AMERICAN MOTORISTS INS. CO. v. STARNES

Print this transcript Transcript: 

Argument of Joel W. Westbrook

Chief Justice Warren E. Burger: We will hear arguments next in 1481, American Motorist Insurance Company against Starnes.

Mr. Joel W. Westbrook: Mr. Chief Justice and may I please the Court.

I am Joel Westbrook of San Antonio, Texas, representing the appellant, American Motorist.

We are aware, may I please the Court that not very many constitutional venue of questions come to this Court.

But I must say I must pass on you that it has been said that Texas probably has a furnished own appellate system, more venue appealed and all the other 49 jurisdictions combined.

And I believe this case will help you see why that is.

Because in Texas the venue cared a great deal more encumbrance than just where the case is going to be tried.

Our client, the American Motorists, unsuccessfully challenged venue in this -- on issue of Motorists case.

That brought against it in a Texas State District Court in McLennan County, Texas.

The appellate then had no more success in the Appellate Court of Texas because the Texas Supreme Court had previously, in 1963 in its Commercial Insurance versus Adam’s case against virtually the same constitutional challenge and held against the challenge, and virtually the same one that we are making today.

Justice Harry A. Blackmun: That was a Texas Supreme Court Case, was it not?

Mr. Joel W. Westbrook: Yes sir, Texas.

Actually, Your Honor, the Texas procedure of refusing writ of error and choosing between two conflicting Courts of Civil Appeals’ judgments on this point and in per curiam, selecting one of them and when writ is per curiam to Texas out right, well, that is the same precedential value as a Texas Supreme Court case would have.

Justice Harry A. Blackmun: Is it possible to say that your opponent does not rely on Adams, he does not cite it in his brief?

Mr. Joel W. Westbrook: You Honor, I felt that the Court would --

Justice Harry A. Blackmun: (Voice Overlap)

Justice William H. Rehnquist: Mr. Westbrook, I take it that this same plaintiff could have sued a domestic corporation in McLennan County just as you were sued in McLennan County, since this plaintiff resided in McLennan County, so that the only distinction you claim as being made between the in state and out of state corporations is the necessity with respect to a domestic corporation of having to prove a prima facie case for the cause of action?

Mr. Joel W. Westbrook: Actually, we have not approved a case by preponderance of the evidence, Your Honor.

Yes, that is the difference.

Justice William H. Rehnquist: (Inaudible) is the final judgment?

Mr. Joel W. Westbrook: I beg your pardon?

Justice William H. Rehnquist: Do you think this is a final judgment under R. 28 U.S.C.?

Mr. Joel W. Westbrook: Yes sir.

It is a final judgment.

Justice William H. Rehnquist: What about our Langdeau case where the Court held that where a Congress conferred a right of -- limited the right to sue a Federal Bank, it would strike me that your claim here -- you are not claiming a right that Texas Law gives you to be sued in a particular county.

All you really claiming is the right to be treated identically with the domestic corporation, is it not?

Mr. Joel W. Westbrook: Yes sir, that is correct.

Justice William H. Rehnquist: Do you think that is the same as Langdeau, for finality purposes?

Mr. Joel W. Westbrook: I do not -- I do not have the familiarity with Langdeau on that point, Your Honor, but in our jurisdictional statement, the appendix B3, we cite a number of cases which, there are Texas cases of course, that do hold that they are final judgments and they are appealable in Texas and this Court did note proper jurisdiction before in an another Texas case, Exxon versus Preston and it had been briefed by the appellant.

Justice William H. Rehnquist: All the Texas Court here did was to say that the suit could proceed against your company, did they not?

I mean, that the suit is not over?

Mr. Joel W. Westbrook: That is right, yes sir.

Justice Harry A. Blackmun: Maybe you are suggesting we should have postponed jurisdiction rather than noted it?

Mr. Joel W. Westbrook: Well, sir I can only say that in Preston versus Exxon, jurisdiction was noted.

It was never heard by this Court because the plaintiff appellee --

Justice Harry A. Blackmun: Let me follow with you with another question that Mr. Justice Rehnquist intimated?

Would you explain for us just what a preliminary venue hearing amounts to in Texas as far as a domestic corporation is concerned?

Mr. Joel W. Westbrook: Yes sir.

If you have a domestic corporation in Texas that challenges venue where the plaintiff had brought the action, that domestic corporation, the defendant files what is called a plea of privilege, a verified plea.

The plaintiff then files what is called a controverting plea and it is set down for hearing.

The defend -- a jury may be requested by the defendant.

If he does, however, request a jury, the Trial Court in his discretion can try it on the merits at the same time, but of course he is running the risk that if it is -- if he is wrong then the plea of privilege will be reversed and he has to try it on the merits again.

Now, the most of them tried before the judge.

The judge then makes a decision either sustaining or overruling the plea of privilege.

If it is sustained then the case is transferred in our case to Dallas County where the principal office was of American Motorists, it is transferred to that County unless there is an appeal from that order.

If it is overruled, it has been tried in the county in which it was originally brought, unless it is an appeal in that order, but either side can appeal the ruling of the Trial Court.

Justice Harry A. Blackmun: Do you feel that that words unequal protection as between domestic and foreign corporations?

Mr. Joel W. Westbrook: In this respect that when the domestic corporation make its challenge to the venue, the plaintiff in order to keep that case in that county, McLennan County, has to prove in addition to other factors such as his is resident there or he is an agent of that domestic corporation, resident in McLennan County.

He has to prove his cause of action.

Every constitute element of his cause of action has to be proven by a preponderance of the evidence.

One of the -- and this is a very substantial burden that the plaintiff has to bear at this early stage in the proceedings.

Justice Harry A. Blackmun: And you are saying he does not have to bear that with respect to a foreign corporation, and therefore, no equal protection?

Mr. Joel W. Westbrook: That is right, Your Honor.

In our case, we stipulated the thing we tried on the record, we stipulated facts.

We stipulated American Motorists was an Illinois Corporation, authorized to do business in Texas and doing business in Texas and that it had an agent in McLennan County, that is with it and the plaintiff relied upon Subdivision 27 of our general venue statute and that was sufficient under Subdivision 27.

Had it been a domestic corporation it would not have been sufficient.

He would then had to go ahead and prove his cause of action, every element of it.

Justice Lewis F. Powell: I hear what you say, but does it mean that you have a full-dress trial before a jury on the merits on the venue issue alone?

Mr. Joel W. Westbrook: If you ask for a jury, yes.

But as I said the Court has the discretion to try the case on the merits at the same time and try its plea of privilege, if he does ask for a jury.

Justice Lewis F. Powell: (Inaudible) does not exercise that discretion, then the plaintiff has a burden of showing about a preponderance of the evidence that he is entitle to recover on the merits?

Mr. Joel W. Westbrook: Yes sir, every element of the cause of action, except damages.

Yes sir, factual damage.

Justice Lewis F. Powell: So you might have a week’s trial?

Mr. Joel W. Westbrook: Yes sir.

Justice Lewis F. Powell: But if you are a foreign corporation, you do not have that opt-in.

Mr. Joel W. Westbrook: No sir.

Just that you are a foreign corporation doing business and have an agent in that county.

Justice Lewis F. Powell: Does the defendant put in evidence at the jury trial to controvert the evidence introduced by the plaintiff?

Mr. Joel W. Westbrook: Yes sir.

Justice Lewis F. Powell: So you have a full-dress trial?

Mr. Joel W. Westbrook: It could be yes, yes sir.

But of course the --

Justice John Paul Stevens: What is the normal practice?

Does the judge usually have two trials or does he usually consolidate them?

Mr. Joel W. Westbrook: No sir, I would say the normal practices of the jury are not demanding.

The normal practice is that the judge hears and makes the decision and normally it is not a full-dress trial.

Justice Potter Stewart: What is it, sort of a prima facie case, and just (Inaudible) of plaintiff?

Mr. Joel W. Westbrook: No sir, it has to go beyond that.

After all he wholly has prove it by preponderance of the evidence, but of course if the jury -- if the judge is the finder of facts and he finds a preponderance there, this is not likely to be upset that -- it was by preponderance of evidence.

Justice William H. Rehnquist: Mr. Westbrook, I see from the brief that you have filed, the appendix to your brief that there are 31 Sections to the Texas Venue Code and there are obviously distinctions between foreign corporations and domestic corporations which you are asking us to focus on, but under Section 28, if your company had been of a Fire, Marine or Inland Insurance Company, it would have been subject to different regulations than being an automobile casualty company.

Now, what is the standard that we are supposed to apply in terms of equal protection in determining whether these 31 different provisions for venue in different kind of suits offend the Federal Constitution?

Mr. Joel W. Westbrook: Sir, we say that the Federal Constitution has offended the Equal Protection Clause, by reason of the difference between Subdivision 23 which covers domestic corporations and Subdivision 27 which covers foreign corporations other than those specified elsewhere and this case came up under Subdivision 27.

No other of the subdivisions are involved in this situation.

Justice William H. Rehnquist: It is perfectly true, but it seems to me that any litigant in Texas, unless he happens to be a private individual sued in a particular kind of case is going to be able to make some claim that he is treated differently than either of the kind of railroad personal injury case in Section 25 or the Fire and Marine case in 28.

What standard do we apply?

Mr. Joel W. Westbrook: Yes sir, as a matter of fact Subdivision 23 was before this Court 44 years ago.

On the claim that corporations were discriminated against because they had to prove a cause of action and an individual did not in order to avail themselves to the privilege of transfer to county of his residence.

And the standard we think is the standard that was employed, substantially employed in the Power Manufacturing versus Saunders, which this Court decide in 1927, involving an Arkansas venue statute.

In that the case the Arkansas statute permitted a foreign corporation to be sued anywhere in the state, any county in the state, whereas a domestic corporations were limited to place it where they had an agency or representative and this Court in that Saunders case said that the classification was not a reasonable classification.

They were not any facts related to the classification which reasonably could justify, it is to us, arbitrary.

Justice William H. Rehnquist: Now but your case is not power, is it, because Texas requires even though a foreign corporation that it be sued only in the county where it has an agent?

Mr. Joel W. Westbrook: Or it says agent or its principal place of business or in a county where the cause of action arose.

In this particular case, the cause of action arose in Tarrant County.

American Motorists has its home office in Texas, in Dallas County and the plaintiff sued in McLennan County, the county of his residence.

Justice William H. Rehnquist: And he could have sued a domestic corporation?

Mr. Joel W. Westbrook: Yes, he could have sued a domestic corporation.

It is -- the Arkansas Statute in Saunders, we recognize that had a wider venue play than here.

Ours is deeper because this matter of the burden that domestic -- that a plaintiff against a domestic corporation has is a valuable right.

Our Courts have consistently said this is a valuable right, this has been your right and part of the reason is, I think, readily see is that if you are a domestic corporation, you get these things, one you have got a look at your adversary's tactics and his witnesses, you get, at the very least a judicial appraisal of the value of the case from the evidentiary point of view and you get an appellate appraisal, perhaps as to important procedural evidentiary matters.

That is a very valuable thing that these domestic corporations have and we do not believe that there is any rational justification before having the -- this difference between domestic corporation's right to be transferred to the county of their residence and foreign corporations.

Now, --

Chief Justice Warren E. Burger: Are you saying -- of course you are saying that it is irrational to say that a domestic corporation should be sued either (a) where the event took place or (b) at its home base when a foreign corporation is likely to have a more progressive presence in the state, is it not?

Mr. Joel W. Westbrook: Yes sir, substantially so.

The domestic corporation --

Chief Justice Warren E. Burger: (Voice Overlap) basis for a different treatment?

Mr. Joel W. Westbrook: I beg your pardon?

Chief Justice Warren E. Burger: Is that a rational basis for a different treatment of the two?

Mr. Joel W. Westbrook: Your Honor, I do not believe that the sole effect and this is what was held I think in Saunders.

If the sole reason for discriminating in the venue statutes is residence, if that is the sole reason that that is not sufficient to avoid confrontation with the Equal Protection Clause.

As a matter of fact I think an argument made with the proposition looking for legislative intent, that is just like it may not have even intended this result.

It -- what happen was and I -- before 1943 they were treated alike then in 1943, the legislature amended Subdivision 23 and created this requirement that a cause of action be proven against it, but it did not similarly do in Subdivision 27.

So, you are not getting the same justice in the procedure of defending, of an insurance company defending, if you are foreign corporation that you would get if you are a domestic corporation.

Justice John Paul Stevens: Mr. Westbrook, would you help me just a minute.

Does this requirement in -- when the suit is against the domestic corporation, the requirement that he put in his prima facie case a little more, is that in the statute or is that by a judicial decision?

Mr. Joel W. Westbrook: No sir.

That is by judicial interpretations.

In the statute to the extent that it says cause of action, but establishing that it must prove a cause of action by preponderance of the evidence is by judicial decision.

Justice John Paul Stevens: Your objection is the way in which the Texas Courts have construed Section 23.

Has any plaintiff ever made the contention in a suit against the domestic corporation that this is an unconstitutional burden against him?

Does he has a great burden if he sued a foreign corporation?

Mr. Joel W. Westbrook: Your Honor, I do not believe so.

Justice Potter Stewart: It seems to me there is a greater burden on the plaintiff where he has to do than it is on anyone else?

Mr. Joel W. Westbrook: Yes sir.

Justice John Paul Stevens: (Inaudible) the one that is really most excited about it.

Justice Lewis F. Powell: Before you carry on, what is the justification for what in effect is a mini trial on a plea of privilege where the only issue is venue -- what is the rationale?

What prompted the Texas Courts to construe Section 23 in this fashion?

Mr. Joel W. Westbrook: I think partly and of course this was before summary judgment, but I think that there are distinctions still.

This partly was to nip frivolous cases in the bud.

If you could not show a cause of action right there at the beginning to the satisfaction of the Court or jury then you would avoid a long trial because we will transfer to another county.

Under that disability, the odds are pretty good it is not going to be tried.

Justice Lewis F. Powell: (Inaudible) summary judgment practice in Texas?

Mr. Joel W. Westbrook: We do have summary judgment practice, sir.

Justice Lewis F. Powell: And this curious procedure?

Mr. Joel W. Westbrook: No sir, and I think the reason why not and why we still have so much of this is it that you get some things in plea of privilege that you do not get -- I am talking from the defense point of view that you do not get a summary judgment.

As Your Honor knows, not Texas, but most states, you can beat a summary judgment motion by the defendant, just by showing there is an issue of fact, but you cannot beat a plea of privilege that way.

You have to prove out your case.

Justice Lewis F. Powell: Yes.

Justice William H. Rehnquist: Mr. Westbrook.

Mr. Joel W. Westbrook: Yes sir?

Justice William H. Rehnquist: Your mini trial or whatever you want to call it, occurs in your plea of privilege cases only where the statute speaks of the cause of action having arisen in a particular place, does it not?

Mr. Joel W. Westbrook: Yes.

Justice William H. Rehnquist: In other words, when the venue provision does not depend on where the cause of action arose then there is no mini trial?

Mr. Joel W. Westbrook: That is right.

It is conceivable that you could have venue, a venue exception established without proving a cause of action, yes sir.

Justice William H. Rehnquist: Really, did not the Texas Supreme Court just come along and read this language where the cause of action arose and say that you are in affect, if you are depending on that kind of language in a venue statute, you had to show that a cause of action did arise?

Mr. Joel W. Westbrook: Mr. Justice Rehnquist, I do not know if that was a language, but I can say that is a fair effect of it, yes sir.

Justice John Paul Stevens: Mr. Westbrook, what are you asking the Court to do?

You are asking us to send it back and require the plaintiff in order to support venue to prove a prima facie case?

Justice Potter Stewart: No sir, we are asking this Court to declare that Subdivision 27 as it is applied in Texas, is unconstitutional because it deprives foreign corporations of the equal protection of the law.

Justice John Paul Stevens: Then what happens to this lawsuit?

Mr. Joel W. Westbrook: Then he would --

Justice Thurgood Marshall: (Inaudible) at all if you write 27 off the books, (Inaudible) of the book?

Mr. Joel W. Westbrook: I had, I suppose more difficult problems in that, but we would be happy with it.

If you did --

Unknown Speaker: (Inaudible)

Mr. Joel W. Westbrook: This cause.

Mr. Justice Keith wrote an opinion when this Court sent back Exxon versus Preston after the plaintiff withdraw brief to determine whether or not the cause was moot and I think if this Court declares Subdivision 27 is unconstitutional that it might well have the superior option of sending it back for determination by the Court of Civil Appeals of whether a cause is moot or what further proceedings should be had.

I think that is Texas’ problem as to what you are doing.

Justice William J. Brennan: (Inaudible) one could -- your client then be sued in Dallas?

Mr. Joel W. Westbrook: Your Honor, there is a question about whether --

Justice William J. Brennan: That is unconstitutional?

Mr. Joel W. Westbrook: I think the statute limitations on uninsured motors case is probably four years, I am not sure because of the contract aspect --

Justice William J. Brennan: Yes, if there is only statute limitations problem, could a new suit, if you were to prevail here and 27 was struck down, could a new suit be brought in Dallas against your client?

Mr. Joel W. Westbrook: Like we brought in Dallas or we brought in Tarrant County, if the forum where the--

Justice William J. Brennan: Cause of action?

Mr. Joel W. Westbrook: (Inaudible)

Unknown Speaker: (Inaudible)

Mr. Joel W. Westbrook: I am sorry Your Honor, I did not hear --

Justice Harry A. Blackmun: You would not be content with a mere transfer of the case to Dallas or Tarrant County?

Mr. Joel W. Westbrook: I think mechanistically, I have to say yes, but of course we are hopeful that invidious discrimination will be declared unconstitutional.

I do not --

Justice Harry A. Blackmun: (Inaudible) the statute limitations on that?

Mr. Joel W. Westbrook: Yes.

I think that we should make it clear to the Court because I do not see how this question was missed, but I think it was surely clear to the Court that we are talking about corporations that are authorized to do business in Texas not unauthorized because that would be an entirely different story I think.

And they do have a fixed place of business in Texas.

They do have a designated process agent.

Now, in the Saunders case this Court decide in 1927, held that for venue purposes there is just no constitutional basis for extinguishing between a domestic and an authorized foreign corporation.

I do not know what my time situation is, except I will be advised here, but I believe that it probably be appropriate if I or let that, not a distinguished associate from word go in answer to the next set of question, but before I do let me say this I -- you will pardon me personal reference, I am a family of six generations in Texas.

I really feel that I am on a sound ground of saying that -- that this invidious discrimination is something more than just being inhospitable to foreign corporation.

Regrettably so it is more than that.

We think it does what Mr. Justice Brennan was talking about in Bowers, I believe when he spoke of the disruption of federalism and we think this kind of discrimination is disruptive of federalism.

I know around the Navy Club, you know they changed the name of the room, strangers room, it has been changed to visitors room and that is somewhat more hospitable, but we do believe it is not just a question of hospitality that it is disruptive of federalism.

Chief Justice Warren E. Burger: Are you saying that there are -- (Voice Overlap)

Argument of W. V. Dunnam, Jr.

Mr. W. V. Dunnam, Jr.: If it please the Court, I would like to in view of the fact apparently that Justices are not too familiar with the localized plea of privilege of venue practice in Texas, to give you actually a clearer view point of what it actually is about there.

In the 20’s, this stuff about a jury trial, in the 27 years so that our practice just continuous trial practice through the years, I have yet to for the first time to ever try a plea of privilege before a jury and actually I have yet to hear one ever being tried though there instances during this history of the State where it has occurred and --

Justice Potter Stewart: In their what, over 200 counties in Texas?

Mr. W. V. Dunnam, Jr.: Yes sir.

Justice Potter Stewart: And, so there -- it is the least possible their practice might vary from --

Mr. W. V. Dunnam, Jr.: Well, if the lawyer or defendant demanded a jury trial then the Court would put in the trial on the merits at the same time and for that reason they never demand a jury trial because then you just try the whole case and he would not get his plea of privilege trial.

Justice Potter Stewart: (Inaudible) demand a jury trial?

Mr. W. V. Dunnam, Jr.: Either party could demand it but --

Justice Potter Stewart: And the plea of privilege --

Mr. W. V. Dunnam, Jr.: I do not believe either party can.

I believe just the defendant.

It is something -- it is about -- it is been 20 years since I have even heard that question of a jury trial brought up in the thing.

Now, about the burden of proof which Justice Stewart suggested possibly was prime facie case.

Technically, legally, according to decision, this preponderance of the evidence as a matter of actual truth and fact and then in factual analysis that is simply a matter prima facie proof.

Actually, the way the practice goes, the man makes out a prima facie case.

He does not show anything other than a prima facie case.

The Trial judge, I have never known of one to decide it just on of weighing the evidence and actual facts.

If he makes out a prima facie case the plea of privilege is overruled.

That was a law for many, many years in the State of Texas.

Then they changed it to preponderance of the evidence and of course, Trial Court is being jealous of their own jurisdiction, generally if a man filed a case in this Court, if he shows that there was a collation and his clients says the light was green for him or other, the defendant takes his stand which they never do.

The defendant never puts any evidence on his own plea of privilege, only agrarians.

So I do not believed in 27 years I have ever had it happen.

Justice William J. Brennan: (Inaudible) judge a viability, what does he do?

He simply says, (Voice Overlap) carried your burden?

Mr. W. V. Dunnam, Jr.: If venue is established.

Now --

Justice William J. Brennan: He makes no finding.

Mr. W. V. Dunnam, Jr.: No.

No Your Honor.

Justice William J. Brennan: You make out a case of viability?

Mr. W. V. Dunnam, Jr.: He just overrules a plea of privilege.

Now, Justice Rehnquist brought up the question about whether or not the -- and when Mr. Westbrook responded and it is the purpose of this -- the whole plea of privilege, the purpose and objective of the state legislature in this instance is to give our defendant an opportunity to see what cause of action is, throw out frivolous lawsuits.

And of course that has no bearing on it whatsoever as to the purpose of the legislature.

For the reason that Justice Rehnquist point it out are probably 50% of your grounds, your exceptions to exclusive venue in the County one's residence are based, have no relationship to cause of action.

In the words, any suit involving the title to real estate or remove a clout of title, if that is the suit by its pleadings alone, that is the suit, you do not have to establish a cause of action whatsoever and cause of action has no bearing on it.

If I sue John Doe from running over my dog, it really means all I have to do, he files for a plea of privilege, all I have to do is come in and prove that he lives in the County were the suit is, cause of action has nothing to do with it, whatsoever.

All I have to do is establish -- that was the county of his resonance in regard to corporation, any corporation, domestic or foreign.

This business of a cause of action applies as to either.

Anytime you sue a corporation in the State of Texas, all you have to do to establish venue if -- in the County of your suit is to establish that the fact that your cause of action of a part thereof, it says to domestic or foreign that your cause of action or a part thereof which means if it is a contract, that the contract was entered into or performance or breach occurred here, any part of that cause of action or your damages occurred in this County or your initial negligence --

Justice Thurgood Marshall: (Inaudible) no difference between the foreign corporations, domestic corporation on the plea of privilege?

Mr. W. V. Dunnam, Jr.: I say as to this -- this one ground of exception to venue in the county of one’s residence.

That is not common.

Section 23 provides as to domestic corporations, you can hold them in any county where a cause of action or a part there of arose.

As to a foreign corporation the same identical provision exists.

Now --

Justice Thurgood Marshall: Is there anything about cause of action in 27?

Mr. W. V. Dunnam, Jr.: That is what I just gave Your Honor, yes sir.

Justice Thurgood Marshall: Where (Voice Overlap) 27?

Mr. W. V. Dunnam, Jr.: Yes sir, in other words in 23 and 27, you can hold either one where identical that provision and --

Justice Thurgood Marshall: (Inaudible)

Justice William H. Rehnquist: (Inaudible) 41 of the appellant’s brief.

Justice Byron R. White: And I suppose that a plaintiff who lives in that county can sue in his own county either a domestic or foreign corporation?

Mr. W. V. Dunnam, Jr.: In a --

Justice Byron R. White: Is that right or not?

Mr. W. V. Dunnam, Jr.: That is not correct.

Justice Byron R. White: (Inaudible)

Mr. W. V. Dunnam, Jr.: No sir.

No.

You cannot just establish venue in a county --

Justice William J. Brennan: Private corporation maybe brought in a county in which the plaintiff resided at the time the cause of action or part thereof arose?

Mr. W. V. Dunnam, Jr.: That is if, if -- of--

Justice William J. Brennan: (Inaudible) you read both the cause of action and the plaintiff?

Which?

Mr. W. V. Dunnam, Jr.: That -- I mean that is the second --

Justice William J. Brennan: What 23 says?

Justice Thurgood Marshall: (Inaudible) but it looks to me like 23 is (Voice Overlap)

Mr. W. V. Dunnam, Jr.: I am speaking of this clause.

23 and 25 have -- each one has about 3, or 4 separate clauses, that is what I am getting at.

They have one in common, the cause of action or part thereof.

That is setup of the separate clause as to each.

Alright, now the Commercial Standard versus Adams, we agree with the rule -- the decision in that case.

However, in our brief we feel that the Court there did not see it as concise as is it actually -- the actual question was.

In that case they just discussed overall question proposed here by Mr. Westbrook.

Simply is it an invidious discrimination to provide that you can merely -- that you can hold a domestic corporation by -- of having to prove an agency and a cause of action and then as to a foreign just an agency, but here is the way we read these two statutes.

The first, 23 as to domestic corporations, we have got the common clause.

We set that out of the way, that is in common, I cannot make a complaint about that.

Either one can be held wherever cause of action or part arose.

Alright, set that aside.

Now ,let us go over to the next.

Here is where Mr. Westbrook’s complain is.

As to the domestic corporations the statute provides that they can be held where their principal office is.

Now that means their principal office in fact are the one designated in Texas.

Now, of course a -- now we are going to this next clause.

A domestic, you can hold them where their principal office is; alright, a domestic corporation, their principal office is of course in the State of Texas generally.

That is where their officers meet.

That is where their records are kept.

That is where their Directors meet.

That is where their officers function, their primary functioning office in the State of Texas.

There is no such thing over here to correlate as to foreign corporation.

Their office is up in Detroit, Michigan maybe.

Chief Justice Warren E. Burger: (Inaudible) the entire State of Texas (Voice Overlap) and all the 200 counties in the entire state?

Mr. W. V. Dunnam, Jr.: (Voice Overlap) Alright and we want to treat as equally as we can possibly do consistent with the differences at reasonably equal consistent with the differences.

Alright, we got the domestic where it has its principal office of business.

We can not hold a foreign it is a principal place of business.

It is out of State.

Justice Byron R. White: It is is one of the alternatives in which you can sue a foreign corporations, is it not?

Mr. W. V. Dunnam, Jr.: That is one of the alternatives but --

Justice Byron R. White: Your own statute indicates that foreign corporations may be sued where their principal office is in Texas?

Mr. W. V. Dunnam, Jr.: We recognize that as a possibility.

A Delaware corporation may get a charter up there.

It is a rarity, once in probably 10,000 corporations have all their meetings and functions right there in Texas and some states do not permit that.

But that is a rarity.

Actually we cannot duplicate, have a duplication, so what is the next closest thing to equality with the domestic corporation.

Texas has concluded and rightly so, that domestic has its primary principal office with all of its functions there, you can hold them there.

The foreign does not.

What is the next closest thing for a foreign corporation?

It is this, where it has an agency and representative, not just an agent or representative, but one of a fixed and a permanent nature, that is where the Texas Supreme Court has construed that provision.

So --

Justice Thurgood Marshall: (Inaudible) office in Delaware.

Mr. W. V. Dunnam, Jr.: That insurance company of course, it is a foreign insurance company, I am sure its main office is probably not in Dallas.

It is in some other State.

Justice Thurgood Marshall: The main Texans office is in Dallas?

Mr. W. V. Dunnam, Jr.: Well, the -- the record does not show that Your Honor and I -- I do not know whether that even has it.

It would be a terrific element of proof to try to establish, say some insurance company in Nevada State, they have got agencies all over Texas.

Justice Thurgood Marshall: The statutes says that only County was the principal of such company maybe situated?

Mr. W. V. Dunnam, Jr.: Alright.

I will get to that Your Honor.

The principal office is this.

What you raise there as a primary, is this Texas statute.

Avenue Insurance Company has an office in Houston.

It is a foreign company.

They have got a big office in Dallas.

They have got one at Odessa and one at the Lubbock.

Which one is the principal office?

They have got an agency, a fixed permanent agency operating out of all four places and they covered large and broad areas which is there principal office.

Justice Thurgood Marshall: But Texas can make them say which one is?

Mr. W. V. Dunnam, Jr.: If --

Justice Thurgood Marshall: State of Texas?

Mr. W. V. Dunnam, Jr.: They would have to hold it as according actual primary office instead of their designation for this reason.

Justice Thurgood Marshall: But did Texas say that you have to designate one office as your principal office?

Mr. W. V. Dunnam, Jr.: Alright sir and here is what would happen.

Justice Thurgood Marshall: (Inaudible)

Mr. W. V. Dunnam, Jr.: Absolutely.

And here is what would happen.

It would be unfair to every litigant in Texas.

I will tell you why.

There are small counties in Texas where 80% of the populations are railroad employees like Palestine, Texas, that county.

The railroads would all designate -- they would designate that county, though it is not their actual primary function and purpose.

It could not succeed in a judgment against them.

Then insurance companies would all designate Dallas, Texas, whether that was their actual main operation or not.

Some companies would designate the -- some county in the remote Big Bend County where it be prohibitive for anyone to sue them, it is a far, it is the most remote area in the State of Texas, miles of -- equivalent of going to across four, five of these States up here.

And the -- it would be un-functional, it would be unfair to the citizens of Texas.

Justice Byron R. White: (Inaudible)

Mr. W. V. Dunnam, Jr.: Your Honor, what?

Justice Byron R. White: A domestic corporation could engage in the same tactics --

Mr. W. V. Dunnam, Jr.: But Texas holds it to their principal office in fact.

Justice Byron R. White: Well, they could hold then foreign corporation to that -- to whatever the facts show as to where their principal office is?

Mr. W. V. Dunnam, Jr.: Principal office in Black’s Dictionary is generally -

Justice Byron R. White: What does a foreign corporation do when it qualifies in Texas, what kind of a piece of paper does it fill up?

Mr. W. V. Dunnam, Jr.: They designate an agent for service and pay a franchise tax.

Justice Byron R. White: And the agent for service is usually the corporation --

Mr. W. V. Dunnam, Jr.: That is probably the -- generally most of them have a CT corporations in some building in Dallas, Texas.

But --

Justice Byron R. White: They do not say where their principal office is going to be in the State?

Mr. W. V. Dunnam, Jr.: I do not -- that they do not have to.

Justice Byron R. White: Or required to --

Mr. W. V. Dunnam, Jr.: But, there would be a black pay if that determined where their principal office was.

Justice Byron R. White: It might not determine the -- finally where it was anymore than it would be with the domestic corporation?

Mr. W. V. Dunnam, Jr.: Well, but -- it is easy to determine a domestic corporation because that is the home office of the company.

Generally they have to have some home office and --

Justice Thurgood Marshall: (Inaudible) goes down in two, three huge buildings to show it must be the home office, 130 stories high.

Mr. W. V. Dunnam, Jr.: That is right.

There are some instances --

Justice Thurgood Marshall: (Inaudible) offices.

Mr. W. V. Dunnam, Jr.: If that was --

Justice Thurgood Marshall: But it would be hard to move them?

Mr. W. V. Dunnam, Jr.: It probably would be in that instance.

But if they put one up in Dallas and two or three other places what would be the -- a similar building.

Justice William H. Rehnquist: Well, is what you are saying that a domestic corporation’s home office has certain functions associated like -- where the like the presence of a Chief Executive Officer, the meetings of the Directors and that sort of a thing that make it much more readily identifiable factually than what might be one of several relatively equally important branch office of a foreign corporation that has its principal place of business in another State?

Mr. W. V. Dunnam, Jr.: That is exactly correct.

That is why Mr. Black defines a principal office of a corporation, where they maintain their permanent records and where their principals officers are and where their Boards generally meet those, of course sometimes they have a meeting at Vegas, and stuff like this for vacation purposes.

Their primary -- their primary board room and so forth and all the various aspects of the corporate function.

Now, the venue -- the Texas venue statute provides a railroad can be held wherever it has a track running in Texas.

The final shot of the whole thing is, as stated by this Court many times, if the classification is based on some differences that reasonably apply and are pertinent to the basis for which the classification is made then it is not arbitrary, it is violative of the Fourteenth Amendment on equal protection laws.

Justice Potter Stewart: The case in this Court that bears on this most relevantly I suppose is the Power Company against Saunders case, is it not?

Mr. W. V. Dunnam, Jr.: That was a case, that was a case where -- they just provided a personal injury action.

You can sue a foreign corporation just any place in the State.

There was no -- the classification did not relate to the distinction made to the subject of the distinction of the differences and so forth.

The -- in other words, that would like providing a -- well, fro instance railroad where it got a track, that has some relationship to the function, state wide function for reasonable basis of -- it is familiar with those grounds, it is functioning in them.

Therefore, it is a reasonable basis to hold it there, though it may have agencies at various places, but of courses a much greater argument could be made on that.

You could argue that, it is just like saying trucking line is sueable wherever there is a highway in the state, that is substantially summary.

But, the --

Justice Harry A. Blackmun: (Inaudible) point of the finality of the judgment here, I take it you are not?

Mr. W. V. Dunnam, Jr.: Well, in Texas a plea of privileges is an interlocutory ruling and the Supreme Court of the United -- of the State of Texas does not have jurisdiction of an order on a plea of privilege except in certain instances where there is a conflict of decisions or where there is a dissenting opinion on certified question because it is not, it is an interlocutory order.

Justice Harry A. Blackmun: Are you taking that there is no jurisdiction in this Court for this review at this point.

I do not read your brief that way?

Mr. W. V. Dunnam, Jr.: I have not claimed that in the brief that it is a question -- there are some serious question about it.

Justice Harry A. Blackmun: I wonder why you did not do it?

Mr. W. V. Dunnam, Jr.: But I did not -- this is a matter -- I feel that as short as our brief is that that gets to the heart of this thing and the Texas Court has -- we would like a final decision on to by this Court.

Justice Harry A. Blackmun: As your brief is, it seems to me it does not touch upon it and this raises -- this brings me to my other question.

I take it if you are not relying on the Adam’s case.

You do not cite it?

Mr. W. V. Dunnam, Jr.: Well, he cited Adam’s case enough and it attacked its rationality which we think is, is accurate.

However, we feel that -- I feel -- the reason we presented this in this brief like I said, the only question actually before this Court on the Fourteenth Amendment is whether or not it is a rational distinction where you give a (Inaudible) whatever cause of action is that you take another clause, you say the domestic can be held where it has its principal office.

Then in order to equalize this, they say you can hold a foreign corporation wherever it has a -- it’s a primary office or wherever it has an agency or representative and the Texas Supreme Court construes that domain a fixed permanent agency in the State of Texas and we say those are equivalents and they are as close to equivalence as anyone could actually bring about.

Justice Thurgood Marshall: (Inaudible) interlocutory order?

Mr. W. V. Dunnam, Jr.: That is what the Supreme Court of Texas has always held that these are interlocutory orders or statutory jurisdiction.

Justice Thurgood Marshall: Give us jurisdiction, you cannot waive jurisdiction?

Mr. W. V. Dunnam, Jr.: No, I know we cannot.

Justice Thurgood Marshall: Case which say we have jurisdiction?

Mr. W. V. Dunnam, Jr.: None whatsoever except the fact that the reason I did not raise it, back this Court did note probable jurisdiction back in this case one time when it presented there is conflict.

The Court of Civil Appeals opinion in Texas.

This Court noted probable jurisdiction but --

Unknown Speaker: (Inaudible) jurisdiction.

Mr. W. V. Dunnam, Jr.: Yes sir.

Justice Lewis F. Powell: You defend the classification here.

Would you summarize to me exactly what you think because State interest is that justifies this different treatment for a foreign corporation and a domestic corporation once venue is sought in the particular locale involved in this case.

What is the State interest that your (Voice Overlap)

Mr. W. V. Dunnam, Jr.: (Voice Overlap) State interest, Your Honor.

The State interest is in the Fourteenth Amendment trying to equalize it.

I will say that -- that where a domestic corporation, a logical place to sue it is a place where its primary office is.

I say you --

Justice Lewis F. Powell: Let us assume a domestic corporation and a foreign corporation both being sued in precisely the same county.

As I understand it one has the privilege of the mini trials and the other does not?

Mr. W. V. Dunnam, Jr.: That is a --

Justice Lewis F. Powell: Is there no -- is there no situation, no county, no cause of action in which a domestic corporation does not have the mini trial when the foreign corporation was to have it.

I put that badly, (Voice Overlap) do you want me to put it again?

Mr. W. V. Dunnam, Jr.: What I am trying to make -- I feel his brief misses the end of the whole thing and it might have thrown a salvo.

Justice Lewis F. Powell: But you do treat a foreign corporation differently under the circumstances before us here?

Mr. W. V. Dunnam, Jr.: You -- we would treat them.

Justice Lewis F. Powell: Answer that question please sir.

Mr. W. V. Dunnam, Jr.: We treat them differently, but as close to equally as can be possibly be done.

Justice Lewis F. Powell: Both to have the mini trial in the circumstances of this case?

Mr. W. V. Dunnam, Jr.: We do not allow the domestic corporation to have the -- the mini trial on a cause of action.

Where we allege -- it is a primary office is Dallas County and we sue him in Dallas County.

Primary office in fact, all we have to do is prove its primary office in Dallas County.

Alright.

As to a domestic it has no primary office, generally.

So the nearest the thing to it -- without a -- it just prove that it has a fixed, permanent agency in that county.

That is what a foreign corporation will have in place of its primary voting office and so forth and officers.

A fixed, a permanent place of business and we prove that -- not just it has some agent living down there, but it has a fixed agency of a permanent nature in that County.

Did we not have established it?

There is no mini trial required as to them.

There was no mini trial required as to the domestic corporation as to cause of action.

That is the thing.

That is our position.

These are the two pluralities.

In other words, he has tried to take this other additional ground of venue which the domestic corporation as his Honor Justice Stewart pointed out a while ago the domestic corporation in this additional ground over here, he is talking about where you have to prove a cause of action.

That is an additional ground to hold a domestic corporation.

In addition to these deals it goes on to provide that you can hold a domestic corporation where it -- or where the plaintiff resides and it holds that you could have to hold a foreign corporation where the plaintiff resides you have also got to prove that the cause of action occurred where the plaintiff resided or that the cause of that -- or you could hold him in the nearest county of which he has an agent to where the plaintiff lives.

That is initial ground, additional ground of that you have got to prove additional burden to the hold a foreign corporation that you do not have to place on a domestic corporation.

Chief Justice Warren E. Burger: But you have not been in your -- that is in the terms of the Powers case, but essentially are you not arguing that the position of Justice Holmes and Brandeis is the -- it justifies whatever discrimination difference in treatment is accorded here by Texas to foreign and domestic corporation?

Mr. W. V. Dunnam, Jr.: I think they were correct in their dissent, but I do not think that case is anywhere informed.

That did not -- there was no distinction made there.

There is no -- it is just wherever, wherever you want to sue a foreign corporation does not relate to where they have an operation going there, a fixed permanent operation or primary office or anything, just sue him anywhere.

Chief Justice Warren E. Burger: The reasoning of Justice Holmes and Brandeis is (Voice Overlap)

Mr. W. V. Dunnam, Jr.: There reasoning is accurate, but I do not think there would be needed in this case because this is a -- we have Texas in this case all of the -- all they have done is provided, going further and place additional grounds, you can hold a domestic just, but to hold a foreign corporation in addition to proving the plaintiff as there you have got to prove a cause of action there to and as to domestic just prove the plaintiff if he object and then the pluralities are up here higher.

Justice Lewis F. Powell: You have not told me what interest that says, what does that do for the benefit of the State of Texas?

Mr. W. V. Dunnam, Jr.: Alright.

Well, of course it is the interest of the State to be -- that any person, form of corporation is functioning within his borders, have some means of access to the Courts to write and redress the wrong.

And -- so everyone should be suable in some county and it is the interest of the State to do it with reason provided for some protection to the person sued that he might be in an area where he is not a total foreigner, where they cannot harass him by filing the suit over into Big Bend County, on a man in Dallas, but likewise it is the interest of the State that litigants have a reasonable opportunity to present their case to a forum within some reasonable relationship to the functioning company involved and where as long as they restrict it to a domestic -- no way I can think up or you could treat them more equally.

If you are going to let a domestic corporation be sued wherever its principal office is, without regard to where the wrong occurred or claim wronged or anything of that nature, then the only way you could closely relate up a foreign corporation to the same category would be to provide as Texas has done that it can be held wherever -- it has a fixed agency and representative.

And then those are equivalents as close as it could be possibly set -- be set out.

And we think that it is reasonable, it is rational, it is the only way you could equivalently treat them.

If you provide that foreign corporation can be sued where its principal place of business is and that if -- and a foreign or domestic corporation likewise did not provide that foreign could be sued where it had an actual permanent fixed place of business in Texas then you would be treating the domestic corporation, you can hold them wherever there principal place of office, businesses, but you could not touch the foreign corporation where its principal was and you could not touch him any place else though they have got their actual prime of fixed place right there in Texas and --

Justice Thurgood Marshall: (Inaudible) the same statute for both?

Mr. W. V. Dunnam, Jr.: They had what, Your Honor?

Justice Thurgood Marshall: The same statute for the both domestic it was exactly the same, domestic and foreign?

Mr. W. V. Dunnam, Jr.: I believe that is correct.

But --

Justice Thurgood Marshall: Why did you change it?

Mr. W. V. Dunnam, Jr.: Well, I guess they want to treat foreign corporations on an equal -- as far as possible with the domestic and you do not have to prove a cause of action to hold a foreign corporation where its office is and likewise you should not have to prove one to hold a -- I mean, the domestic corporation where its office is and where a foreign corporation its office in Texas, you ought not to have a proof of cause of action to wholly limit that.

Justice Thurgood Marshall: (Inaudible) I appreciate that.

Justice Potter Stewart: I did not quite understand your answer to my Brother Marshall.

You conceded in response to his question that up until sometime in the 1940’s, domestic corporations and foreign corporations were treated precisely alike under the same statute and as I understood you, in any civil why do they -- why do think the legislature changed it and your answer was, in order to treat them alike.

It does not -- I missed something there.

Mr. W. V. Dunnam, Jr.: Well.

You could hold either one of them where a cause of action occurred, and you could hold either one of them where the plaintiff resides plus you got to prove a little more on the foreign and you could hold the local or wherever their principal office is, but the foreign does not have any office you could hold the in until they initiated that in actual practice, for truth and practice.

There is at out--of--state, they got -- they might have to or three huge offices, the very places in Texas, you cannot differentiate which is the biggest and which is the volume or otherwise.

Chief Justice Warren E. Burger: Do you have anything further Mr. Dunnam.

Rebuttal of Joel W. Westbrook

Mr. Joel W. Westbrook: Very limited Mr. Chief Justice.

I would remark that in response to Mr. Justice Powell’s question as to whether a corporation were treated differently, foreign and domestic, I understood counsel to say that they were treated differently, but attempted to make it as equal as possible and I would really rather thought that the concept of separate but equal had been a long and since dissipated.

It must be kept in mind that the plaintiff has the right to choose initially, not only the forum, but the exception.

He could pick four or five of them if you wanted to and he did in this case, he picked two, Subdivision 23 and Subdivision 27.

But in actual trial -- plea of privilege, he elected to stand only on 27.

Why?

Because if he had tried to stand on 23, he would have had to prove the cause of action, it is his choice.

I do feel that, it will be useful to say and to establish although I do not see it on one of Justice’s remark, the statute itself refers to a principal office in a State and that is a question of fact.

In this case it was asserted in a verified plea that it was Dallas.

That was not consequent.

It would have been no problem, would be no problem, if the Court ruled the other way, we are going to Dallas.

I do feel that it might be desirable and if the Court would give us leave to furnish the Court with a brief on the jurisdictional question which several of the Justices asked.

Justice Potter Stewart: As to whether or not that our Court has jurisdiction which depends upon whether or not this is the final judgment of the Court of Civil Appeals of Texas?

Mr. Joel W. Westbrook: Yes, that is right.

Justice Potter Stewart: I would be interested in it.

Mr. Joel W. Westbrook: Before closing finally your Honor,we believe that the Exxon case --

Justice Potter Stewart: How did the Exxon case, was it in the same procedural posture as this one?

Mr. Joel W. Westbrook: Substantially, yes sir.

It was a venue of question and it came up here, proper jurisdiction was voted.

Justice Potter Stewart: That actually it was in the same procedural posture?

Mr. Joel W. Westbrook: Yes sir.

Yes sir.

Justice Potter Stewart: Because the Arkansas case, Power Company case did not -- that was a final judgment for the plaintiff after a trial.

Mr. Joel W. Westbrook: Yes sir, that is right, but Exxon, Exxon likewise was the question where the plea of privilege was overruled.

Justice William H. Rehnquist: Exxon was never argued here though, was it not?

Mr. Joel W. Westbrook: No sir.

The appellant filed his brief --

Justice Potter Stewart: Proper jurisdiction was noted.

Mr. Joel W. Westbrook: Probable jurisdiction was noted.

Appellant filed his brief and I do not think, the question was briefed beyond what is just ordinary is and then the plaintiff withdrew.

I have got the exact language that he used and this Court then sent it back to the Courts of Appeal in Texas for determination on whether or not it was moot.

That Court determined it was moot and transferred to Harris County from Belmont where it was originally filed.

Justice Harry A. Blackmun: We transferred it then, we did not dismiss it?

Mr. Joel W. Westbrook: No sir, did not dismiss it.

Mr. Justice Keith in that case actually got it back, struggled with that problem quite a bit and wrote an opinion on it.

It was a problem for him ,but that is what he did.

We would feel that since Wheeling versus Glander came after Saunders, Power versus Saunders, and after Bain Peanut which expressed the philosophy of Mr. Justice Holmes, who had previously dissented.

And that case by the way, the Bain Peanut case which came after Saunders, I do not believe Mr. Justice Holmes discussed Saunders at all in that opinion.

But Wheeling came still further and while it was not a venue case, I think that it has a very considerable philosophical core and that is the statement that is made in there.

That once -- once a foreign corporation has come into a State and it becomes domesticated and let me say that this insurance corporation, it comes fully under the insurance code just as all other, all other insurance companies, domestic or foreign in Texas, but once a State has chosen to domesticate foreign corporations, this is in Wheeling versus Glander, 571 of 337 U.S, the adopted corporations are entitled to equal protection with the States’ own corporate progeny and this was attached case and they said at least to the extent that having the same tax basis, but we believe the basic philosophy of that statement does govern.

Thank you.

Justice Potter Stewart: (Inaudible) possibility of filing a written document directed to the issue of our jurisdiction.

Do you have any views on it orally beyond those you have given us?

Have you (Voice Overlap)

Mr. Joel W. Westbrook: I do not I believe I gave a helpful oral argument on it, Your Honor.

Unknown Speaker: (Inaudible)

Mr. Joel W. Westbrook: I can refer to in Texas cases on its being a final judgment for purposes of appeal, but I do not have in mind Supreme Court cases of the United States.

Justice Potter Stewart: I would be interested in --

Mr. Joel W. Westbrook: If the Court will grant us leave we will undertake --

Chief Justice Warren E. Burger: (Inaudible) a week and you will let your friend respond if he --

Mr. Joel W. Westbrook: Yes sir.

Chief Justice Warren E. Burger: -- desires to do so.

Thank you Mr. Westbrook.

Mr. Joel W. Westbrook: Thank you.