-lived, as Bonsu did not believe that a defense lawyer who was paid by the government could represent his interests. A second private lawyer (Lawyer 4) was hired by his family, but he too was later replaced by Bonsu’s current, court-appointed lawyer (Lawyer 5). From the time that Lawyer 2 came onto the scene, Bonsu’s competency became a central issue. The court responded by ordering a series of competency evaluations that followed a distinct pattern. First, a forensic psychiatrist evaluated Bonsu and concluded that Bonsu suffered from certain personality traits or disorders that made it difficult to work with him, but that he was not incompetent to stand trial. Next, Bonsu’s attorney provided information to the evaluating doctor about the quality of the lawyer’s relationship with Bonsu, including specific details on the difficulties of discussing his case with him. The examining doctor then reconsidered his initial diagnosis. The first time this happened, a new doctor, Dr. Eric Woodward of the Isaac Ray Center for Psychiatry and the Law, found that Bonsu suffered from “a delusional disorder, persecutory type” and that he was incompetent to stand trial. The court then held an evidentiary hearing during which conflicting evidence was presented on Bonsu’s competency to stand trial. As a result of this hearing, the court ordered Dr. Bernard Rubin, a third doctor, to conduct another competency evaluation. This evaluation initially resulted in Dr. Rubin’s diagnosis of an Axis II, personality disorder, which in the doctor’s opinion did not meet the legal definition of incompetence to stand trial. Upon receiving further information from Bonsu’s lawyer and the Assistant United States Attorney (AUSA) who was prosecuting the case, Dr. Rubin reassessed his initial diagnosis and concluded that Bonsu suffered from brief psychotic disorder, an Axis I diagnosis, which, when aggravated, diminished Bon-su’s contact with reality and made it impossible for him to cooperate meaningfully with his lawyer and participate in his own defense. As a result, the court found Bon-su incompetent at that time to stand trial. On June 21, 2000, Bonsu was ordered transferred to the Federal Bureau of Prisons, Federal Medical Center in North Carolina, where he remained for treatment and assessment until the Mental Health Division of the Center in November 2000, submitted to the district court a Certificate of Restoration of Competency to Stand Trial. The psychiatrist and psychologist who prepared the supporting report concluded that Bonsu “is not now and likely never was severely mentally ill.” During the period in which the court had taken Bonsu’s competency to stand trial under advisement, Bonsu himself, his various lawyers, and the government all filed a series of motions to undo the cooperative efforts that had previously led to Bonsu’s grand jury testimony and guilty plea. The court ultimately granted Bon-su’s motion to withdraw his guilty plea and allowed the government to rescind the plea agreement. As soon as Bonsu was restored to competency and returned from North Carolina, a trial date was set and the case proceeded to trial. The government’s case included testimony from Bon-su’s former girlfriend, who played a minor role in his heroin dealing, various FBI agents who participated in the events leading up to and including Bonsu’s arrest, and extensive testimony from the government’s paid informant, who walked the jury through twenty-six tape-recorded conversations with Bonsu. The tapes, which reflected both telephone calls and face-to-face meetings, included many discussions about Bonsu’s efforts to orchestrate the interrupted four— to six-kilogram sale. II Bonsu begins with his argument that the district court committed reversible error when it rejected his motion for a reduced sentence pursuant to U.S.S.G. § 5C1.2, and so shall we. The safety valve provision authorizes the district court to depart from a statutory mandatory minimum sentence for certain offenders who also meet the criteria set forth in 18 U.S.C. § 3553(f)(l)-(5): they must be first time offenders, not in a leadership position, who committed crimes that did not involve violence or threats of violence, or result in death, and they must truthfully have provided the government with all relevant information and evidence that they had concerning their offense. Our review of the district court’s denial of Bonsu’s motion for a reduced sentence under § 5C1.2 is for clear error. United States v. Williams, 202 F.3d 959, 964 (7th Cir.2000). Bonsu’s argument on appeal begins with the factual proposition that he cooperated fully with the government while he was of sound mind, and ceased his cooperation only when his mental condition deteriorated. Under those circumstances, he continues, it was improper to deny him the benefits of the safety valve provision. As stated in his brief, Bonsu’s “belief that he was coerced into reading the affidavit prepared by the government in front of the grand jury would reflect a delusional belief that there was a conspiracy against him.” Nevertheless, even if we were to accept the fact that there was a period of time during which his mental condition made it impossible for him to cooperate, this still does not answer the question why he did not resume cooperating once he was restored to competency — and indeed, why he is still continuing to take positions inconsistent with cooperation, such as his argument that his grand jury testimony was false. The district court noted that after Bonsu was restored to competence, he could have acknowledged that his grand jury testimony was correct and accepted the consequences of his conduct. Instead, “[h]e chose as a competent man to continue to deny his criminal involvement in this case and to put the government to its proof.” Accordingly, the district judge concluded that it would be wrong to allow Bonsu to benefit from the safety valve, because he did not cooperate in good faith from the time his competency was restored. Importantly, the district court in no way assumed that a defendant has a duty to cooperate during the time period when he or she is actually incompetent. Bonsu insists that because the Guidelines say that the safety valve is appropriate where cooperation is forthcoming “not later than the time of the sentencing hearing,” U.S.S.G. § 501.2(a)(5), he is nonetheless entitled to its benefit. He reasons that because he cooperated fully with the government until he became too ill to continue, and because he eventually offered to resume cooperation, his sentence should have been reduced. Although it is true that Bonsu did offer to resume cooperation after he was restored to competency and before his sentencing hearing, the district court committed no clear error when it found that Bonsu was not entitled to a reduced sentence. It quite reasonably decided to focus on Bon-su’s cooperation during the entire time period after he was restored to competency and found fit to stand trial. During this period Bonsu insisted that his grand jury testimony was coerced and untruthful. Bonsu also put the government to its burden at trial after he was restored to competency. These post-restoration facts are not outweighed by Bonsu’s belated offer to resume cooperation with the government. If upon restoration to competency Bonsu had decided to reverse course once again and resume cooperation with the government, the district court signaled that it would have given serious consideration to his safety valve arguments. But that is not what he did, and we can find no error in the district court’s decision to deny him the benefits of the safety valve guideline. See, e.g., United States v. Thompson, 106 F.3d 794, 801 (7th Cir.1997). Bonsu also contends that he was improperly denied a downward departure under U.S.S.G. § 5K2.0, which authorizes a district court to depart from a mandatory minimum sentence under the Sentencing Guidelines where there are “aggravating or mitigating circumstances of a kind or degree not adequately taken into consideration by the Commission.” Koon v. United States, 518 U.S. 81, 94, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996); U.S.S.G. § 5K2.0; 18 U.S.C. § 3553(b). This provision acknowledges that the Guidelines focus on the “heartland,” or typical cases, but leave room for departure (upward or downward) in atypical cases.

6487333-11922

OPINION DONALD R. SHARP, Bankruptcy Judge. This matter came on for trial pursuant to regular setting. When all parties were present in Court, evidence was adduced and the matter was taken under advisement. The following opinion constitutes the Court’s findings of fact and conclusions of law in accordance with Bankruptcy Rule 7052 and to the extent that any finding of fact is a conclusion of law or conclusion of law is finding of fact they shall be so construed. The following opinion disposes of all issues presented to the Court in this adversary proceeding. FACTUAL BACKGROUND The matter before the Court is a claim by Team Bank and FDIC that certain debts of the Debtors, Kenneth R. Barron and Clara W. Barron, should be excepted from discharge pursuant to the provisions of 11 U.S.C. § 523(a)(2)(B). There is no serious disagreement about the fact that Debtors owed Team Bank and FDIC $73,599.46 as of June 19, 1990. The debt results from promissory notes dated February 26, 1987, in the original amount of $31,700.00, dated February 4, 1986, in the original amount of $25,000.00 and one dated January 20, 1987, in the original amount of $14,720.72. The note dated February 26, 1987 in the original amount of $31,700.00 was a renewal of a promissory note dated May 7,1986, in the original amount of $30,000.00. Therefore, only $1700.00 of additional money was advanced on February 26, 1987. At issue in this case, is the question of the accuracy of financial statements dated November 1, 1985, and a subsequent financial statement dated December 1, 1986. Plaintiff contends that the financial statements were materially false and that it has demonstrated the necessary elements contained in 11 U.S.C. § 523(a)(2)(B) so as to except from discharge the debt described above. At the heart of the controversy is the omission by Debtor on both of the financial statements of any mention of a promissory note in the amount of $570,000.00 that he, along with other partners in a partnership known as Data-pro executed. Plaintiffs contention is that the addition of the liability on this note to the list of liabilities on the two financial statements would have demonstrated that the Debtors were hopelessly insolvent and that no loan would have been made had the bank known of the liability. Debtor admits the $570,000.00 obligation and it is clear that it is not shown on the financial statement. Debtor’s position is, first, that the obligation was secured by a deed-of-trust on real estate and a building which had a value greater than the note and that if both the asset and liability had been shown on his financial statement it would have enhanced his financial condition rather than demonstrating an additional deficit. Second, he argues that he and the bank officer, Robert Stone, had an agreement to exclude both the asset and liability from the financial statement. The Court finds that there was no evidence of any agreement between the Debtor and the bank officer to exclude the Data-pro transaction from the financial statements. DISCUSSION OF LAW In all cases in which a creditor is attempting to except a debt from discharge the creditor is charged with carrying the burden of proof. Matter of Benich, 811 F.2d 943, 945 (5th Cir.1987). Additionally, while there has been some dispute between various courts as to the appropriate standard of proof (preponderance of evidence versus clear and convincing evidence) that issue has been finally laid to rest by the Supreme Court’s recent decision in Grogan v. Garner,-U.S.-, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) which categorically holds that the preponderance of the evidence standard is appropriate in all 11 U.S.C. § 523 dischargeability matters. As a consequence, this Court’s opinion shall examine Creditor’s 11 U.S.C. § 523(a)(2)(B) complaint using the preponderance of the evidence standard of proof. The controversy in this case essentially boils down to whether or not the financial statements were materially false; whether or not the bank reasonably relied upon the financial statements in advancing credit; and whether the Debtor submitted the financial statements with intent to deceive. 11 U.S.C. § 523(a)(2)(B)(i, iii & iv). The Court observes that the financial statements at issue concern the Debtor’s financial condition. 11 U.S.C. § 523(a)(2)(B)(ii). Looking first at the question of the falsity of the statements this Court can make no other finding but that the statements were materially false. In In re Carter, 101 B.R. 702, 704 (Bkrtcy.E.D.Okl.1989) the court held that “A materially false financial statement is one in which there is an ‘omission, concealment, or understatement of any of the debtor’s material liabilities.’ ” quoting In re Harmer, 61 B.R. 1, 5 (Bkrtcy.D.Utah 1984). Case law is replete with holdings to the effect that omissions from financial statements constitute a material falsity. In re Finley, 89 B.R. 938, 939 (Bkrtcy.M.D.Fla.1988) (failure to list additional mortgage obligations constitutes a material falsity); In re Kroh, 87 B.R. 1004, 1008 (Bkrtcy.W.D.Mo.1988) (finding of material falsity in a debtor’s financial statement can be based on an omission of information about the debtor’s financial condition); In re Mitchell, 74 B.R. 457 (Bkrtcy.D.N.H. 1987). In the instant case, the total liabilities shown on the financial statement dated November 1, 1985, was $419,532.07 and the total liabilities shown on the financial statement dated December 1, 1986, was $441,-750.00. The addition of the $570,000.00 liability in connection with the Data-pro transaction would have more than doubled the liabilities on both of the financial statements. Clearly, the omission of such a liability is a material falsity. The Debtor’s argument that he would have also had the right to show the property securing the debt in the asset portion of the financial statement does not cure the falsity of the financial statements. It is clear that he was an owner of an undivided interest in the real estate at the time the obligation was incurred and his argument that he would have been entitled to become the owner of one hundred percent (100%) if he had been called on to pay off the debt does not cure the problem of a false financial statement. That position is open to interpretation and he may or may not be right, but the essence of the financial statement is that those facts should have been revealed so that the lender could then make an informed decision about the extension of the credit. Therefore, this Court finds that the omission of the debt in connection with the Data-pro transaction renders both financial statements materially false. In considerable dispute is whether or not the Creditor reasonably relied upon the financial statements in the extension of the credit. (11 U.S.C. § 523(a)(2)(B)(iii)). Exactly what constitutes “reasonable reliance” in compliance with 11 U.S.C. § 523(a)(2)(B)(iii) is not statutorily defined by the Code. Case law, however, reveals that reasonable reliance is to be objectively determined by the fact finder given the totality of the circumstances. • In re Figge, 94 B.R. 654, 665 (Bkrtcy.C.D.Cal.1988). Reliance will be found to be reasonable if it is demonstrated by the creditor that had the false representation or omission been known, the credit would not have been extended. In re Carr, 49 B.R. 208, 210 (Bkrtcy.W.D.Ky.1985). In cases of lending institutions this standard is expanded to compare the creditors’ actual conduct with debtor; the industry-wide practice; and the surrounding circumstances of the case. In re Compton, 97 B.R. 970, 979 (Bkrtcy.N.D.Ind.1989); In re Pascucci, 90 B.R. 438, 446-447 (Bkrtcy.C.D.Cal.1988). In this case the financial statements found to be materially false were dated November 1, 1985, and December 1, 1986. All parties agreed that they were delivered to the bank within a matter of a few days after their dates. The debts with which we are dealing were incurred on May 7, 1986, or some seven months after the financial statement of November 1, 1985, was delivered. That debt was renewed on February 26, 1987, or three months after the December 1, 1986, financial statement was delivered. Another debt was incurred on February 4, 1986, which is three months after the November 1, 1985, financial statement was delivered and the other debt was incurred on January 20, 1987, or two months after the December 1, 1986, financial statement was delivered. Clearly, none of the financial statements were delivered to the bank contemporaneously with the incurring of the debt. The financial statements were annual statements delivered to the bank on a more or less annual basis and placed in the files for the ostensible purpose of maintaining a current financial picture of the bank’s customer. The bank was not able to demonstrate a direct connection between the submission of the financial statement and the incurring of the debt. Although it is not necessary that the financial statement be submitted contemporaneously with the request for credit, that is certainly some indication that the financial statement was an integral part of the lending institution’s consideration of the granting of the credit. In this case that factor is absent. The bank officer testified that he relied on the financial statement along with his perception of the Debtor’s ability to earn money, the long past history of a successful banking relationship and the Debtor’s reputation and standing in the community. There is no requirement in the law that the false financial statement be the only thing on which the creditor relied. Regency Nat. Bank v. Blatz, 67 B.R. 88, 92 (E.D.Wis.1986). It is clear that partial reliance on a materially false financial statement is sufficient to deny the debtor a discharge from that particular debt. In re Hall, 109 B.R. 149, 154 (Bkrtcy.W.D.Pa.1990); In re Wing, 96 B.R. 369, 373 (Bkrtcy.M.D.Fla.1989); In re Nance, 70 B.R. 318, 323 (Bkrtcy.N.D.Tex.1987). The testimony of the bank official was convincing that he did consider and rely on the financial statements. These financial statements were not so remote in time from the incurring of the debt that such reliance was unreasonable. Supporting the bank officer’s testimony, of his reliance on the financial statements, is an entry on the commercial loan memorandum dated May 7, 1986, indicating that the net worth on the November 1985 financial statement had been considered. Also introduced into evidence was a document styled Loan Application dated February 25, 1987, which served the same purpose as a loan memo, and which was accepted into evidence as such, that also contains the notation of the net worth shown on the December 1986 financial statement. These documents coupled with the testimony of the bank official convinces this Court that the financial statements were relied on in part in connection with the advance of funds. The Defendant attempted to counter this evidence with a showing of the long relationship between the Defendant and the bank official. Although this long relationship is conceded, it does not rebut the direct evidence by the bank official that the financial statement was relied on. Additionally, the Defendant attempted to show that the bank official was conversant with the Debtor’s financial condition to the extent that the bank official knew of the Data-pro transaction from its inception through the date of filing bankruptcy. The Defendant’s evidence simply falls short on this score. Although Defendant alleged and attempted to elicit testimony from the bank official that he was familiar with the transaction, the bank official was clear in his testimony that he withdrew from active participation in the Data-pro business enterprise in the late ’70s and had no further contact with it. Defendant was not able to offer any evidence in rebuttal of this position other than his own unsubstantiated assertions.

12512251-22322

KEVIN R. ANDERSON, U.S. Bankruptcy Judge I. Introduction Over twenty years ago, Theodore William White, Jr. (the "Debtor") was accused, arrested, and incarcerated for a crime he did not commit. Approximately seven years after his initial arrest, and after multiple proceedings, trials, and appeals, the Debtor was exonerated on all charges and released from prison. Shortly thereafter, the Debtor commenced legal proceedings against those who had wrongfully accused him. On August 28, 2008, the Debtor obtained a $15 million judgment against his accusers. On September 29, 2008, the Debtor and his wife executed a promissory note directing that upon collection of the judgment, $1 million of its proceeds would be paid to six family members, including his parents who are the Defendants in this proceeding. The stated consideration for the $1 million note was the emotional and financial support provided to the Debtor by his family during his incarceration and legal proceedings. In July of 2011, after three more years of legal proceedings, the Debtor received a payment of $15.5 million in satisfaction of the judgment. At the same time, and pursuant to the note, the Debtor directed that $1 million of the judgment proceeds be transferred to the Defendants. Almost three years later on May 30, 2014, the Debtor and his spouse, Porscha Shiroma, filed a voluntary Chapter 7 bankruptcy petition. J. Kevin Bird was appointed as the Chapter 7 Trustee ("Trustee"). Two years later, on May 30, 2016, the Trustee filed this adversary proceeding against Ryan B. White, in his representative capacity as personal representative of the estate of Theodore W. White, Sr., deceased, and Myrna Y. White (the "Defendants"). The Complaint seeks to avoid and recover the Debtor's transfers of $1 million and $1,500 to the Defendants under 11 U.S.C. §§ 544, 547, 550, and Utah's Uniform Fraudulent Transfer Act (the "UFTA"). The matter before the Court is the Defendants' Motion for Summary Judgment ("MFSJ"), which argues that the $1 million transfer is not avoidable because the Debtors received reasonably equivalent value. The Court held a hearing on Defendants' MFSJ on August 1, 2018. The Court has reviewed the parties' papers and has conducted independent research of applicable law. For the reasons set forth in this memorandum decision, the Court grants the Defendants' MFSJ. II. Jurisdiction and Venue The Court has jurisdiction over this contested matter pursuant to 28 U.S.C. §§ 1334(a) & (b) and 157(b). Defendants' MFSJ is a core proceeding under 28 U.S.C. § 157(b)(2)(H). Venue is appropriate in this District under 28 U.S.C. §§ 1408 and 1409, and notice of the hearing was proper. III. Undisputed Facts Defendants' MFSJ centers on whether the Debtors received "reasonably equivalent value in exchange" for the transfer of $1 million to Defendants. The following undisputed facts are material to the Court's decision and are derived from Defendants' MFSJ, the Trustee's Memorandum and Supporting Document in Opposition, and Defendants' Response: 1. On August 28, 2008, Debtor Theodore White obtained a judgment for $15 million arising from his wrongful arrest, prosecution, and incarceration (the "Judgment"). 2. On September 29, 2008, Debtors executed a promissory note in Lawrence County, Missouri ("Note"). 3. The Note names six payees consisting of the Defendants Theodore W. White, Sr., and Myrna White (the Debtor's parents); Ryan and Tiffany White (the Debtor's brother and sister-in-law); and Tiffany and Michael Means (the Debtor's sister and brother-in-law) (collectively the "Payees"). 4. The Debtors promised under the Note to pay the six Payees a total of $1 million "share and share alike," but "contingent upon full payment of ... [the Judgment] from any source." 5. The stated consideration for the Note was "the love, support and advancement of the necessary defense funds to Theodore W. White, Jr. [the Debtor] during the time that he was charged, prosecuted and unfairly imprisoned from 1998 to 2005." 6. None of the Payees assigned their interests in the Note to the Defendants. 7. On July 21, 2011, the Debtor received $15.5 million in settlement of the Judgment. 8. On July 22, 2011, the Debtor caused $1 million of the Judgment proceeds to be transferred to the Defendants (the "$1 Million Transfer"). 9. All Payees agree that the Debtor's $1 Million Transfer to the Defendants was in full satisfaction of the Note. 10. On May 30, 2014, the Debtors filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. 11. On May 30, 2016, the Trustee filed a complaint against the Defendants to recover the $1 Million Transfer as a constructively fraudulent transfer under the UFTA. IV. Summary Judgment Standard Under Fed. R. Civ. P. 56(a), as incorporated into bankruptcy proceedings by Fed. R. Bankr. P. 7056, the Court is required to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Substantive law determines which facts are material and which are not. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Whether a dispute is "genuine" turns on whether "the evidence is such that a reasonable [fact finder] could return a verdict for the nonmoving party." In sum, the Court's function at the summary judgment stage is to "determine whether there is a genuine issue for trial." The moving party bears the burden to show that it is entitled to summary judgment, including the burden to properly support its summary judgment motion as required by Rule 56(c). If the moving party has failed to meet its burden, "summary judgment must be denied," and the nonmoving party need not respond because "no defense to an insufficient showing is required." Once the moving party meets its initial burden, "the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter." The nonmoving party may not rely solely on allegations in the pleadings, but must instead designate "specific facts showing that there is a genuine issue for trial." When considering a motion for summary judgment, the Court views the record in the light most favorable to the non-moving party, but the Court does not weigh the evidence or make credibility determinations. V. Summary of the Issues The Trustee's complaint seeks to recover the $1 Million Transfer from Defendants based on the allegation that the Debtors did not receive reasonably equivalent value in exchange for such transfer. Defendants counter that the $1 Million Transfer is not avoidable because it fully satisfied the legally-enforceable Note for $1 million. The Trustee now alleges that the Note was not enforceable for want of consideration. The Trustee also alleges that the Defendants were overpaid because the Note's "share-and-share alike" provision gave each Payee a one-sixth interest in the $1 Million Transfer. Therefore, the core issues are whether the Note constituted a legally-enforceable, antecedent debt of the Debtors, and whether the $1 Million Transfer was in full satisfaction of the Note. VI. Analysis The Trustee's Complaint alleges that the Debtors "did not receive equivalent value in exchange for the" $1 Million Transfer. The UFTA provides that "[v]alue is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied." A transfer that results in a dollar-for-dollar reduction of a valid, antecedent debt is not constructively fraudulent because it has no impact on a debtor's net worth and thus results in no prejudice to other creditors. A. Was the Note a Valid and Legally-Enforceable Obligation of the Debtors? A dispositive issue in this case is whether the Note was valid and enforceable at the time of the $1 Million Transfer. While not alleged in his Complaint, the Trustee has now asserted that the "Note was not enforceable for lack of consideration." In essence, the Trustee is arguing that the Note can be avoided because the Debtors did not receive reasonably equivalent value at the time they signed the Note. However, this separate cause of action is not in the Complaint, and the statute of limitations for challenging the Note under § 544 and the UFTA has long passed - even for the Trustee. Specifically, the Trustee is proceeding under § 544, which means he steps "into the shoes of an actual creditor who has standing to avoid the transfer under the applicable state law." This includes any defenses that could be asserted against such creditor. In this case, the Note was signed on September 9, 2008. The statute of limitations for the recovery of a constructively fraudulent transfer under UTAH CODE ANN. § 25-6-5(1)(b) or 25-6-6(1) is four years. So the time to avoid the Note ran on Monday, September 10, 2012. The Debtors filed their bankruptcy petition on May 30, 2014, and the Trustee filed this Complaint on May 30, 2016. Consequently, the Trustee is time-barred from seeking to avoid the Note under the UFTA. In the similar case of Cox v. Nostaw, Inc. , the trustee sought to recover $900,000 in note payments as constructively fraudulent transfers. The trustee argued that because the note was invalid for lack of consideration, the payments on the note were without value to the debtor. The bankruptcy court rejected the trustee's argument because his complaint did not include a cause of action to avoid the note, and the time for filing such an action had expired. On a motion for reconsideration, the bankruptcy court augmented its ruling by noting that because the statute of limitations to avoid the note had expired, the trustee's only authority to attack the note for lack of consideration was to step into the debtor's shoes under § 541 (as opposed to stepping into a creditor's shoes under § 544 ). However, the court noted under § 541 that the trustee takes no greater rights than the debtor held, and thus the trustee was subject to the same defenses and limitations as would apply to the debtor. The court then ruled that because lack of consideration is an affirmative defense, it is waived when the obligor pays the note. Further, a "trustee in bankruptcy is bound by any waiver of a defense made by a debtor before the filing of the petition." Therefore, because the debtor could not attack the note for lack of consideration, neither could the trustee. On appeal, the district court agreed that under such facts, the avoidance of the note was essential to the trustee's cause of action to recover the $900,000 in payments as constructively fraudulent transfers: It is widely recognized by courts that where a debtor makes prepetition payments on a contractual debt, in order for those payments to be avoidable as constructively fraudulent, it is necessary for the trustee to first avoid the underlying contract as a fraudulently incurred obligation. Absent avoidance of the underlying contract, the payments discharge the obligation and are, by definition, for reasonably equivalent value. In other words, if payments result in a commensurate, dollar-for-dollar satisfaction of a note, the note itself must either be avoided or found to be legally unenforceable before a trustee in bankruptcy can avoid such payments as constructively fraudulent transfers. And as the trustee in Cent. Ill. Energy Coop. , the Trustee in this case cannot seek to avoid the Note because the statute of limitations for an action under UFTA expired some years before the bankruptcy filing. Even though not specifically pleaded or alleged, the Trustee's only basis to avoid the Note for lack of consideration would be to "stand in the debtor's shoes" under § 541. However, because the Debtors have already accepted the consideration under the Note and paid it in full, the Debtors have waived any challenge to the Note, and the Trustee is bound by that waiver. For these reasons, the Court finds that the Note cannot be avoided by the Trustee, and that it was otherwise a valid and legally-enforceable obligation of the Debtors at the time of the $1 Million Transfer. B. The Note is Supported by Adequate Consideration Under Missouri Law. Even if the Trustee was not barred from challenging the Note's adequacy of consideration, the Debtors received legally-sufficient consideration for the Note to be valid under Missouri law. The Note asserts three forms of consideration: "love, support, and advancement of the necessary defense funds to Theodore W. White Jr. [the Debtor] during the time that he was charged, prosecuted, and unfairly imprisoned from 1998 to 2005." The last phrase alone is dispositive as to the issue of adequate consideration. Under Missouri law, consideration on a note "may consist of some benefit to one party or some detriment to the other." The "discharge, release or forbearance of a right or claim against a third person, at the instance or request of the obligor, is sufficient consideration to support the latter's undertaking on a note." A promissory note specifically imports consideration. In Hammons v. Ehney , the Missouri Supreme Court stated: A recitation of the consideration on which an agreement is based is prima facie evidence that sufficient consideration existed. Furthermore, all written promises to pay another a specific sum of money, signed by the promisor, import a consideration. Under both theories, a presumption is created that consideration exists, which must be overcome by evidence to the contrary. This import of consideration occurs regardless of whether the Note was negotiable or non-negotiable. Finally, if multiple considerations are stated for a promise, only one form of consideration need be legally sufficient to render the promise enforceable. The Trustee argues that "[l]ove, affection, and moral support will not suffice as consideration for a contractual promise," citing to the Missouri case of Rose v. Howard . This is indeed the law, but the Trustee cannot overcome the other stated consideration in the Note regarding "the advancement of the necessary defense funds" to the Debtor. A note to repay funds previously advanced for the benefit of the note's obligor is unquestionably sufficient consideration under Missouri law. Further, the Note contains an implicit forbearance agreement by stating that "payment pursuant to the terms of this note is contingent upon full payment of ... the judgment of $14,000,000." And this is exactly what happened. Almost three years later, on July 21, 2011, the Debtor received $15.5 million under the Judgment, and the next day he transferred $1 million to the Defendants. Thus, the Payees' agreement to await collection on the Judgment before receiving payment on the Note constituted additional consideration. The Trustee makes other arguments under pre-UCC Missouri law because the Note is non-negotiable. However, the Trustee has not demonstrated why pre-UCC Missouri law should apply. In contrast, the Missouri Legislature has specifically indicated that applying the UCC by way of analogy to non-negotiable instruments may be appropriate. MO. ANN. STAT. § 400.3-303(a)(3), provides that, "[a]n instrument is issued or transferred for value if: ... (3) the instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due." Under this clear and straightforward test, there was consideration on the part of the Defendants and other payees for the Note based on the antecedent debt, without any need for a showing of extinguishment. The Trustee makes other arguments on this point, but he has stretched his lack-of-consideration fight far beyond its reasonable application. None of these arguments were alleged in the Complaint, and the Court has already found that the Trustee is barred from seeking to avoid the Note for lack of consideration. The Court has nonetheless addressed this issue and has found that the Note was based on good and valuable consideration under Missouri law. The Court therefore finds that at the time of the $1 Million Transfer, the Note was a valid and legally-enforceable obligation of the Debtors in favor of the Payees. C. Did the Debtors Receive Equivalent Value in Exchange for the $1 Million Transfer? The next issue is whether the Debtors received equivalent value in exchange for the $1 Million Transfer. The Trustee argues under Missouri law that with the Note's "share-and-share-alike" provision, each of the six Payees was entitled to one-sixth of the $1 Million Transfer. Therefore, because the Defendants received the entirety of the $1 Million Transfer, the other four Payees collectively still hold a claim for $666,666.67 based on their remaining one-sixth interests. Thus, the Debtors only received a value of $333,333.67 in exchange for the $1 Million Transfer. This argument might be relevant if the other Payees were still making a claim under the Note - but they are not. They have all definitively stated by declaration that they deemed the $1 Million Transfer to the Defendants to be in full satisfaction of Note. The Trustee cannot overcome the effect of these declarations. For these reasons, the Court finds that there is no issue of fact that the $1 Million Transfer was in full satisfaction of the Note. Thus, the Debtors received dollar-for-dollar consideration in exchange for the $1 Million Transfer - and that is all that is required for Defendants to prevail on their MFSJ. VII. Conclusion The Court finds that the Trustee's authority to challenge the Note for lack of consideration under § 544 and the UFTA is time-barred. Moreover, the Court finds that the Trustee would likewise be barred from any challenge to the Note under § 541 due to the Debtors' pre-petition waiver of any defenses when he paid it. Even if the Trustee could contest the Note's adequacy of consideration, the Court has found under Missouri law that it is supported by adequate consideration arising from the Defendants' advance of monies to fund the Debtor's legal defense and prosecution for his wrongful incarceration. The Court finds further consideration from the Payees' three-year forbearance in collecting on the Note until the Debtor recovered on the Judgment. Thus, the Court finds no genuine issue of material fact that at the time of the $1 Million Transfer, the Note was a valid and legally-enforceable obligation of the Debtors. The Court further finds that all Payees deemed the $1 Million Transfer to be in full satisfaction of the Note, and thus the Debtor's payment of $1 million to the Defendants represented a dollar-for-dollar reduction of the Note. Consequently, the Court finds that the Debtors received reasonably equivalent value in exchange for the $1 Million Transfer. Because reasonably equivalent value is an absolute defense to the Trustee's constructively fraudulent transfer action, the Court grants the Defendants' MFSJ. The Trustee's cause of action to avoid and recover the $1,500 the Debtor transferred to Mrs. White within one year of the bankruptcy filing remains at issue. The Court will enter an Order consistent with the rulings set forth in this Memorandum Decision. Dkt. No. 1. Hereinafter, all references to the docket will be in Case No. 16-02090 unless otherwise specified. Utah Code Ann. §§ 25-6-5(1)(b) and 25-6-6(1)(a) (2016) (In 2017, the Utah Legislature renamed and amended the Uniform Fraudulent Transfer Act to the Uniform Voidable Transfer Act ). Dkt. No. 57. This statement includes facts that the parties may have objected to, but that the Court determines are not in material dispute. Dkt. No. 57. Dkt. No. 65; Dkt. No. 66. Dkt. No. 67; Dkt. No. 68 See Note, Dkt. No. 57, Ex. 1. Id. Id. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Id. Id. at 249, 106 S.Ct. 2505. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Murray v. City of Tahlequah, Okla. , 312 F.3d 1196, 1200 (10th Cir. 2002). Reed v. Bennett , 312 F.3d 1190, 1195 (10th Cir. 2002) (citation omitted) Concrete Works of Colorado, Inc. v. City & County of Denver , 36 F.3d 1513, 1518 (10th Cir. 1994). Celotex , 477 U.S. at 324, 106 S.Ct. 2548. Schrock v. Wyeth, Inc. , 727 F.3d 1273, 1279 (10th Cir. 2013) (citation omitted). Nat'l Am. Ins. Co. v. Am. Re-Insurance Co. , 358 F.3d 736, 742-43 (10th Cir. 2004) (citing Cone v. Longmont United Hosp. Ass'n , 14 F.3d 526, 533 (10th Cir. 1994) ). Dkt. No. 1 at ¶ 18. Utah Code Ann. § 25-6-4(1) (2016). Klein v. Michelle Tuprin & Assocs., P.C. , No. 2:14-cv-00302-RJS-PMW, 2016 WL 3661226, at *7, 2016 U.S. Dist. LEXIS 86954 (D. Utah July 5, 2016) (if a transfer satisfies a legally-enforceable debt of the payor, then the payor has received reasonably equivalent value for purposes of the UFTA); Klein v. Cornelius , 786 F.3d 1310, 1321 (10th Cir. 2015) ("The primary consideration in analyzing the exchange of value for any transfer is the degree to which the transferor's net worth is preserved.") (citation omitted); Rupp v. Moffo , 358 P.3d 1060, 1064 (Utah 2015) ("In cases where the debtor does receive reasonably equivalent value, the transfer puts one asset beyond the reach of the creditors, but replaces the asset with one of equivalent value, thus avoiding any harm to creditors."). Dkt. No. 65, p. 13. Montoya v. Tobey (In re Ewbank) , 359 B.R. 807, 809-10 (Bankr. D. N.M. 2007) (citation omitted). Id. Utah Code Ann. § 25-6-10. Claim for relief - Time limits. A claim for relief or cause of action regarding a fraudulent transfer or obligation under this chapter is extinguished unless action is brought: ... (2) under Subsection 25-6-5(1)(b) or 25-6-6(1), within four years after the transfer was made or the obligation was incurred. See Montoya v. Tobey (In re Ewbank) , 359 B.R. 807, 809-10 (Bankr. N.M. 2007) (trustee barred from avoiding deeds as fraudulent transfers under § 544 because the four-year statute of limitations of New Mexico's fraudulent transfer act had expired well before the bankruptcy filing). Cox v. Nostaw, Inc. (In re Cent. Ill. Energy Coop.) , 521 B.R. 868 (Bankr. C.D. Ill. 2014). Id. at 874. Id. Id. at 792. Id. Id. at 795 (citation omitted).

4115970-19263

MEMORANDUM OPINION ELIZABETH W. MAGNER, Bankruptcy Judge. The Chapter 7 Trustee, Claude C. Lightfoot, Jr. (“Trustee”), filed this adversary proceeding to avoid and recover three alleged preferential payments made by the debtor, Sea Bridge Marine, Inc., (“Sea Bridge” or “Debtor”) to the defendant, Praxis Energy Agents, LLC, (“Praxis”) totaling $195,000.00. Praxis asserts that the payments fall under the ordinary course of business exception set forth in 11 U.S.C. § 547(c)(2) and the subsequent new value defense of § 547(c)(4). On August 1, 2008, the Court conducted a trial and the parties were given until September 29, 2008, to file post-trial briefs. Jurisdiction This Court has jurisdiction under 28 U.S.C. § 1334, and this is a core proceeding under 28 U.S.C. § 157(b)(2)(F). Facts Debtor was a marine cargo carrier and chartered vessels as a part of its business operations. Praxis is a bunker trader that supplies fuel to shipowners, charterers, and ship managers. The parties began their business relationship in April, 2004, and Praxis sold Debtor twenty-one (21) bunkers from that time until Debtor filed bankruptcy on August 25, 2006. During the span of their business relationship, Sea Bridge made thirty-one (31) payments to Praxis; the last three being the subject of this adversary. The final three payments were: 1) a $100,000.00 wire transfer made on June 24, 2005; 2) a $25,000.00 wire transfer made on July 15, 2005; and 3) a $70,000.00 wire transfer made on August 5, 2005. The parties, in the Joint Pretrial Order, stipulated that the three payments in question satisfy the elements of 11 U.S.C. § 547(b), and barring any applicable defenses, are avoidable as preferential payments. During the preference period, Praxis delivered one bunker of fuel to the M/V African Star in Mobile, Alabama, worth $50,593.75. Discussion Bankruptcy Code Section 547 allows a trustee to recover transfers or payments on an antecedent debt, made by the debtor within the ninety-day period preceding the filing of the bankruptcy petition. The Fifth Circuit explained the policy behind the preference provision: The theory is that when the preferential payments are returned, all creditors can share ratably in the debtors’ assets, and the race to the courthouse, or the race to receive payment from a dwindling prebankruptcy estate, will be averted. Because some creditors, however, receive payments for shipping supplies that enable the debtor to continue doing business, to that extent they act to forestall an ultimate bankruptcy filing. Congress enacted several affirmative defenses against preference recovery in order to balance the competing interests. The only issues before the Court are the applicability of the defenses raised by Praxis. A. Ordinary Course of Business Exception Praxis asserts that the disputed payments were made in the ordinary course of business, and therefore may not be voided and recovered by the Trustee. Under the Bankruptcy Code, an otherwise preferential payment need not be returned to the debtor’s estate if the transfer was: (A) in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debt- or and the transferee; (B) made in the ordinary course of business or financial affairs of the debtor and the transferee; and (C) made according to ordinary business terms. Praxis must prove all three statutory elements by a preponderance of the evidence. The first element is not at issue as Sea Bridge incurred its debts to Praxis in the ordinary course of business; the purchase of fuel to supply its cargo transportation operations. The Trustee does not dispute this finding. The Court, therefore, turns to the remaining two elements. 1. Were the transfers made according to the ordinary business affairs of the parties? The “subjective” prong of the ordinary course of business defense typically requires consideration of: (1) the length of time the parties were engaged in transactions prior to the preference period; (2) whether the amount or form of tender differed from past practices; (3) whether the creditor engaged in any unusual collection or payment activities prior to the transfers; and (4) the circumstances under which the transfers were made. The defense is narrowly eon strued and a critical element in the analysis is whether the transactions between the debtor and the creditor before and during the ninety-day period are consistent. 1. Length of Time. Before the preference period, Sea Bridge and Praxis conducted business between themselves for approximately 13 months. During this time, the parties completed seventeen bunker sales and Sea Bridge made twenty-eight payments on account. This pre-preference history provides the basis for comparison with the parties’ preference period transactions. 2. Payment Amounts and Form of Tender. Daniel Yasosky, General Manager of Praxis, testified that company policy required full payment of any invoice under $100,000.00, within 30 days of delivery. Praxis typically provided payment terms on invoices of $100,000.00 or greater. Praxis charged interest on any invoice not paid within 30 days at the rate of two percent per month. The parties stipulated to the invoice dates, due dates, and delivery dates for twenty-one bunker sales to Sea Bridge. The parties also stipulated as to the amounts and dates of payment made by Sea Bridge to Praxis. Throughout 2004, and the early months of 2005, Sea Bridge purchased twenty bunkers of fuel ranging in price from $12,475.00 to $412,342.50. The bunkers purchased for less than $100,000.00 were invoiced and generally paid within thirty (30) days. Invoices over $100,000.00 were subject to prearranged installment payments on terms generally followed by Sea Bridge. In early 2005, Sea Bridge began extending its time to repay. A February 28, 2005, invoice for $84,282.00 was not paid until May 4, 2005. A second invoice dated March 30, 2005, was not paid until May 19, 2005. Payments made during the prepreference payment period matched the amounts due on specific outstanding invoices. In contrast, during the preference period, Sea Bridge made lump sum payments totaling $195,000.00, which did not match the outstanding invoices. These payments were the only times Sea Bridge forwarded payment to Praxis in amounts that did not correspond to the balance due on a specific invoice. At the time of the payments, multiple invoices were outstanding and Praxis applied the payments at will. This course of conduct varied considerably with the account’s history before the preference period. 3. Unusual Collection Activity. The record contains evidence that the final three payments were made due to collection activities outside of the ordinary course of business. A string of emails admitted into evidence shows that Praxis applied increasing pressure and demanded urgent attention as Sea Bridge’s delinquency grew. In a June 23, 2005, email sent to Joseph Srour, General Manager for Sea Bridge, Daniel Yasosky stated: “[i]f a payment is not received today in the amount initially scheduled we will have no choice but to turn this matter over to our collections team as I (gen/mgr) have been unable to satisfy my board’s guidelines.” Sea Bridge made a $100,000.00 payment to Praxis the following day. On July 29, 2005, Milto Papangelis, an attorney hired by Praxis, sent Sea Bridge a letter demanding payment on its outstanding debt as a “final pre-action warning.” He concluded the letter by threatening that Praxis would take “judicial steps against you/your assets in order to secure and enforce their undisputed and long outstanding claim ...” Mr. Srour testified that towards the end of the first quarter of 2005 Sea Bridge was having cash flow problems. As a result, he became the person within the company to negotiate with vendors for extensions of credit. Cash was so tight that payments were only forwarded to vendors from whom additional services or goods were needed. This was a departure from the company’s previous practices. Bunker suppliers were some of the largest creditors of the company and Praxis was in the top six. Because they were important to operations, bunker suppliers were favored when payments on payables were made. Sea Bridge believed that the greater the size of the payable, the more likely that a bunker supplier would take legal action. When Praxis began making demands for payment on the past due account and threatened to seize the vessels Sea Bridge took the threat seriously and made the payments in question. Praxis’ threat to turn Sea Bridge’s account over to a collection team and the demand letter sent by Mr. Papangelis are evidence that it utilized collection activities to obtain the payment. The Court concludes that payments made in response to these demands were not in the ordinary course of business. 4. Circumstances Under which Payments were Made. As previously discussed, the $100,000.00 payment on June 15, 2005, was made after Praxis threatened collection or legal action. The $25,000.00 payment, made on July 15, 2005, was a part of a payment plan proposed by Sea Bridge and agreed to by Praxis. Under the terms of the repayment plan, Sea Bridge was to pay $25,000.00 per week. Sea Bridge made only one payment before breaching the terms of the agreement. This plan was the first of its kind between the parties. Payments made pursuant to a payment plan do not fall under the ordinary business exception where no such arrangements existed prior to the preference period. The $70,000.00 payment, made on August 5, 2005, was made in exchange for a delivery of additional fuel. Praxis agreed to supply a bunker of fuel, but only if Sea Bridge tendered $70,000.00. Before this transaction, Praxis had never withheld delivery of a bunker for payment. A debt- or who makes payment in response to a cancellation of service cannot be deemed to have made the payment in the ordinary course of business. The three payments made during the preferential period were not made in the ordinary course of business. The amount and application of the final three payments differed from those made before the preference period. The circumstances under which the payments were made were unique to the preference period because they were made under threat of legal action, a repayment plan, or to obtain delivery of additional fuel. Therefore, the Court finds that payments made during the preference period are not consistent with those made prior to the preference period. 2. Were the transfers made according to ordinary business terms? Often described as the objective prong of the ordinary course of business test, the third prong compares the credit arrangements between other similarly situated debtors and creditors in the industry to determine if they are consistent with the payment practices at issue. The Fifth Circuit determined that “the judge must satisfy himself or herself that there exists some basis in the practices of the industry to authenticate the credit arrangement at issue. Otherwise the practice cannot be considered an ‘ordinary’ way of dealing with debtors.” Furthermore, “for an industry standard to be useful as a rough benchmark, the creditor should provide evidence of credit arrangements of other debtors and creditors in a similar market, preferably both geographic and product.” Praxis failed to meet its burden under the third prong of the ordinary course of business exception because it did not produce sufficient objective evidence as to the prevailing credit arrangements between debtors and creditors within the marine fuel market. Praxis’ only expert witness, J.C. Tuthill, a certified public accountant, was retained to determine whether the three payments that occurred during the preference period were made in accordance with industry practices. In preparing her report, Tuthill spoke with a representative of another bunkering company, audited the public financial statements of approximately ten shipping and bunkering companies, and reviewed wholesale trade information produced by Risk Management Associates. Tuthill never worked in the maritime industry, nor did she review the financial statements of Sea Bridge. The Court accepted her as an expert witness in analyzing financial statements, but not in the maritime fuel supply industry. Tuthill’s analysis and expert report focused on the number of days it took Sea Bridge to pay Praxis on each invoice during and prior to the preference period. She then compared the number of days businesses in the maritime industry took to pay or collect receivables. Tuthill testified that other companies averaged between 44 and 135 days in days to pay, and between 29 and 89 days to collect receivables. Tuthill only spoke with a representative of one company, and otherwise relied upon publically published year-end financial information. This information did not give her sufficient detail to determine the “days to pay” parameters for any of the companies in question. She also failed to obtain information on extensions of credit, repayment programs, or collection activities common within the industry. This one-dimensional analysis is not sufficient to establish the industry practice with regard to marine fuel supply credit arrangements. As Praxis failed to establish a benchmark within the industry, the Court finds that Praxis has not met its burden of proof under the third prong of § 547(c)(2)(C). The Court will next consider Praxis’ assertion that a portion of its payments are not preferential because it provided new value to Sea Bridge. B, New Value Exception Praxis argues that it provided subsequent new value to Sea Bridge within the preference period and is entitled to reduce the Trustee’s recovery by the amount of the new value. Under § 547(c)(4), a trustee may not avoid an otherwise preferential payment to or for the benefit of a creditor, to the extent that, after such transfer, the creditor gave new value to the debtor— (A) not secured by an otherwise unavoidable security interest; and (B) on account of which new value the debtor did not make an otherwise unavoidable transfer to or for the benefit of such creditor. New value is defined in § 547(a)(1) of the Bankruptcy Code as: money or money’s worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, including proceeds of such property, but does not include an obligation substituted for an existing obligation. The purpose of this exception is to “encourage creditors to continue their revolving credit arrangements with financially troubled debtors, potentially helping the debtor avoid bankruptcy altogether.” Transfers that are protected under this section are “not unfair to the other creditors of the bankrupt debtor because the preferential payments are replenished by the preferred creditor’s extensions of new value to the debtor.” The creditor must provide new value after it receives an otherwise preferential payment in order to qualify for the exception. The Fifth Circuit has rejected the “net result” rule that would allow a creditor to offset the total payments against the new value advances given during the preferential period. The transaction at issue revolves around a bunker delivery to the M/V African Star. Praxis agreed to sell Sea Bridge a $50,593.75 bunker for the ship on the condition that Sea Bridge make a $70,000.00 payment toward its outstanding debt. The payment and sale both occurred on August 5, 2005. Daniel Yasosky testified that Sea Bridge wired the payment and Praxis released the bunker after it confirmed receipt of the funds. This transaction falls within the new value exception because the bunker was not secured by an otherwise unavoidable security interest and Sea Bridge did not repay the new value by means of an otherwise unavoidable transfer. The Trustee argues that Praxis should not be entitled to claim the new value exception because the M/V African Star’s charter was cancelled shortly after the bunker was delivered. The Trustee asserts that the new value did not benefit the estate because Sea Bridge was not able to complete the voyage. Whether new value has been given is determined at the time goods are delivered to a debtor. A supplier is not a guarantor of a debtor’s success. In In re Furr’s Supermarkets the debtor returned expired baked goods, considered valueless at the time of return, to its creditor. The goods were worth approximately $90,000.00 when delivered to the debtor. The trustee attempted to reduce the amount of creditor’s new value exception by arguing that the goods did not replenish the estate because the debtor did not sell the goods. The court disagreed and held that the creditor was entitled to a new value exception at their original delivery value. The defense applied because the goods were of value to the debtor when delivered. Since new value is calculated at the time Sea Bridge received the bunker, Praxis is entitled to retain the value of the bunker, or $50,593.75. Conclusion Praxis has failed to demonstrate that the three payments made during the preference period fall within the ordinary course of business. The amount, application, and size of the payments differ from those made by Sea Bridge before the preference period. Additionally, the evidence and testimony show that Sea Bridge made the payments in response to unusual collection activities. Praxis, however, has shown that Sea Bridge made the final $70,000.00 payment before Praxis provided new value in the form of a bunker valued at $50,593.75. Therefore, Praxis is entitled to a $50,593.75 exemption from the Trustee’s preference claims. The Trustee is entitled to recover the remaining $144,406.25 in preferential payments made by Sea Bridge, plus legal interest from August 18, 2007. . "Bunker” is an industry term for marine fuel. Bunkers are where ships used to store coal to be burned as fuel, and the. term was carried over to describe fuel oil after coal became obsolete as a fuel. August 1, 2008, Trial Transcript ("Tr.T.") 20:19-21:3. . The parties have stipulated that the disputed payments were made to Praxis on account of an antecedent debt owed by Sea Bridge before the transfer was made. They also stipulated that the payments were made while Debtor was insolvent, within the ninety days before the petition date, and that the payments enabled Praxis to receive more than it would have if the transfer had not been made and if it were to receive distribution under the provisions of title 11 of the United States Code. . In re SGSM Acquisition Co., LLC, 439 F.3d 233, 238 (5th Cir.2006). . 11 U.S.C. § 527(c)(2). This statute was amended in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA”), however, the prior version of the statute is applicable in this case as Sea Bridge filed its bankruptcy before October 17, 2005; the effective date of BAPCPA. See, In re SGSM Acquisition Co., LLC, 439 F.3d 233, 237 n. 1 (5th Cir.2006). . Id. at 239, citing Gulf City Seafoods, Inc. v. Ludwig Shrimp Co. (In re Gulf City Seafoods), 296 F.3d 363, 367 (5th Cir.2002).

866494-22721

J. JOSEPH SMITH, Circuit Judge: Geraldine Powell, formerly a visiting assistant professor at the Syracuse University School of Architecture, appeals from a judgment of dismissal entered in the United States District Court for the Northern District of New York, Edmund Port, Judge. Judge Port found that, contrary to the appellant’s contentions, the university had legitimate, nondiscriminatory reasons for terminating Ms. Powell’s employment, and was accordingly not in violation of either Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. or 42 U.S.C. § 1981. We find no error in the result reached by the court, and affirm the judgment. I. In December, 1973, Ms. Powell was informed by the Dean of the Architecture School that her contract would not be renewed for the 1974-75 academic year. She subsequently filed a claim of discrimination based on race, color, and sex with the New York State Division of Human Rights. After hearings before an agency examiner, the Division of Human Rights dismissed the appellant’s complaint for failure to prove that she was terminated from her employment, or denied equal terms, conditions, or privileges of employment, because of her race, color, or sex. While the state complaint was pending, appellant filed a similar complaint with the Equal Employment Opportunity Commission (“EEOC”), receiving a right-to-sue letter on September 10,1975. She subsequently commenced this action within the 90-day period required by statute. The case was submitted to the district court upon the transcript of hearings before the New York State Division of Human Rights, stipulated facts and exhibits, and the parties’ briefs. II. The findings of basic fact made by the district court are well supported by the record. Accordingly, we accept them for purposes of this appeal, and summarize them below. Ms. Powell has an extensive academic background. She studied art in high school, but later changed fields, receiving a Registered Nurse’s degree from New York University in 1959. In 1971, she received a Bachelor of Fine Arts degree from Syracuse University, and later was awarded the Master of Fine Arts degree in Environmental Design. Her master’s thesis concerned the relationship of low income housing to black studies in Syracuse. In April, 1972, appellant was interviewed for a teaching position by the Dean of the Syracuse University School of Architecture. Despite the fact that appellant had not yet earned her Master’s degree, did not have any formal training in architecture, and had no teaching experience, she was hired for the academic year 1972-73 at the rank of lecturer (part-time), receiving an annual salary of $3,000. During the fall semester, 1972, appellant taught one section of the basic design course. Prior to 1975, a detailed student manual for this course did not exist, and each section teacher was free to fashion his own course curriculum after reading the course description in the School of Architecture’s annual bulletin, and consulting with the dean and other faculty members teaching the course. Ms. Powell did not receive any criticism from other faculty members during her first semester on the faculty. In December, 1972, appellant again met with the dean, who expressed an interest in promoting her to a full-time position. The following spring, however, the school’s Committee on Appointments, Tenure, and Promotion voted not to promote the appellant, but to permit her to continue teaching part time on the condition that she not teach basic design. Appellant was told that she would not be teaching the design course because of a decrease in enrollment; she was not told about the committee’s vote. The dean, on his own initiative, promoted Ms. Powell to the rank of part-time visiting assistant professor and raised her salary to $5,500 per year. The parties did not enter into a written agreement concerning the 1973-74 school year at that time, and there was subsequently considerable misunderstanding as to appellant’s teaching responsibilities. It was finally determined that she would teach architectural rendering, serve as advisor to minority students, and deliver five guest lectures on non-western architecture. In November, 1973, appellant was advised by the dean that her employment status was to be reviewed by the Tenure Committee. Shortly before the Thanksgiving vacation, she was asked to provide the committee with a summary of her Master’s thesis, and samples of her students’ work. The appellant was under the impression that she had only a couple of days during which to organize her submission, although the dean testified that he told her that the material was not required until December 1, an approximately ten-day period. Appellant submitted those student projects which had been left in the studio during the vacation period, believing that they did not represent the best of her students’ work; she also submitted a hand-written summary of her thesis. She did not, however, request a postponement of the committee meeting. The Tenure Committee met on December 1,1973 to consider the appellant’s continued employment during the 1974-75 school year. The dean, six faculty members, and two students attended the meeting, which focused, in relevant part, on Ms. Powell’s written statement, and on an evaluation of her students’ projects. The minutes of this meeting indicate that there was some discussion of the appellant’s approach to a “black aesthetic,” and that a white, female faculty member was permitted to delay committee consideration of her case. In a secret ballot taken at the meeting, eight individuals voted in opposition to, and one voted in favor of, continuing appellant on the architecture faculty. Those who voted against the appellant testified before the New York State Division of Human Rights that their votes were based on an evaluation of the student work, and on the appellant’s background and relative inexperience. They testified further that their attitudes had hot been influenced by the appellant’s race or sex. The dean transmitted the results of the committee vote to the appellant, indicating that he believed that the committee thought the appellant unduly “nationalistic.” The appellant refused to submit a letter of resignation, appealing the committee’s decision to the university’s Subcommittee on Academic Freedom. The subcommittee did not find any evidence of discrimination, but did believe that there had been procedural irregularities in the disposition of the case. It recommended the reinstatement of the appellant, or alternatively, the payment of compensation, but these suggestions were rejected by the dean. Ms. Powell received a letter of termination in May, 1974. The architecture school later hired a white male with a master’s degree in architecture to teach rendering, and a white female with a Master of Fine Arts degree, to teach basic design. It also hired a white female with a Master’s and Doctoral degree in history to teach architectural history. hi. On this appeal, Ms. Powell asserts that her dismissal was the product of racial and sexual bias, and hence unlawful. She contends that similarly qualified teachers who were white or male received preferred treatment, and that the justification for her dismissal offered by the Tenure Committee was merely pretextual. By contrast, the appellees argue that Ms. Powell failed to prove that her dismissal was motivated by unlawful bias. They assert that the Tenure Committee made a valid qualitative judgment which should, in the absence of a clear showing of discrimination, be respected by reviewing courts. Both the appellees and the trial court place great emphasis on our opinion in Faro v. New York University, 502 F.2d 1229 (2d Cir. 1974), where we wrote: Of all fields, which the federal courts should hesitate to invade and take over, education and faculty appointments at a University level are probably the least suited for federal court supervision. Dr. Faro would remove any subjective judgments by her faculty colleagues in the decision-making process by having the courts examine “the university’s recruitment, compensation, promotion and termination and by analyzing the way these procedures are applied to the claimant personally” (Applt’s Br. p. 26). . Such a procedure, in effect, would require a faculty committee charged with recommending or withholding advancements or tenure appointments to subject itself to a court inquiry at the behest of unsuccessful and disgruntled candidates as to why the unsuccessful was not as well qualified as the successful. [502 F.2d at 1231-32] In recent years, many courts have cited the Faro opinion for the broad proposition that courts should exercise minimal scrutiny of college and university employment practices. Other courts, while not citing Faro, have concurred in its sentiments. This anti-interventionist policy has rendered colleges and universities virtually immune to charges of employment bias, at least when that bias is not expressed overtly. We fear, however, that the commonsense position we took in Faro, namely that courts must be ever-mindful of relative institutional competences, has been pressed beyond all reasonable limits, and may be employed to undercut the explicit legislative intent of the Civil Rights Act of 1964. In affirming here, we do not rely on any such policy of self-abnegation where colleges are concerned. As originally passed, Title VII of the Civil Rights Act exempted all educational institutions with respect to faculty employment practices. 42 U.S.C. § 2000e-l (1970), as amended. This exemption had not been part Qf the original Senate bill, but was proposed in a substitute bill submitted by Senators Dirksen and Mansfield, and adopted first by the Senate and later by the House. There is virtually no legislative history, however, which indicates the rationale for the exemption of educational institutions. The Equal Employment Opportunity Act of 1972, 86 Stat. 103, sec. 3 (1972), amended Title VII to bring educational institutions within the purview of the Act. In the words of the House Report: There is nothing in the legislative background of Title VII, nor does any national policy suggest itself to support the exemption of these educational institution employees — primarily teachers— from Title VII coverage. Discrimination against minorities and women in the field of education is as pervasive as discrimination in any other area of employment. [H.R.Rep.No.238, 92d Cong., 2d Sess. (1971), reprinted in [1972] U.S.Code Cong. & Admin.News pp. 2137, 2155] The pervasive nature of discriminatory university employment practices has been well documented in the literature, and was characterized in the Congressional debates preceding the passage of the 1972 amendments as “truly appalling,” “gross” and “blatant.” It is clear beyond cavil, then, that the Congress has evidenced particular concern for the problem of employment bias in an academic setting. Indeed it might be said that far from taking an anti-interventionist position with respect to the academy, the Congress has instructed us to be particularly sensitive to evidence of academic bias. Accordingly, while we remain mindful of the undesirability of judicial attempts to second-guess the professional judgments of faculty peers, we agree with the First Circuit when it “caution[ed] against permitting judicial deference to result in judicial abdication of a responsibility entrusted to the courts by Congress. That responsibility is simply to provide a forum for the litigation of complaints of . discrimination in institutions of higher learning as readily as for other Title VII suits.” Sweeney v. Board of Trustees of Keene State College, 569 F.2d 169, 176, 177 (1st Cir., 1978). See also Egelston v. State University College at Geneseo, 535 F.2d 752 (2d Cir. 1976). It is our task, then, to steer a careful course between excessive intervention in the affairs of the university and the unwarranted tolerance of unlawful behavior. Faro does not, and was never intended to, indicate that academic freedom embraces the freedom to discriminate. IV. The district court correctly observed that the appropriate starting point for the evaluation of a personal claim of job discrimination brought under Title VII is McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). There the Court indicated that: The complainant in a Title VII trial must carry the initial burden under the statute of establishing a prima facie case of racial discrimination. This may be done by showing (i) that he belongs to a racial minority; (ii) that he applied and was qualified for a job for which the employer was seeking applicants; (iii) that, despite his qualifications, he was rejected; and (iv) that, after his rejection, the position remained open and the employer continued to seek applicants from persons of complainant’s qualifications. . . . The burden then must shift to the employer to articulate some legitimate, nondiscriminatory reason for the employee’s rejection. [411 U.S. at 802, 93 S.Ct. at 1824.] If the employer is able to sustain this burden, the burden shifts again to the plaintiff, who must “show that [defendant’s] stated reason for [plaintiff’s] rejection was in fact pretext.” 411 U.S. at 804, 93 S.Ct. at 1825. A. The trial court proceeded to indicate that Ms. Powell failed to make out a prima facie case of discrimination for two reasons. First, the court felt that Powell failed to prove that she was “qualified” to teach on the architecture faculty, given the negative faculty evaluations of her work. Second, the court indicated that Powell failed to demonstrate that other individuals possessing similar qualifications were hired after Powell was fired. We believe that the trial court applied an erroneous legal standard in reaching these conclusions, and that Ms. Powell has made out a prima facie showing of discriminatory treatment. With respect to the first of the court’s findings, we believe that the court’s approach unnecessarily collapses the steps suggested by McDonnell Douglas by shifting considerations which are more appropriate to the employer’s rebuttal phase to the earlier requirement that the employee demonstrate competence to perform the specified work. This is not merely of formal consequence, for it has the practical effect of requiring the employee to prove not merely that he possesses the basic skills necessary for the job, but rather that he is the best-qualified candidate for the job, under the criteria suggested by the employer. As can be seen in the present case, this burden is extremely difficult to meet if the employer’s claim that the employee did not meet some unstated level of performance is sufficient to negate the employee’s offer of proof. In this respect, we agree with the Seventh Circuit’s view that under McDonnell Douglas [t]he plaintiff need not show perfect performance or even average performance to satisfy this element. He need only show that his performance was of sufficient quality to merit continued employment, thereby raising an inference that some other factor was involved in the decision to discharge him. Satisfactory performance is an ordinary prerequisite of continued employment, just as job qualification is an ordinary prerequisite to hiring. [Citation omitted.] However, the plaintiff need not, and indeed cannot, disprove as a cause of his discharge a source of dissatisfaction of which he is unaware. Accordingly, the employer’s acceptance of his work without express reservation is sufficient to show that the plaintiff was performing satisfactorily for the purpose of shifting the burden of proof. [Flowers v. Crouch-Walker Corp., 552 F.2d 1277 at 1283 (7th Cir. 1977)]. Ms. Powell was hired by the School of Architecture after a careful review of her qualifications, training, and past performance. In addition, she was reappointed after her first year of teaching. While some members of the faculty may have expressed dissatisfaction with some aspects of her work, this dissatisfaction was never communicated to Ms. Powell, who was, accordingly, in no position to disprove these alleged inadequacies. We agree with the Seventh Circuit that proof of competence sufficient to make out a prima facie case of discrimination was never intended to encompass proof of superiority or flawless performance. If an employer is dissatisfied with the performance of an employee, he can properly raise the issue in rebuttal of the plaintiff’s showing. In the context of this case, Ms. Powell has demonstrated that she possesses the basic skills necessary for the performance of her job, and has thereby made out a prima facie showing of competence. With respect to the second factor, the School of Architecture’s hiring of a white female with a M.F.A. degree to teach basic design is sufficient to satisfy the McDonnell Douglas requirement that the position remain open and the employer seek applicants from persons of the complainant’s qualifications. The trial court believed that a time gap of over two years between the appellant’s discharge and the other individual’s employment precludes the possibility that the other individual “replaced” appellant. And the trial court may well be correct in the more common case in which hiring is ongoing and employees largely fungible. In the context of university employment, however, a department or school may hire only a small number of individuals each year, and the fact that a position may go unfilled for a time does not indicate that the position has been terminated. It only indicates that the school has not yet located the candidate of its choice. Thus Ms. Powell has, as a matter of law, been able to demonstrate both her competence and the architecture school’s ongoing hiring efforts. This, coupled with undisputed proof of minority status and the termination of her employment contract, is sufficient, under McDonnell Douglas, to make out a prima facie case of discriminatory treatment. B. The more difficult issue before us is whether, on the present state of the record, the School of Architecture can be said to have successfully rebutted Ms. Powell’s showing by articulating a “legitimate, nondiscriminatory reason for the employee’s rejection.” In this regard the trial court found that: [A] contract for the academic year 1974-75 was not offered to [the appellant] for one reason only. The Tenure Committee honestly reached the conclusion that plaintiff’s performance fell short of teaching requirements, after affording her a fair opportunity to demonstrate her teaching ability. This determination was devoid of any racist or sexist base. The plaintiff has not demonstrated the assigned reason to be a pretext for prohibited discriminatory conduct. All of the eight members of the Tenure Committee who voted against plaintiff testified that they voted to terminate plaintiff essentially because of the poor work product of her rendering students, and her inadequate architectural background. These are matters of obvious concern to the architecture faculty and, therefore, are unquestionably legitimate reasons for the vote. [App. at 17-18.] Rule 52(a) of the Federal Rules of Civil Procedure requires that findings of fact made by a trial court shall not be set aside unless clearly erroneous. Where, as here, a case is heard on the basis of a record developed before another judge, a trial judge is necessarily unable to make first-hand assessments of credibility, and the broad deference normally due a trier of fact under the federal rules may be somewhat attenuated. See 5A Moore’s Federal Practice ¶ 52.04 and the cases cited therein. Nevertheless, after a careful review of the record, we cannot say that the trial court’s finding in the instant case is clearly erroneous. The court considered testimony by all eight members of the Tenure Committee, and was unable to discern either overt or covert discrimination on the part of those officials. And our own independent review of the record confirms these findings, which are supported by substantial evidence, and which do not leave us “with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 394-95, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). It would, of course, have been preferable if the School of Architecture had presented the court with a more fully developed description of the appellant’s duties, and the criteria used in assessing her performance. In that way the legitimacy and rationality of the school’s hiring practices would have been more immediately evident. But the law does not require, in the first instance, that employment be rational, wise, or well-considered — only that it be nondiscriminatory. And the record here simply does not support the appellant’s contention that her termination was the result, in whole or in part, of racial or sexual animus. Accordingly, we affirm the judgment of the district court. . The Division of Human Rights also found that appellant failed to prove that the university retaliated against her upon learning that she had filed a claim of discrimination. . This letter was dated August 28, 1975. . The Office of the Clerk of the United States District Court received appellant’s complaint on December 4, 1975. Because of bookkeeping technicalities, the complaint was not formally filed until December 15, 1975. The complaint was treated by the district court as timely filed. See Appendix at 12-14. . The complaint was subsequently amended to include a charge brought pursuant to 42 U.S.C. § 1981. . No formal description of the rendering course was developed until September, 1974. (App. at 129) The school’s faculty disagreed as to whether rendering was best taught by an architect or an artist. . This testimony was discounted by the trial court in view of the dean’s favorable attitude toward the appellant. . At the time that the architecture school refused to renew Ms. Powell’s contract, three male and one female faculty members resigned from the faculty. Subsequently, two men resigned, and the contracts of one man and one woman were not renewed. None of these individuals taught basic design or rendering. . See, e. g., Huang v. College of the Holy Cross, 436 F.Supp. 639, 653 (D.Mass.1977); Johnson v. University of Pittsburgh, 435 F.Supp. 1328, 1353-54 (W.D.Pa.1977); Cussler v. University of Maryland, 430 F.Supp. 602, 605-06 (D.Md. 1977); Peters v. Middlebury College, 409 F.Supp. 857, 868 (D.Vt.1976); Labat v. Board of Education, 401 F.Supp. 753, 757 (S.D.N.Y. 1975); Moore v. Kibbee, 381 F.Supp. 834, 839 (E.D.N.Y.1974).

1503526-10134

R. DORSEY WATKINS, District Judge. This is a suit by the plaintiffs (hereinafter Nelson and Smith) against the defendant, their employer (hereinafter Victory) to recover moneys allegedly due and to become due under the provisions of a collective bargaining agreement entered into on June 25, 1959 between United Brotherhood of Carpenters and Joiners of America (hereinafter Union) and Victory. This agreement provided that Victory would “carry an excess compensation policy on his employees when they are working outside of the District of Columbia which shall give the employees * * * additional compensation in Maryland and Virginia equal to that of the District of Columbia.” The underlying facts have all been stipulated. Nelson and Smith, while employed by Victory and while working for Victory, sustained accidental personal injuries ■arising out of and in the course of their ■employment. Each received an award from the State Industrial Accident Commission, under which (to October 29, 1963): Nelson had received under the Maryland Award: Temporary total disability $ 880.00 Temporary partial disability 200.00 Permanent partial disability 1,875.00 $2,955.00 Under the District of Columbia Compensation Act, his compensation would have been: Temporary total disability $1,188.00 Temporary partial disability 200.00 Permanent partial disability ($15.00 a week from April 25, 1961 to October 29, 1963) 1,965.00 $3,353.00 Plus “excess benefits” payable at $15.00 per week, or $780.00 per year, until a total of $17,280 is paid. Nelson is fifty-■eight years old and has a life expectancy of nineteen years, or $14,280 based on life expectancy. Smith had received under the Maryland award: Temporary total disability $ 640.00 Permanent partial disability 3,125.00 $3,765.00 Under the District of Columbia Compensation Act, his compensation would have been: Temporary total disability $ 864.00 Permanent partial disability ($25.00 per week from November 21,1960 to October 29, 1963) 3,825.00 $4,689.00 Plus “excess benefits” payable at $25.00 per week, or $1,300.00 per year, until a total of $17,280.00 is paid. Smith is forty-six years old and has a life ex-pectaney of twenty-seven years. Jurisdiction is based upon diversity of citizenship, Nelson and Smith being residents and citizens of the District of Columbia, and Victory being a corporation with its principal place of business in Louisiana, but which had been doing business in Maryland. The “contract” allegedly involved related to performance within the State of Maryland. It is alleged that the amount in controversy, as to each of Nelson and Smith, exceeds $10,000, exclusive of interests and costs. Service was purportedly made upon Victory through the State Department of Assessment and Taxation of the State of Maryland. Victory moved to dismiss on the ground that at the time suit was instituted Victory had ceased to do business in the State of Maryland. The motion was denied by Judge Edward S. Northrop, on the basis of Chief Judge Roszel C. Thomsen’s opinion in L’Hereux v. Central American Airways Flying Service, Inc., D.Md.1962, 209 F.Supp. 713, and on the ground of waiver, with both of which opinions this judge is in accord. Victory then answered, raising as defenses that if there were an agreement as alleged, it was contrary to Article 101, section 52 of the Maryland Code of Public General Laws; and that the Union agreement, if executed, was not binding upon it. 1. Section 51 provides in pertinent part as follows: “No employer or employee who is subject to the provisions of this article shall exempt himself from the burden or waive the benefit of this article by any contract, agreement, rule or regulation, and any such contract, agreement, rule or regulation shall be pro tanto void.” The argument in substance is that one of the benefits of Article 101 to the employer is the provision of section 15 that the liability to pay compensation according to the schedules “is exclusive.” However, section 51 would not appear to prevent the employer, by agreement independent of, and outside of the provisions of Article 101 from complementing or supplementing the Compensation Act as to the total sums recoverable or receivable. The dictum, if not the express holding, in Baltimore Transit Company v. Har-roll, 1958, 217 Md. 169, 141 A.2d 912, strongly supports the position of Nelson and Smith. In the Harroll case an employee had sought to recover medical and hospital expenses allegedly payable under the terms of a collective bargaining agreement, and prevailed in the lower court. In reversing, the Court of Appeals held that where plaintiff had first received compensation benefits, then settled his claim against the negligent third party, out of which settlement the insurer of the employer had been repaid the compensation, plus the amount of hospital and doctor’s bills it had paid plaintiff, he could not recover the hospital and doctor’s bills on the theory that such medical care had been furnished under the terms of a collective bargaining agreement. The court said (217 Md. at 177, 141 A.2d at 916): “We cannot read Article 17 as requiring the company to pay over to an employee the hospital and medical expenses it has received from a tortfeasor. If the parties had so intended and had clearly expressed that intent, they could have agreed that any such expenses recouped by the employer and made his by the statute, must be given by him to the injured employee, but the provisions of Article 17 fall far short of such an agreement, as we read them.” However, the court recognized the validity of the supplementation of benefits under the Act, saying (217 Md. at 173-174, 141 A.2d at 914) : “There are significant indications that Article 17 of the agreement was to complement the compensation act and not to supplement or supplant it in any respect. It would be entirely competent for the parties by express contract to supplement the benefits under the Act or to relax its restrictions or requirements in favor of the employees. 2 Larson, Workmen’s Compensation Law, Sec. 97.61; Sharp v. Foley Brothers, Sup., 69 N.Y.S.2d 514.” The Harroll case is construed as follows in 23 M.L.E. Workmen’s Compensation § 181: “Accordingly, as a general rule, an employee may not, by an agreement, waive rights given under the Act, or waive a claim for compensation before the disability takes place. However, it is entirely competent for an employer and an employee by express contract to supplement benefits under the Act or to relax its restrictions or requirements in favor of the employee.” The first defense is accordingly without merit. 2. The Union agreement was signed on behalf of Victory by its Project Manager in charge of Victory’s work at the job site in Maryland. It was stipulated that the Vice President and General Counsel of Victory, if a witness, would testify that the signature of the Union agreement was without the knowledge and consent of the officers and directors of Victory; that no resolution was ever passed by the officers or directors of Victory authorizing or ratifying the agreement; that it was the custom for Victory to subcontract work of the type done by Nelson and Smith; that before the contract in question, Victory had never signed any contracts with any “excess compensation benefits” such as the contract in question; and that Victory had always hired only union employees. It was also stipulated that Victory paid wages to its carpenter-employees (including Nelson and Smith) in accordance with the wage rates in the agreement, which were those prevailing in the District of Columbia and higher than those prevailing at the work site; that Victory made contributions to the Health and Welfare Fund in accordance with Article VII, Section 17 of the Agreement ; and that Victory abided by all other working conditions of the agreement. It was further stipulated that the Project Manager had authority to hire and fire employees at the job site; and that he communicated with officials of the Union for the purpose of employing carpenters on the job and that thereafter Nelson, Smith and other union carpenters were employed on the job. Since the Project Manager had authority to hire and fire, and since he could hire only union carpenters , he would have at least apparent authority to execute the agreement necessary for their employment. Brager v. Levy, 1914, 122 Md. 554, 560, 90 A. 102; 2 Am.Jur. Agency, section 348; 3 Am.Jur.2d, Agency, section 263. Moreover, the payment of wages in accordance with those prescribed in the Union agreement, and the payments into the Union Health and Welfare Fund, in addition to wages, would be waiver, or constitute an estoppel or a ratification (Southern Industries, Inc. v. United States, 9 Cir. 1964, 326 F.2d 221), as to the authority of the Project Manager. The second defense is accordingly without merit. The complaint asked for judgment in favor of Nelson for all accrued payments for temporary total, temporary partial and permanent partial disability, and an order that future payments be made to him at the rate of $15.00 per week during the continuance of his permanent partial disability or until the sum of $17,280.00 be paid; and in favor of Smith for all accrued payments for temporary total and permanent partial disability, and an order that future payments be made at the rate of $25.00 per week during the continuance of his permanent partial disability or until the sum of $17,280.00 be paid. The complaint also asks for such other and further relief as may be necessary. On the question of jurisdiction of the court to entertain a diversity suit where the amounts accrued at the time of bringing the suit, and at the time of trial, were less than the jurisdictional amount, but where the addition of the future weekly sums sought would exceed the $10,000.00 requirement, and on the question of the authority of the court to order the payment of future weekly amounts, Nelson and Smith have filed a memorandum, in which Victory concurs, supporting the jurisdiction of the court, and the authority of the court to order future payments.

4257834-5138

PER CURIAM: Thomas J. Smith, by Tutrix Carolyn Smith, appeals pro se from the district court’s pre-trial dismissal of his claims that Defendants the Department of Health and Hospitals State of Louisiana (“the Department”), South Central Louisiana Human Services Authority, Easter Seals Louisiana, Inc., and Lafourche ARC violated his rights under various federal statutes and constitutional provisions by reducing his weekly hours of in-home care from 168 to 74. For the following reasons, we affirm. I. Smith is a disabled Medicaid recipient and participant in the New Opportunities Waiver (“NOW”) program. The NOW program, which is administered by the Department, allocates resources — including in-home care — to participants based on their level of need. Smith alleges that, in 2012, the Department reduced his in-home care from 24 hours per day to 74 hours per week. Smith appealed this reduction to a state administrative law judge, who affirmed the Department’s decision. In July 2012, Smith filed suit in the Seventeenth Judicial District for the Parish of Lafourche, seeking review of the administrative law judge’s ruling. This suit is still pending. On December 31, 2012, Smith filed a motion for leave to proceed in forma pauperis in the United States District Court for the Eastern District of Louisiana. The court granted the motion, and, on January 9, 2013, Smith filed his pro se complaint. Summons were withheld, however, pending further order of the court. In his complaint, Smith purported to “transfer” his pending state court action to the federal district court. The magistrate judge construed this as Smith’s attempt to remove his own action to federal court and recommended that the action be remanded to the Seventeenth Judicial District for the Parish of Lafourche. Smith objected to the magistrate judge’s recommendation, explaining that he intended to file a separate action in federal court and erroneously believed that he was required to transfer his pending state court action in order to do so. The district court sustained Smith’s objection, rejected the magistrate judge’s recommendation, and granted Smith leave to file an amended complaint that included claims under federal statutory or constitutional law. Smith filed his amended complaint on March 1, 2013. In August 2013, Smith filed a Motion for Emergency Permanent Restraining Order, by which defendants would be immediately enjoined from reducing Smith’s in-home care hours. Finding that the defendants had not been served with Smith’s amended complaint, the district court denied Smith’s motion without prejudice to re-file once the defendants had been served and given an opportunity to file responsive pleadings. After being served, the defendants each filed motions to dismiss Smith’s amended complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief could be granted. On November 19, 2013, Smith filed identical oppositions to all three motions to dismiss. On December 16, 2013, the district court granted the defendants’ motions to dismiss, holding that Smith had failed to state a claim upon which relief could be granted and that the district court lacked subject matter jurisdiction to hear Smith’s claims. Smith now appeals the judgment of the district court. II. This court reviews de novo a district court’s dismissal under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Spotts v. United States, 613 F.3d 559, 565 (5th Cir.2010). Likewise, this court reviews de novo a district court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, accepting all well-pleaded facts as true and viewing those facts in the light most favorable to the plaintiffs. Doe ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir.2012). “[B]ut conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” Beavers v. Metro. Life Ins. Co., 566 F.3d 436, 439 (5th Cir.2009) (internal quotation marks omitted). As an initial matter, to the extent that Smith seeks review in federal court of the Department’s decision to reduce his benefits under the NOW program, his claims do not raise a federal issue and were rightly dismissed for lack of subject matter jurisdiction. See Vinson v. La. Sec’y of Health and Hosps., 2009 WL 1406296, *1-2 (W.D.La. May 19, 2009); Mashburn v. La. Dep’t of Soc. Servs., 1993 WL 192122, *1 (E.D.La. June 1, 1993). Under Louisiana law, a plaintiff aggrieved by a final decision of the Department must seek review “in state, as opposed to federal, court.” Mashburn, 1993 WL 192122 at *1; see also La.Rev.Stat. § 46:107(0 (“[A]n applicant or recipient may obtain judicial review [of an adverse administrative decision] by filing a petition for review of the decision in the Nineteenth Judicial District Court or the district court of the domicile of the applicant or recipient.”). Thus, as the district court correctly noted, Smith must continue to pursue these claims in state court.