FLAGG BROS., INC. v. BROOKS

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Argument of Alvin Altman

Chief Justice Warren E. Burger: We will hear arguments next in Flagg Bros. against Brooks and the related and consolidated cases.

Mr. Altman, I think you may proceed whenever you are ready.

Mr. Alvin Altman: Mr. Chief Justice, and May it please the Court.

The issue before the Court is the presence or absence of state action in the sale by a warehouseman of household goods, a sale of the household goods deposited by a warehouse depositor who has defaulted in payment of the storage charges, the sale being made pursuant to New York Uniform Commercial Code Section 7-210.

The petitioner is the warehouseman.

Respondents are two depositors of warehouse household goods while the facts in each case are not identical, they are substantially similar.

Both respondents, tenants in an apartment dwelling in Mount Vernon, New York were evicted from their respective apartments by a Court Order.

On the day of the eviction, the petitioner warehouseman acting on behalf of the landlord, the evicting landlord, to effectuate the removal of the household goods from the apartment to the sidewalk appeared at the apartment and entered into discussions with the respondents.

I may point out to the Court that these two occasions did not occur on the same day, there were separate occasions on different days.

As a result of the discussion in the Brookâs case, respondent Brooks requested that her household effects be removed from the apartment to the petitionerâs warehouse rather than leaving the goods on the sidewalk.

In the Jonesa case, the respondent Jones was present with the warehouseman in the apartment at the time of discussion, made a call to the Department of Social Services for the purpose of obtaining approval for getting funds to pay the transportation charges and to pay storage charges.

This was confirmed by letter of the Department of Social Services.

The Department of Social Services approved one monthâs storage.

After a period of time elapsed, both accounts became in arrears and the warehouseman threatened to sell in conformity with Section 7-210.

Respondents sought an injunction relief and a declaration from the United States District Court that Section 7-210 was unconstitutional being in violation of the Fourteenth Amendment due process.

The District Court on motion of the warehouseman dismissed the case on the ground that state action was not present.

The Second Circuit Court of Appeals reversed.

Since the Bedrock Principle of the Fourteenth Amendment is a prohibition against state action and not individual action, no matter how harmful or hurtful, the question is whether the State of New York was so involved in the sale that the action of the warehouseman maybe fairly treated as the action of the State of New York.

Unknown Speaker: Mr. Altman in that connection, just as a matter of you curiosity, if you prevail here what remedies do the respondents have under the New York System during the alleged wrong.

Mr. Alvin Altman: If we prevailed here, Your Honor, the remedies of the respondents are of course to go into Court to enjoin any action in which they feel the warehouseman has not complied with the rigorous safeguards of the statute.

Chief Justice Warren E. Burger: Or damages if they have?

Mr. Alvin Altman: They have an action for damages Mr. Chief Justice for any infraction of the statute, no matter how minute, and they have an action for conversion in the event that the infractions are willful one.

Justice William H. Rehnquist: But really all the respondents are complaining about is that the UCC gives your client an additional defense to a claim for a conversion in the State Courts of New York, is it not?

Mr. Alvin Altman: Well, that is so Mr. Justice Rehnquist, but of course in addition they have taken the position that the conferral of the right of sale upon the warehouseman is an action associated with sovereignty, is a right associated with sovereignty (Voice Overlap).

Justice William H. Rehnquist: If the UCC were not even in existence, and that there was nothing on the books at all with respect to what a warehouseman could dom common law or statutory law, presumably if the warehouseman without any contractual right to do so, took a bailorâs goods out and sold them, the bailor could sue for conversion, right?

Mr. Alvin Altman: Yes sir.

Justice William H. Rehnquist: And the UCC simply says if you follow this what you have described as rigorous procedures and I presume your opponent characterizes them otherwise, you will have a defense to that State Court action posiibly?

Mr. Alvin Altman: Yes sir.

Unknown Speaker: There is no attack here on the, even assuming the state action, there is no attack on the lien itself, is it?

Mr. Alvin Altman: No, Your Honor.

The only attack is on the conferral of the right of sale.

Unknown Speaker: On the conferral of the right to sell and in fact on these cases there was no sale with respect to either one of the named parties (Voice Overlap) is that correct?

Mr. Alvin Altman: That is correct Your Honor.

Justice Lewis F. Powell: Why is that contract between the warehouseman and the party who is (Inaudible)?

Mr. Alvin Altman: In the one case, Mr. Justice Powell, there was a storage receipt; a warehouse receipt which we claim has all of the elements of the contract in it.

Justice Lewis F. Powell: And that is received in the record here?

Mr. Alvin Altman: The warehouse receipt of the particular petitioner warehouseman and there is also a warehouse receipt which is used more commonly throughout the industry so the Court has before it the receipt issued in this particular case plus the receipt which is in common usage.

Justice Lewis F. Powell: Is that receipt the one issued in this case ended the Section 7-210?

Mr. Alvin Altman: Not in those words Your Honor.

Justice Lewis F. Powell: I thought you said it is relevant to this case if anything.

Mr. Alvin Altman: There is a provision in that warehouse receipt which confers the right of sale by the warehouseman in the event of the default in payment.

However, there is no specific pointing out of Section 7-210.

Justice Lewis F. Powell: Could you rely on that contract rather than the New York statute?

You can in deed of trust in that state?

Mr. Alvin Altman: We believe that you can rely on that contract.

Of course in this case if I may point out Your Honor, we have a special situation in that it was an emergency situation.

It was not the normal time to prepare the storage contract, the warehouse receipt in the ordinary case where there is a removal to storage.

This was an emergency whereby the goods were being removed to the sidewalk and in order to prevent that, the warehouseman took the goods into storage.

Unknown Speaker: Did the bailor sign the warehouse receipt?

Mr. Alvin Altman: No, Your Honor.

Unknown Speaker: So, how could it be a contract then?

Mr. Alvin Altman: We submit that there was an implied contract based on all of the facts in this instance.

Unknown Speaker: But not a writing signed by the party to be charged?

Mr. Alvin Altman: That is correct Your Honor.

Unknown Speaker: Well, it is like if you want to store your goods, you would store them on lease terms or we will not store them and so they stored the goods, that is what it amounts to us?

Mr. Alvin Altman: Not quite Your Honor if I may disagree.

Unknown Speaker: What more is there, in this case at least?

Mr. Alvin Altman: Well, there was the right --

Unknown Speaker: In terms of the contract?

Mr. Alvin Altman: Right, there was the right of the bailor to obtain different warehouseman if she did not agree to the terms specified by this particular warehouseman.

Unknown Speaker: (Voices overlap)

Unknown Speaker: You suggest that she knew anything?

You had any notions what the terms where when he took the goods away.

It was an emergency as you said.

Mr. Alvin Altman: That is correct Your Honor.

That is correct.

Justice Thurgood Marshall: The choice was either give it to him or leave it out on the street?

Mr. Alvin Altman: Or I try to obtain the services of another warehouseman and that is true Mr. Justice Marshall.

Chief Justice Warren E. Burger: But you are implying the contract must imply a power of sale which is in the written contract, is it not?

Mr. Alvin Altman: Yes, Mr. Chief Justice.

Chief Justice Warren E. Burger: How do you imply a power of sale in just a storage contract?

Mr. Alvin Altman: Well, Your Honor we imply it first because the statute itself should be considered and the statute itself should be considered in the terms of the contract.

That is one way and then we say Your Honor that this a --

Chief Justice Warren E. Burger: These statutes are limitations on the power of the parties to contract, is it not?

Mr. Alvin Altman: Yes, Mr. Chief Justice.

Yes, it is definitely a limitation.

Justice Lewis F. Powell: Why should not the warehouseman frame a contract that would solve this problem consistent with the terms of the statute?

Mr. Alvin Altman: That could very well be done and that is the case Mr. Justice Powell.

In the vast majority of the warehouse deposits, the contract is specific on this point, the documentation the warehouse receipt of the storage contract.

It so happens in this particular case that was not done for the reasons that I have mentioned.

Unknown Speaker: This case came to the Court of Appeals after the District Court dismissed the complaint?

Mr. Alvin Altman: Yes sir.

Unknown Speaker: And the posture of the case therefore is that we assume that the allegations of the complain are all true and it is taking those allegations.

There is no contract in this case.

The question is as you quite accurately said that outset of your argument and the only question before us is whether the action of your client was state action?

Mr. Alvin Altman: That is correct sir.

Unknown Speaker: Is that not right?

Mr. Alvin Altman: That is correct sir.

We respectfully submit that state involvement in a disputed private act must be significant, affirmative, all but ordering the challenged activity and that the delegation of sovereign power in economic due process setting is insufficient to cross the state action threshold.

We would point out that New York Commercial Code is a permissive statute.

There is no direction in the statute to sell.

The decision to sell is the decision of the warehouseman.

It is a private decision arrived at by a private party in a private transaction with no state official being present.

No state encouragement whatsoever.

Unknown Speaker: But on that point Mr. Altman, without a contract and without a statute, you think your client would have gone head and soul?

Mr. Alvin Altman: Without a contract and without the statute --

Justice William H. Rehnquist: Is not the statute a fairly important part of the whole picture?

Mr. Alvin Altman: Yes, it is.

Unknown Speaker: Otherwise, you would have to go to Court to foreclosure your lien?

Mr. Alvin Altman: That is correct.

Unknown Speaker: And the question I guess is whether it is under color of state law in the sense that it is something that would not have been done without the statute?

Mr. Alvin Altman: That is right sir and on that issue, may I say that the conferral of this right of sale is not the delegation of a power associated with sovereignty.

Far from being a power associated with sovereignty, this statute is a codification of a power to dispose a property which any private property had a common law.

The power of sale was an attribute of ownership and a common law possession was deemed to be, was presumed to be ownership.

Justice Byron R. White: Do you think under the law of bailor and bailee at common law, the bailee could sell the property without aid of the Court?

Mr. Alvin Altman: The bailee could sell the property under common law if possession had been voluntarily delivered to him, yes Mr. Justice.

Justice Byron R. White: Without going to Court at all?

Mr. Alvin Altman: Yes sir.

Justice William H. Rehnquist: Let me ask you one more question if I may Mr. Altman.

So, supposing that contrary to your answer to Mr. Justice White at common law, the bailee had absolutely no power to sell without going to Court, but the New York Court of Appeals without any statute, all it said, âWe are not going to follow that branch of the common law.

We are going to enunciate a new principle that the bailee does have the power to sell.

So that without statute, but as a result of decisional law of the New York Court of Appeals, your client would have the same right as now conferred on it by statute, do you think the case would be any different here?

Unknown Speaker: No, you do not.

Mr. Alvin Altman: In so far as a seizure is not concerned in this case, in so far as possession was delivered voluntarily, I do not think there would be any difference.

Chief Justice Warren E. Burger: Mr. Greenwald.

Argument of A. Seth Greenwald

Mr. A. Seth Greenwald: Mr. Chief Justice and May it please the Court.

My co-counsel has stated the relevant facts of this case.

The Attorney General of the State of New York has intervened and intervened at the District Court level by a way to defend the Constitutionality of the State Law and at this time, there is only one provision involved, Uniform Commercial Code Section 7-210, and of course the New York State Legislature several years ago passed that Statute, but it is my contention that that is not enough to make this a matter of state action.

I think there is really no dispute about that.

Unknown Speaker: And that is a simple enactment of the law?

Mr. A. Seth Greenwald: Precisely.

Unknown Speaker: Anybody who thereafter acts under its provisions just by reason of existence of the law that that private person is not acting like as a state, that is your point?

Mr. A. Seth Greenwald: That is precisely --

Unknown Speaker: A simple enactment of the law does not make the action of Mr. Flagg and Flagg Brothers a state action?

Mr. A. Seth Greenwald: Yes.

Unknown Speaker: The question is not of state action, is it not, the question whether it is action under color of state law?

Mr. A. Seth Greenwald: I think those two terms are basically interchangeable.

They have, I think in the past been used alternatively and perhaps confusingly.

I think that this is not the case to make any distinction rather than --

Unknown Speaker: I rather thought that you are saying there is quite a difference between the two.

I guess (Voice Overlap).

Mr. A. Seth Greenwald: Well, if this was before a fireplace that might be the time and the place, but I think in the context of this case basically under color state of law and the state action are basically interchangeable.

Unknown Speaker: Well, really what we have here is whether we are relying on the language of 1983 or whether we are relying on the language of the Due Process Clause of Fourteenth Amendment and that could be a difference, but perhaps that is as far side discussion.

Mr. A. Seth Greenwald: Yes, I think that we basically have to go back.

Section 1983 is derived from and based on the Fourteenth Amendment and I think this Court was so held.

Justice William H. Rehnquist: Well, do you not have to have both here as a matter of fact?.

You have to have under color of state law a deprivation of a constitutional right and the constitutional right is that you are not be deprived of due process by the state?

Mr. A. Seth Greenwald: Yes, that is a fair statement.

The fact of the matter is there has to be some, once again getting back to the magic words, there must be some state action that has deprived you of your constitutional rights.

Unknown Speaker: Well, there is no constitutional right unless there is a deprivation by the state, that is the point.

Mr. A. Seth Greenwald: Yes, basically of course.

Unknown Speaker: Deprivation by a private individual is not a violation of private personâs constitutional right, no matter how gross the deprivation might be?

Mr. A. Seth Greenwald: Yes and I think that was determined back in the civil rights cases, I think over century ago.

Justice Thurgood Marshall: And there had been a lot (Inaudible) with them since then?

Mr. A. Seth Greenwald: Well, I do not think that much.

I think the law has been reaffirmed only a few years ago by this Court in Jackson against Metropolitan Edison.

But I think it is worthwhile to emphasize to this Court that not only has New York passed the Uniform Commercial Code, 48 other state legislatures plus the District of Columbia have passed this Section that is under challenge here.

So, of course it is rather obvious we have a statute with nationwide impact and this statute simply regulates and authorizes the exercise of a power of non-judicial sale by the warehouseman where his customer may have disappeared, done any sort of thing and not paid his bill.

Now, there maybe a dispute about the bill, but that is something else, that is not a constitutional dispute and as I was saying, speaking about the UCC, the statute though dates much further back in UCC which is a product of distinguished group of legal authorities of the late 50s and early 1960s, it dates back in New York back to 1879 and it is based on and I would emphasized this, it is part of a Uniform Statutory Scheme of a warehouseman having a specific possessory lien of the stored goods in his possession and the statute by regulating sale by the warehouseman is basically a wholesome statute.

Justice William H. Rehnquist: And what difference does it make when New York first enacted the statute?

Supposing that there was no statute on the books and no decisional law and New York had just become a member of the union and the Court of Appeals was first established and had no cases at all on this subject, and this precise case came before it?

The Court of Appeals would have had to decide one way or another whether the bailee had a right to sell without going the Court, would it not?

Mr. A. Seth Greenwald: Well, I put it this way.

Age is not a determinant factor, but when we speak up and this Court has spoken traditional function of the state, it becomes of interest and I simply say, of interest, how old is a statute because when the Court below, this Court of Appeals' decision said that we had transferred by the UCC provision and traditional function of the state and I can cite and they even themselves cite the fact that dates back to 1879 and perhaps and even longer in other states, it hardly becomes a traditional state function for warehouseman to exercise the power of non-judicial sale when his lien which is not into question here is still outstanding.

Chief Justice Warren E. Burger: Are you going to touch at anytime on the question of possible mootness?

Mr. A. Seth Greenwald: Well, I have in my brief of course pointed out that --

Chief Justice Warren E. Burger: If you want to rely on the brief, you may do so.

Mr. A. Seth Greenwald: Yes, I would prefer to rely on my brief as I have many things to say here and I think they would go to the merits.

As I say and I mention the Jackson against Metropolitan Edison Case which had to do with utility cut offs, this Court enumerated, it went to the extent of enumerating what a traditional functions of the state and quite interestingly, not one of them even closely approached non-judicial sale by warehouseman or anyone else.

It is really a total stretch of the imagination to call non-judicial sale which was only threatened in the instant case and never carried out or cannot be now, to call that a traditional function of a sheriff because a sheriff has a significant power of sovereignty that the warehouseman does not have.

Basically stated, a sheriff seizes property and this is something that the warehouseman cannot do, did not do in this case, and never will do because his lien is based on voluntary consensual possession and there is another aspect when you are speaking about state action.

It has been generally recognized that this Court and any Court is much quicker to find a delegation of state function, a traditional state function in a case that involves racial discrimination because that racial discrimination is at the heart of the purpose of the Fourteenth Amendment when it was passed and what we all know is that that accredited relations really had nothing to do with the passage of the Fourteenth Amendment, it was not involved one iota and I think it is rather obvious that in New York, a sale by a warehouseman like they are challenging here and claiming the state action the respondents are claiming is not a traditional state function.

Now, there is some authority in the New York Court of Appeals which the respondent cite says it is a traditional state function.

That is the Blye Case, but I emphasize and I was in involved in the Blye Case, I argued that for the Attorney General up in Albany.

That case involved a lien sale, simply liens not a lien sale involved in innkeeperâs lien which is a basically different type of lien than a warehousemanâs lien.

And finally and most importantly, the decision of the New York Court of Appeals simply does not control this Court.

Even the cases that respondent cites, shows that you make an independent determination of case where there is a federal constitutional issue and once again, I would emphasize that the question of state action here is one of great importance because at the present time, you have a conflict in the circuits.

The Ninth Circuit in California has --

Justice Thurgood Marshall: Mr. Greewald you are down to five minutes.

Are you going to get to the Chief Justice's question's mootness.

As I understand, that Mrs. Jones paid the money and that the only by agreement they removed them.

Mr. A. Seth Greenwald: Well as I said and Chief Justice accepted my statement that I would rely on my brief.

Chief Justice Warren E. Burger: Well, I did not.

Mr. A. Seth Greenwald: But you have not.

Okay, then I will address my answer.

Yes, the point is that Mrs. Jones, the late Mrs. Jones at the termination of the District Court Case by her own action paid her bill and got her goods back.

It was not case of Mr. Altman trying to moot this case out.

This was a matter of the plaintiff taking action in effect to resolve the question, a question now states that she did not get all her goods back and some were in damaged condition, but that is a state law of question, it is certainly not a constitutional issue and I might point out also of course that my co-counsel has different views as to the mootness of this case and he has a client who is very anxious to get this matter resolved because it has been around for an awful long time.

But I have pointed out to Your Honors that having an actual case of controversy is a necessary ingredient of the case and I felt the obligation to inform Your Honors.

At this point, I would like to reserve my --

Unknown Speaker: May I just phrase it down Mr. Greenwald, We have an Amicus Brief here from the New York State Consumer Protection Board taking a position as opposed to yours.

Mr. A. Seth Greenwald: Yes,

Unknown Speaker: You represent the State of New York and this is a State Agency you know that --

Mr. A. Seth Greenwald: Well, once again, yes, this is the second time, at least on my own personal experience that you have a Amicus Brief opposing the Attorney General from the Consumer Protection Board.

Justice William H. Rehnquist: From a State Agency?

Mr. A. Seth Greenwald: Yes.

Well, they perform some state function.

As we say, it is questionable who they represent.

It is also questionable and is not questionable, there is no doubt under the New York State Law they have no right to come into court cases even when this law gives them a right to appear at a Regulatory Agency Hearing, a Public Service Commission.

Even though they could appear at that hearing, they cannot then go into challenge the matter.

So, I emphasize that the views of the State of New York are presented by the Attorney General, not the Consumer Protection Board.

Chief Justice Warren E. Burger: Mr. Schwartz.

Argument of Martin A. Schwartz

Mr. Martin A. Schwartz: Mr. Chief Justice and May it please the Court.

Before I commence my argument I would like to address the question of mootness.

Mrs. Jones claims that the $16,00.00 payment she made during the course of the litigation was not made voluntarily, but at least in part because of the threat of sale.

She would have a claim for damages at least for a part of that $16,00.00 payment.

In addition, I closely point out to the Court that the defendants charged Mrs. Jones an auctioneerâs fee presumably for a schedule to sale and under the Code, in order for a person whose goods are stored to exercise a right of redemption, part of the cost which must be paid are the fees involved in the carrying out of the contemplated or actual sale.

I think this claim for damages is efficient to keep the case alive.

I would also point out that in all of these Consumer Due Process Cases which have been brought the last few years, there is virtually an inherent problem in mootness.

We pointed this out to the Circuit Court.

We prepared in appendix in the Circuit Court which listed the various cases and the status of the good during the litigation and it is inevitable that a threat of sale will not continue during an entire lengthy litigation period.

We brought this case at the time the threat of sale existed.

We submit that was as proper time to bring the case to try to stop the sale.

The lawsuit served that purpose, but it is not reasonable to suppose that that threat will continue during the course of a three or four-year litigation period.

I would say that the capable of repetition yet evading review doctrine would also apply to these type of situation and I would also point that --

Justice Thurgood Marshall: Well, the woman had, it seems to me that woman I think it was who paid $16,00.00 is not automatically in danger of not being able to pay storage in the future.

She paid $16,00.00.

Mr. Martin A. Schwartz: But she claims that one reason for that $16,00.00 payment --

Justice Thurgood Marshall: Yes, I know but she did got together $16,00.00.

Mr. Martin A. Schwartz: But she claims it was not a voluntary payment.

This woman was left without all her possessions for virtually a two-year period Your Honor and of course the payment of the auctioneeras fee would only have to be made because the statute was invoked against her.

I also would like to point out that we have filed an action on behalf of a client whose goods have been sold already in the Southern District and it is assigned to the same judge before whom the Brooksa case was assigned and the only reason that we could not move to intervene at that point into the Brookas action is because the Circuit Court stayed its own mandate remanding the action to the District Court pending proceedings in this Court.

So, there is another case which has been filed.

It was just a mere formality.

I would also point out that the parties did stipulate to the propriety of the class here.

There was no certification.

The District Court never so ordered the stipulation.

Unknown Speaker: Well, some of the parties stipulated not all of them.

Mr. Martin A. Schwartz: Well, at the time the stipulation was entered into, Your Honor, the Attorney General and the associations were not parties to the lawsuit.

Unknown Speaker: But now they are.

Mr. Martin A. Schwartz: Now, they are but a

Unknown Speaker: And they have not stipulated.

Mr. Martin A. Schwartz: I would also point that the action clearly meets all of the requirements of Rule 23 (a) and (b) 2.

It is clearly the type of action that Subdivision (b) 2 was intended to apply to it.

Justice Thurgood Marshall: We can consider unless it was not certified.

Mr. Martin A. Schwartz: I understand that Your Honor.

I am just saying that it is another factor to consider if the case was remanded back to the District Court as the Circuit Court contemplated.

The Circuit Court opinion I believe, contemplates that the action is a proper class action, but that the only question is the propriety of the scope.

We did everything possible to get this class certified.

We entered into a stipulation, went to over side or whatever the stipulation was not approved.

We moved for class certification.

The District Judge did not pass on the certification.

We appealed.

Unknown Speaker: And then you have the summary judgment.

Mr. Martin A. Schwartz: We moved for a Class Certification and Summary Judgment at the same time Your Honor.

We then appealed from the denial of the Class Certification as well as they say, the only reason there is any mootness problem here at all is because the Certificate Court stayed its own mandate otherwise this new client, Mrs. Fence would have intervened into the Brookâs action, but we do have an action filed on behalf of somebody who is good to solve.

Your Honors, the point of contention is that state action is present in this case because we have a direct, precise and significant nexus between the stay and the contested activity.

The state has delegated two warehousemen.

The extraordinary power to summarily sell bailoras goods and in doing so, we contend that New York has delegated to warehouseman, the public functions of reinforcement and non-consensual dispute resolution.

Unknown Speaker: Without that delegation, where would the power of sale be?

Mr. Martin A. Schwartz: There would be no power of sale Your Honor and despite what my adversary said, the authorities are in consistent agreement and we cited them in the brief, there was no power of sale at common law.

It is clear; I do not know how my adversary can make the statement to the contrary.

Baileeas right to common law was merely the right to became possession of the goods.

Unknown Speaker: And goto court, he could go to court?

Mr. Martin A. Schwartz: He could go to the court.

The normal common law if the bailee sought to enforce his lien, his remedy was to bring in action in court and if he proved his claim and defeated offenses and obtained the judgment, the sheriff would then levy execution on the very goods that was sold.

Unknown Speaker: Well, in some respects that involves almost more state action than it this, does it not?

Mr. Martin A. Schwartz: I would say that this is a direct substitute for that process.

That is a judicial process, judicial determination and judicial enforcement and our position is that a person whose goods are sold under this statute, under Section 7-210 stands in the precise posture of a defendant and a judicial action against whom a judgment has been gotten and enforced with one exception and that exception is that the person whose goods are sold under Section 7-210 does not get an opportunity to be heard prior to sale, whereas the person whose goods are sold after a judicial proceeding presumably does.

Justice William H. Rehnquist: Is your claim of state action based on the legislature's enactment of the statute?

Mr. Martin A. Schwartz: Our primarily claim Your Honor is that the enactment of the statute constitutes the delegation of power which is normally associated with sovereignty.

Justice William H. Rehnquist: Okay.

Supposing that without any such statute, the New York Court of Appeals as a matter of common law had reached precisely the same result?

Mr. Martin A. Schwartz: My position would have to be the same.

If the New York Court of Appeals had recognize that the extensively private sector has the power to exercise functions which are governmental in nature, we would nevertheless have a delegation from the public sector to the private sector of governmental power.

Justice William H. Rehnquist: So it is not the enactment of the statute.

It is the any recognition by a Body in New York that is capable of laying down law that a warehouseman has a defense to a conversion action in this situation?

Mr. Martin A. Schwartz: It is the delegation of sovereign power by any branch of the government.

That is right Your Honor.

Justice William H. Rehnquist: What would say delegation of sovereign power but all that really is a defense to a conversion action?

Mr. Martin A. Schwartz: It is more than a defense Your Honor because these goods are sold without a hearing.

Justice William H. Rehnquist: Well, but in a conversion action, the goods may have been taken without a hearing.

Mr. Martin A. Schwartz: A conversion action come about because of an unlawful sale and what this statute does is make this sale lawful.

It makes what would have been an unlawful act a lawful act.

Justice William H. Rehnquist: So, it gives them a defense to an otherwise unlawful act to where the conversion is?

Mr. Martin A. Schwartz: But it gives them more than a defense.

It gives them much more than a defense.

It gives them a defense if an action in conversion is brought.

But if an action in conversion is not brought, it gives them the power to resolve this dispute by selling a personâs goods summarily.

Justice William H. Rehnquist: Well, just as if a converter takes your goods and does away with them and you never sue him, he gets away scot free?

Mr. Martin A. Schwartz: Well, that is true but if a case was brought it would be an unlawful act.

The state here is making lawful what would otherwise be clearly unlawful in common law, there is no question of that.

Chief Justice Warren E. Burger: That alone certainly, if you got to go further than that.

Mr. Martin A. Schwartz: We do not rely on that alone.

The heart of our claim is this.

That this person whose goods are sold stands in the same position as a defendant in a judicial proceeding against whom a judgment was taken and against whom that judgment was enforced by this power of sale of his goods and we would say what is involved here are the combination functions of non-consensual dispute resolution which is normally, historically, and traditionally carried out by the courts together with lien reinforcement which is the enforcing mechanism which is normally carried out by sheriffs and constables.

Unknown Speaker: If it were clear in common law that this power of sale existed, would you be making the same argument?

Mr. Martin A. Schwartz: I would have to consistently Your Honor because the common law would then be recognizing that the private sector has what we claim to be a power of the sovereign.

I cannot --

Unknown Speaker: Consistent argument as to what the common law was to be immaterial?

Mr. Martin A. Schwartz: No, I do not think it is immaterial.

Perhaps the Circuit Court stated the proposition to broadly when they spoke about the statutory reversal of the common law in a vacuum.

I think the statutory reversal of the common law is relevant into somewhat limited respects.

First of all, how the function was carried out at common law tends to give us some evidence as to whether that function was in the private and public sector.

For example in this case, it is clear that the private sector did not have the power to determine these disputes and to enforce liens.

So with some evidence that the power was not lodged in the private sector at common law and on the contrary in response to Mr. Justice Whiteâs question, I stated that that what happened at common law was that the lien would in fact be enforced after a judicial proceeding and enforcement by the sheriff so that at common law this is a function which is historically and traditionally was carried out by courts and sheriffs and constables.

In addition, I think the lack of common law authority is significant in that it shows that when the warehouseman does exercises his power, he is acting under and only under this particular statute, he must be acting in reliance upon the statute.

Unknown Speaker: Would you be making the same argument if all that the state law said is that bailor or bailee situations, we will go just by the contract whatever the parties agree to.

So, if the party has agreed to a private sale that would be state authorization of a private sale and that would be enough for you I take it?

Mr. Martin A. Schwartz: Your question presupposes a valid contract?

Unknown Speaker: Yes, it does.

Mr. Martin A. Schwartz: All right.

If we had a valid contractual power of sale, I would say that this would be a prime example of a credit as remedy which came about as a result of a contractual voluntarily agreement.

Unknown Speaker: Even though it comes about because of the state law simply authorizes parties to agree on a private sale, would that be state action?

Mr. Martin A. Schwartz: Now, you are assuming the existence of the statute?

Unknown Speaker: Yes, I am.

I am just trying to find out.

Mr. Martin A. Schwartz: Then there would be state action because the only, let me make sure I have this question straight.

We have the statutory power of sale.

Unknown Speaker: The statute says, whatever the parties agree to with respect to a private sale is all right with us, that is what the statute says and the parties agree to a private sale.

Now, is the state involved in that?

Mr. Martin A. Schwartz: If it is totally contractual, I would say that the state is not involved.

Justice William H. Rehnquist: But the whole source of enforcement of law for contracts is the state sovereignty under Austin or anybody else.

In many societies a written agreement between two parties is not enforced by the sovereign.

Mr. Martin A. Schwartz: But if we have a valid contract with a power of sale in that contract.

Unknown Speaker: Valid, you have automatically had reference to state law right there.

Mr. Martin A. Schwartz: Well, we may have reference to state law, but the power of sale came about because the parties mutually, consensually agreed that upon default the warehouseman would have the power of sale, that is not what we have in this case.

In this case we have a power of sale which exists only by operation of the statute.

Justice Thurgood Marshall: Well, you do agree that there is a lien, in common law there was a lien?

Mr. Martin A. Schwartz: We do not contest the lien.

The constitutionality of the lien we are not contesting.

Justice Thurgood Marshall: What does a lien mean that you can sell it?

Mr. Martin A. Schwartz: The lien at common law is defined as the right to detain the goods indefinitely until the bailor makes all the payments which the bailee claims are due and owing.

Justice Thurgood Marshall: And?

Mr. Martin A. Schwartz: And that is all.

Justice Thurgood Marshall: No, and he can go to court?

Mr. Martin A. Schwartz: He can go to court, but any other creditor can go court too.

The norm for is for a creditor who claims he has an amount due and owing to bring a judicial proceeding, prove his claim, if he can defeat defenses, obtain a judgment and seek to enforce that judgment.

This statute in effect short circuits that entire process.

If I could get back to Mr. Justice Whites question, the difference between a contractual power of sale and the statutory power of sale is the difference between voluntary dispute resolution which is historically and traditionally been in the private sector and involuntary, non consensual dispute resolution which has historically and traditionally been the function of the courts and the sheriffs.

Well, I see that it is 12 o'clock if I might complete my argument after.

Chief Justice Warren E. Burger: Well, we will allow you to start at 1 o'clock.

Mr. Martin A. Schwartz: Thank you.

Chief Justice Warren E. Burger: You may continue Mr. Schwartz.

Mr. Martin A. Schwartz: Thank you, Your Honor.

In Jackson versus Metropolitan Edison Company, this Court stated that the characterization which the State Courts give to a function as to whether that function is public or private in nature is entitled to wait in making the determination whether the state has delegated a public function to the ostensibly private sector.

The rationale for this, we respectfully submit is that just as the State Courts have the expertise --

Chief Justice Warren E. Burger: Now, you say a public function and sort of lost me there.

What about the State of New York, I assume grants licenses to truck lines as well as the --

Mr. Martin A. Schwartz: The granting of the license itself of course would be a public function, but the activity is carried out under that license, might be public, might be private, depending upon the nature of the powers that were delegated.

Chief Justice Warren E. Burger: Some trucking companies own warehouses and some warehousing companies own the lines of trucks too, do they not?

Mr. Martin A. Schwartz: The general everyday activities of warehouse companies, I would concede are functions which are private in nature.

They are genuinely contractual relationships, contracts of moving and storage.

The question here is whether the stateâs delegation of the power of summary sale is of that type of nature whether it is private in nature or whether this is the type of function which is historically and traditionally has been associated with sovereignty whether it is a public function and my point is that the characterization given by a State Court as to whether that function is public or private in nature should be given some weight by this Court in making that determination and the rationale for that is that the State Courts just as they have the expertise on questions of state law or in a particularly good position particularly the highest court in the state to evaluate whether a function is public or private in the particular state.

In this case, in New York, the New York Court of Appeals in Blye v. Globe-Wernicke Company has concluded that in New York lien enforcement historically and traditionally has been the function of the sheriff.

Now, the Attorney General seeks to distinguish the Blye case as a case involving a seizure of goods under the inn keeperâs lien law.

However, the Court of Appeals in Blye did not hold that it is a seizure which constitutes a public function, but rather held that it is the execution of a lien, regardless of the method of lien enforcement which in New York has been the function of the sheriff and in fact cited two types of liens.

Judgment liens and liens which arise from an action to judicially foreclosing mortgage which are liens which can be enforced by sale and without seizure.

In addition, the appellate division in New York has concluded that lien enforcement where accomplished by sale and without seizure is also a function which historically and traditionally has been the function of the sheriff in New York.

Unknown Speaker: But you do not contend that the actual sale is an act by the state, do you?

Mr. Martin A. Schwartz: It is not an act by a state official.

Unknown Speaker: Or is it by the state?

Yes, it is an act which is equivalent to the exercise of sovereign power.

It is something which we contend.

Unknown Speaker: Well, you would not say the state is liable.

If for example, the person misuses the power.

Mr. Martin A. Schwartz: We would not say the state is liable.

We would say that the state would be liable in Evans v. Newton, and in the case where the function of running a park has been delegated.

It is public under the state action doctrine.

It does not mean that the state has liability for the acts of the defendant.

That would be true in all the public function cases which this Court has decided.

I would also stress that the decisions --

Unknown Speaker: But your point is that this defendant has liability as though it were of the state?

Mr. Martin A. Schwartz: Our point is that this defendant is bound to comply with the Fourteenth Amendment.

Unknown Speaker: Because as though it was a state?

Mr. Martin A. Schwartz: That is right.

Unknown Speaker: And that is why it is liable under 1983?

Mr. Martin A. Schwartz: That is right, but that does not make the state qua state liable which I took to be Mr. Justice Whiteâs question.

Unknown Speaker: I suppose that for the foreclosures done by a sheriff and the sheriff was out and if he absconds though or if he does something wrong, perhaps you could sue him under 1983?

Mr. Martin A. Schwartz: The sheriff would be liable with the one exception that he would have a good faith immunity from liability for damages.

He is subject to liability in the first Section 1983 (Voice Overlap).

Unknown Speaker: In the warehousemanâs situation if the private seller mis-performs, can you sue him under 1983?

Mr. Martin A. Schwartz: Well that raises a question which I (voice overlap)

Unknown Speaker: Is it state action or is it not?

Mr. Martin A. Schwartz: We contend that it is state action whether damages would flow from the private party's wrong and this situation whether this (Voice Overlap)

Unknown Speaker: But you can get into Court under 1983?

Mr. Martin A. Schwartz: We can get into the Court on 1983 action.

Unknown Speaker: Claiming that his private seller was exercising state power and therefore should answer for what?

Mr. Martin A. Schwartz: Injunctive relief, declaratory relief, and damages with the possible exception that whether or not this dependent would have a good faith immunity is I believe a question which this Court has not answered.

Otherwise whether this type of defendant would have the same immunity as a sheriff or other executive or administrative official are only qualified in that respect.

The decisions of the New York Court (Voice Overlap)

Unknown Speaker: But at least the sheriff when he is making the sale as a neutral, but when the sale is made under power of sale, either expressed or implied, the selling official is not a neutral, is he?

Mr. Martin A. Schwartz: Absolutely not, Your Honor.

We contend that that makes this statute worse than the statutes which were involved in the Sniadach Fuentes and Di-Chem Cases.

Unknown Speaker: Would your theory make all powers of sale under mortgages and trusts both real and personal property state action?

Mr. Martin A. Schwartz: Absolutely not, Your Honor because they come about as a result of a contractual agreement.

We sharply distinguish --

Chief Justice Warren E. Burger: But it is a substitute for what I think you have at least implied is the traditional common law Sovereign Act?

Mr. Martin A. Schwartz: It is a substitute Your Honor when it is exercised as a result of non-consensual dispute resolution.

When it is a substitute for the functions exercised by the courts and sheriff, it is not a substitute when it comes about as a result of a voluntary neutral agreement between the parties that historically and traditionally has been in the private sector.

Unknown Speaker: Mr. Schwartz, may I ask you a question?

If there were non-compliance with the statutory procedure, say the failure to give a notice statutory required something like that, would you say that was state action?

Mr. Martin A. Schwartz: Sure.

Unknown Speaker: Could you sue in a Federal Court on the ground that there was a failure to comply with the state --

Mr. Martin A. Schwartz: The failure to give the notice might constitute not only a state law, but if there is state action in this case as we contend then it would also constitute a violation of the due process for us because our substantive claim is that an owner of the goods should be given adequate notice and some opportunity to be heard prior to sale.

Unknown Speaker: But if he acts without the statute, without complying with the statute, is he then acting under color of state law?

Mr. Martin A. Schwartz: Your Honor, he might be acting in violation of state law.

Well, it means in threatening to sale or in engaging in the sale itself, he would necessarily be invoking the power of the statute, otherwise he could not sell.

Unknown Speaker: What I am really asking is, is it your position that the Federal Court has jurisdiction of every case arising under one of these statutes or are you only contending that the Court has jurisdiction to determine a constitutionality of the basic procedure, I guess your argument is former?

Mr. Martin A. Schwartz: We are only arguing that the Court has jurisdiction to determine whether there has been a constitutional violation, a violation of due process which I take it to be the lack.

Unknown Speaker: But there could be a violation of due process resulting from the failure to follow the state procedure?

Mr. Martin A. Schwartz: That is right of course.

Our basic claim is that due process requires some opportunity to be heard prior to the sale, the statute does not provide for any opportunity.

Unknown Speaker: And you say there is the same kind of state action whether or not the defendant complies with the statutory procedure?

Mr. Martin A. Schwartz: I cannot see the distinction Your Honor because --

Unknown Speaker: Well, in one case he is acting under color of the state law and the other case is acting contrary to the state law, you do not draw distinction --

Mr. Martin A. Schwartz: But in exercising the power of sale, he is invoking the statutory power.

He may have engaged in some procedural irregularity along the way, but when he makes that determination to sell, and he in fact sells, he is only acting on the color of that statute.

Unknown Speaker: Well, supposed he sells at am unconstitutionally low price to his brother-in-law, and he just steals.

Now, he is exercising the state authority you say and so you could sue him under 1983 and recover damages?

Mr. Martin A. Schwartz: That is right, but not because it was fraudulent.

Unknown Speaker: No, I understand because --

Mr. Martin A. Schwartz: Because due process violation.

Unknown Speaker: Because he is exercising, at the threshold he is exercising --

Mr. Martin A. Schwartz: That is right and whether he conducted a fraudulent sale or did not comply with the procedural requirements, those are all of course generally questions of the the state law.

Unknown Speaker: Well, the state deprived him of his property without due process?

Mr. Martin A. Schwartz: That is right.

I might also say that those normally questions which would be determined at a hearing prior to the sale, in other words whether the warehouseman has a proper lien, the amount of the charges, the extent of the lien or whether the proper notification provisions were given and so forth, those are questions primarily questions of state law which would be resolved at a due process hearing prior to the sale.

It is the lack of that mechanism that brings us to this Court.

Justice Thurgood Marshall: And what about the provision in the contract that they had this right?

Mr. Martin A. Schwartz: Your Honor, there is no contractual power of sale in this case.

In the case of plaintiff Jones, the complaint alleges no contractual authorization for storage and transportation at all.

Justice Thurgood Marshall: What about the other one?

Mr. Martin A. Schwartz: In the case of plaintiff Brooks, the Bill of Lading which was given to Mrs. Brooks and I will refer you to page 19a on the record, in the most minute print imaginable refers to a right of sale.

If goods are not claimed at the shipment upon destination that refers to a carriers lien and the carrier's right to sale of the purchasing --

Justice Thurgood Marshall: Then it is not a warehouse lien?

Mr. Martin A. Schwartz: That is not a warehouse lien.

Justice Thurgood Marshall: Well, what would a warehouse lien good one do to your argument?

Mr. Martin A. Schwartz: Your Honor, a valid contractual power of sale would result in a lack of state action, but we would point out that in the Fuentes Case, this Court indicated that there are several factors that might lead, a Court as matter of state law to conclude that this type of contractual power of sale would be an invalid contract of adhesion, beyond need for bargaining power, the fact that the term is not really bargained for, if it is in form contract to find print form contract, these would be other factors which might lead the Court to conclude that there was no valid contractual power of sale.

Justice William H. Rehnquist: Does your argument not lead you to the conclusion that you could have a voluntary agreement between the bailor and bailee here which did not comply with the UCC Provision, but was perfectly valid under the Fourteenth Amendment since it was entirely consensual?

Mr. Martin A. Schwartz: If there is a consensual power of sale and it was valid as a matter of state law.

Justice William H. Rehnquist: No, supposing it is invalid as a matter of state law?

Mr. Martin A. Schwartz: Well, then we would not have a contractual power of sale.

Then in that case, the power of sale would arise wholly from the statute and the sale would be involuntary act.

Justice Thurgood Marshall: And that would mean there was no coercion that happened?

Mr. Martin A. Schwartz: That is right.

Justice Thurgood Marshall: But valid is the word that decides it whether or not it is valid?

Mr. Martin A. Schwartz: I agree Your Honor.

Justice William H. Rehnquist: So, it is just not any consensual agreement that it gets you at the the warehouseman out from under the Fourteenth Amendment here.

It has to be not only consensual, but it must also comply with the state statute which you say has delegated to the warehouseman, the stateâs ordinary function?

Mr. Martin A. Schwartz: Absolutely because that would be a pre-requisite for a valid contractual power sale and I say the distinction is critical in this case.

The distinction between contractual voluntarily powers which the parties agree to confer upon a credit such as the Article 9 transactions.

Now, on the one hand --

Unknown Speaker: In this case, are you contending that your adversary violated the statute in anyway?

Mr. Martin A. Schwartz: No, we are not Your Honor.

Unknown Speaker: So, we do not have a problem of whether or not a violation of the statute could be the state act?

Mr. Martin A. Schwartz: We do not have that problem.

In the case of Jones, we do not have a contract at all.

In the case of Brooks, we say that that course does not pertain to a warehouseman's lien, even if it did, it would be invalid as a contract of adhesion, that is what the court below stated.

Unknown Speaker: Do the members of the class that was stipulated, are they all parties who had no contracts?

Mr. Martin A. Schwartz: The quest was not limited in that respect, but I would have to concede that the quest should be limited in that respect.

Your Honors, in enforcing liens, warehousemen have been engaged in the enforcement of non-consensual binding dispute resolution.

This has been and always has been and remains an essential attribute of sovereignty.

According to Loach, one of the great and fundamental basic purposes of government is the protection of property by the establishment of courts to resolve disputes consensually when the parties cannot voluntarily do so.

From the early common law that remains so today, self-help remedies have always been very strictly limited.

We submit to this Court that our system of law recognizes that a person who is interested in the disputes such as a warehouseman should not have the power.

I see that my time is up.

Chief Justice Warren E. Burger: You may finish your sentence.

Mr. Martin A. Schwartz: A person who is interested in the dispute such as the warehouseman should not have the power to unilaterally resolve that dispute by the for sale of another personâs property without giving that other person an opportunity to be heard.

Thank you.

Chief Justice Warren E. Burger: Very well Mr. Schwartz.

Do you have anything further Mr. Greenwald?

Rebuttal of A. Seth Greenwald

Mr. A. Seth Greenwald: In response to the respondentâs argument, early on there was mention of this and has been mentioned again, a stipulation about class action.

As it has been recognized by this Court, the Attorney General did not sign this and many other parties did not sign this so-called class action stipulation.

So, we are parties to this case so these other people, so it basically is inoperative.

Furthermore, and I think I should emphasize that the respondents seems to be saying that he wants the warehouseman to bring service summonsing complaint and bring a court action.

As has been pointed out I think in our brief of the petition of Flagg Brothers.

that brings into play when the sheriff goes out to execute the judgment lien, brings into play the question of the household goods exemption provided by New York State Statute and makes a world of problems which I do not have time to go into now.

Now, I think once again, there is a claim here that there is not an opportunity to be heard.

Well, the claim as I now hear it that there is no opportunity to be heard, he says he has no opportunity to be heard before the sale.

Well that is questionable, but what I wish to emphasize to Your Honors is that the sale is not such a significant event.

The customer can be heard before the sale if he has a vigorous attorney and that he wants to be heard before the sale seeking an injunction of the like or he can be heard as he very frequently is after the sale claiming an action in conversion of the sale was not properly conducted and a like.

This is a complete opportunity to be heard.

Unknown Speaker: But that is after his property, perhaps personal, irreplaceable personal property has been sold?

Mr. A. Seth Greenwald: Well, once again I would point out that we are dealing here with personal property and you use the term irreplaceable.

I would say with personal property it can be replaced by money.

Unknown Speaker: Well, maybe family portraits and so on cannot be?

Mr. A. Seth Greenwald: Well, there is no allegation here that any of these matters -- and by the way, I would also say that these are stored goods also.

Unknown Speaker: That goes really to the question whether there is a violation of due process rather than the state action issue I guess.

Mr. A. Seth Greenwald: Right.

Unknown Speaker: May I just ask you one question on the state action issue?

I have been sometimes a hypothetical, I will illustrate the position.

Supposing New York passed a statute that said if a man is large enough and strong enough, he can go next door and take his neighborâs chattels, his lawnmower or one thing or another and he has the power to sell them to a third party and get good title and some one does that pursuant to that statute.

Could you get Federal Jurisdiction to challenge that statute?

Mr. A. Seth Greenwald: Well, that raises another issue which is not in the case.

That raises the issue of General non-possessory liens which is a totally different problem from the warehouseman --

Unknown Speaker: Well, I am just asking under that hypothetical, do you think the man would be acting under color of state law within the meaning of 1983?

Mr. A. Seth Greenwald: Well, I do not think that question is before us, but I would say that the State of New York cannot authorize someone to do a wrongful act.

Unknown Speaker: Well, but the question is how do we decide when state action is involved, an action is authorized by a statute, but no state official participates?

Is it your view that unless a state official participates, there is never a state action?

Mr. A. Seth Greenwald: Well, I would say that where a state official does not participate, it is much more difficult to find state action and racial--

Unknown Speaker: Did you ever find, that is the question?

Mr. A. Seth Greenwald: Well, basically you might never find unless it is a racial discrimination case or a classic governmental function.

Unknown Speaker: Your answer is that in my case, there would be no state action.

I think that is your position?

Mr. A. Seth Greenwald: Yes, but I do not think you get very far relying on such a law and of course such a law has never been passed.

Unknown Speaker: But you admit that you would be able to rely on Federal Court, you could dismiss on the ground that there is no Federal Jurisdiction, is that not your position here?

Mr. A. Seth Greenwald: No, that is not my position here because the type of lien where --

Unknown Speaker: What does that got to do with whether the private individual is acting on behalf of the state?

Mr. A. Seth Greenwald: Well, I think it has a lot to do because you have to focus upon the type of lien that the warehouseman has.

He has a lien by the voluntary, there is a question basically by the delivery by the customer, a property for moving and storage to the warehouseman.

The customer wants to have his goods taken care of and not surprisingly, the warehouseman expects to be paid.

The law provides a lien for this surface.

Unknown Speaker: Because there is greater, legal involvement, there is less state action?

I do not understand.

Mr. A. Seth Greenwald: Well, I would put it this way

Justice William H. Rehnquist: What is your test to the one there is state action in the case like this?

Mr. A. Seth Greenwald: Well, I would say that you have to have a traditional state function.

The best example is racial discrimination or say free speech, a fundamental right.

Justice Thurgood Marshall: Like due process?

Mr. A. Seth Greenwald: What?

Justice Thurgood Marshall: Like due process?

Mr. A. Seth Greenwald: Not like.

No, I would say not like.

Justice Thurgood Marshall: Well, that is what he said.

He wants a little due process.

Mr. A. Seth Greenwald: Well, I do not think due process would help him.

Justice Thurgood Marshall: He does not object to you giving the warehouseman lien?

He does not object to that.

He objects to you selling the property.

Mr. A. Seth Greenwald: Well, I think that --

Justice Thurgood Marshall: Not granting the lien.

Mr. A. Seth Greenwald: Well, I think that giving him due process would be a illusory benefit because due process as we all know has and have in this case a very substantial cost and in the end, the person who is going to pay this cost is the customer and we are dealing here allegedly with people who do not have a lot of money.

Justice Thurgood Marshall: Well, he asking to pay for it.

Mr. A. Seth Greenwald: Now, he has never yet.

Well, in the end he will pay for it because the bill that he is going receive in the first instance is going --

Justice Thurgood Marshall: But if a man wants due process, do not tell him that he cannot have it because he will have to pay for it?

Mr. A. Seth Greenwald: Well, that is a fact that this Court has considered in its other cases.

Justice Thurgood Marshall: Well, do we have to consider in this case?

Mr. A. Seth Greenwald: No, because you are on the state action issue.

You are not on the due process issue.

Justice William H. Rehnquist: Mr. Greenwald, what if the New York legislature decided that the Courts of New York were so congested that they just had to eliminate some claims for relief and they decided to eliminate any civil action for conversion.

Do you think that would implicate state actions so that someone who had previously had a claim for conversion could go into the District Court and say the state has taken away my client?

Mr. A. Seth Greenwald: No, because we actually had that case with our no fault law and I think it was appealed up to this Court where we under no fault insurance provision, we provided that any dispute about no fault, the benefits or the insurance is subject to binding arbitration.

It basically was taken out of the Courts of the State of New York because we do have a lot of congestion in our Courts and I think that is the example that is operative in that situation.

Thank you, Your Honors.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.