TULL v. UNITED STATES

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Argument of Richard N. Nageotte

Chief Justice Rehnquist: Mr. Nageotte, you may proceed whenever you're ready.

Mr. Nageotte: Mr. Chief Justice, and may it please the Court:

The constitutional issue for decision in this case this afternoon is whether a citizen of the United States who finds himself to be the defendant in a suit brought by the federal government in a federal court, that is a federal district court, under a federal statute, subjecting that citizen to a substantial civil penalty, whether that citizen is entitled to trial by jury under the Seventh Amendment.

The facts briefly stated in this case are that in July 1981, the federal government, the Department of Justice, filed suit in the United States District Court in Norfolk alleging that Mr. Tull had filled properties, had developed properties and in some cases had sold those properties, in some cases more than five years prior to filing this suit.

In all cases at least more than six months last property having been filled and partially sold in December, 1980.

The complaint in that case, while it did ask for a conclusionary injunctive relief, the primary thrust of that case was to impose substantial civil penalties.

Interestingly in this case, Mr. Tull, in 1976, in order to avoid just this result, upon the advice of his attorney had asked for a jurisdictional inspection to be made by the District Engineer who is charged with enforcement of the statute.

This jurisdictional inspection was made in July of 1976 by no less than the District Engineer and eight key people of this department, including several department heads and two attorneys.

And the attorney's specific job was to make jurisdictional determinations to determine whether or not permits were required.

Mr. Tull proceeded with his activity after having been told that in only two locations were permits required.

Unknown Speaker: Mr. Nageotte, we granted certiorari only on the jury trial issue in this case.

Mr. Nageotte: Yes, Your Honor, I'm simply trying to briefly summarize the facts.

Mr. Tull demanded a jury trial.

That jury trial demand was denied on the, and the basis of the trial court's denial was that all issues in this case were equitable or in regards to opinions requested from the court.

The case today falls squarely within the case of Curtis v. Loether, the only distinction being that in that case the issue, the legal relief was punitive damages and in this case it is civil penalties.

We would point out that the government suggests that this case involves disgorgement of profits as a form of equitable relief.

Say to the court that the complainant in this case made no mention of disgorgement of profits or profits in any regard.

In both counts one, two and three of the complaint filed in this case, the government asked for the imposition of civil penalties under that provision of the statute, 33 U.S.C. 1319(d).

Unknown Speaker: Mr. Nageotte, if the language of the statute had made clear that the so-called civil sanction was to be related to disgorgement of economic benefit for example, would you think the Seventh Amendment would then guarantee a right to trial by jury?

Mr. Nageotte: That would really depend on the precise language used.

Of course, disgorgement, if properly disgorgement under the equitable principles of disgorgement could be an equitable remedy bestowed in this statute by Congress in any number of ways.

But whether or not it is in fact an equitable remedy, in other words what I'm saying is--

Unknown Speaker: Well, you would concede that it could be an equitable remedy?

Mr. Nageotte: --Yes.

I don't like the term disgorgement.

I don't think that's particularly correct, but restitution is probably a more appropriate term.

Restitution has always been a form of equitable relief that is to put the parties into the same position that they would have been in but for the action.

Unknown Speaker: Well, is it possible that we could interpret this statute as essentially one for that type of relief even though it's not express?

Mr. Nageotte: Justice O'Connor, I don't believe that that could be done in this case for this very specific reason.

Justice Marshall, in his opinion in Curtis v. Loether, pointed it out and Chief Justice Rehnquist in his concurring opinion in Albemarle Paper pointed it out.

The distinction between an equitable remedy and the discretion of the equitable court is whether or not under the statute the imposition of relief is discretionary, irrespective of the act of the violation.

And in this particular statute you don't have that.

I believe Justice, Chief Justice White's exact words were to the extent that discretion is replaced by words which follow as a matter of course.

If 33 U.S.C. 1319(d), which is the civil penalty provision of the Clean Water Act, it requires that on a finding of a violation of the statute that a civil penalty be imposed, so for that reason I say it's no longer, it's not discretionary.

Now, of course, if that whole wording was changed then perhaps, but that's--

Unknown Speaker: Would you clarify one thing factually for me?

Was your client offered an opportunity to repair the damage or fill in the canal in lieu of a penalty?

Mr. Nageotte: --Yes, Your Honor, he was.

But it really was not an option because as the trial court noted this ditch, which the court called a canal, had been filled in as much as five years before this suit was brought and the government watched this whole thing being filled in.

It stood, stayed back and did nothing, notwithstanding an affirmative obligation of the District Engineer to issue a cease and desist order.

But irrespective of that, Mr. Tull had already filled, developed and sold each and every one of those lots that that ditch went through.

And he had sold them to third parties; he could not get them back.

The court recognizes, the trial court recognizes that numerous points in the trial which we cite in our brief and in addition to that we came in after the trial and asked for an option to restore the ditch in a different location because he could not restore it in the original location.

So the, it's a very long answer to your question, but the answer is that if he still owned it, perhaps he could, but he couldn't in this case and so that restoration really didn't come into it.

It was a remedy that was moot at the time it was offered.

Unknown Speaker: Mr. Nageotte, do I understand you to say that there is no discretion as to whether or not a civil penalty shall be imposed under the statute?

Mr. Nageotte: That's correct, Justice Scalia.

If you look at the statute--

Unknown Speaker: Says that any person who commits a violation shall be subject to a civil penalty.

Mr. Nageotte: --Yes, sir.

Shall be.

Unknown Speaker: Yes, shall be subject to.

Mr. Nageotte: Shall be subject, I read the words, "shall be" to require the imposition of some penalty and that's the government's position in most of these cases, that it's not a discretionary item, that the court must impose some civil penalty in each case.

Unknown Speaker: If someone is subject to deportation, it means he must be deported.

If someone is, if someone who commits a particular crime is subject to death, it means the death penalty must be imposed?

I don't read the phrase, "subject to" that categorically.

Mr. Nageotte: Well, if you read, if you read it together with the criminal penalties which are provided in 33 U.S.C. 1319(c), the criminal penalties provide for a willful or negligent violation.

So the civil penalties are imposed even in cases where there's no willful or wrongful intent--

Unknown Speaker: I agree that you're subject to them.

I'm just... do you have any case that says that, that a penalty must be imposed, that the court has no discretion not to impose a penalty in this case?

Mr. Nageotte: No, Your Honor, these are... this is simply from my experience in trying these cases at the district court level.

That's the position the government takes in argument to the trial court that there is no discretion, based on that language in the statute.

The, getting to, back if I could to this disgorgement of profits as equitable relief as raised by the government, first of all I would point out that in all three counts of the complaint the relief sought specifically by the government in each count was civil penalties under the civil penalty provision of the statute.

There were no other either specific statutory allegations or factual allegations which would lend themselves to a position of disgorgement of profit.

I went back through after reading that in the government's brief and looked at the closing argument of the government.

With respect to Eel Creek the closing argument of the government was that there was one day of violation; they were entitled to a $10,000 fine equating a day of violation to a day of fill.

With regard to Mire Pond I, they said there was ten days of filling, they were entitled to a $100,000.

With respect to Ocean Breeze they said there was a hundred days of filling and for Ocean Breeze they were entitled to a $1,000,000 in civil penalties.

I also checked their post trial brief and the post trial brief specifically said the United States seeks a mandatory injunction against the defendant for restoration, a permanent injunction against further filling on the island without first checking with the Army Corps of Engineers to determine whether the location is within the jurisdiction of the Corps and civil penalties for every day of violation.

There was never at any time throughout this case any suggestion that what the court sought was disgorgement of profits.

I'd also take issue to the government's position that the court in this case could of, that somehow the civil penalties were transformed into some type of equitable relief from legal relief and that this constituted, or was within equity's power to provide complete relief.

The... as I see it, the government's position on that is not founded by the case law.

It's clear from the cases of this court and the point the government seems to miss is that an item such as penalties, forfeitures, and punitive damages, and we submit that in this case civil penalties are most closely analogous to punitive damages, that in those situations equity never had jurisdiction in the first place and never could award that type of relief.

So, when you talk about equity granting complete relief you're talking about things like perhaps in those cases where it takes, where it took, before merger at least, money of some fashion to make the parties whole and Porter v. Warner Holding Company made that clear in that case the restitution of rent money was all right but they said that the civil penalties were a wholly different matter--

Unknown Speaker: --Well, if Congress had vested the authority in an administrative agency to impose a civil fine, I don't suppose you'd be here.

Mr. Nageotte: --That's absolutely correct, Your Honor.

As Your Honor's opinion for unanimous court in Atlas Roofing said that if it's in an administrative agency there's no Seventh Amendment right to a jury trial.

Unknown Speaker: And so you are in effect saying Congress made its choice.

It's put the collection of penalties in the court and they're stuck with it.

Mr. Nageotte: Well absolutely, Your Honor.

I'm not sure I'd use the term, "stuck with it"--

Unknown Speaker: Well, xxx but is there a jury trial.

Mr. Nageotte: --Yes, Justice White, and it was, and they knew, I mean they knew, we have, what we have is a coin that has heads and tails.

On the heads side is your opinion in Atlas Roofing and the tails side is Justice Marshall's opinion in Curtis v. Loether, both unanimous decisions, different sides of the coin.

In this case the federal government opted for trial in the district court and so fully must of intended the Seventh Amendment to apply when civil penalties were sought.

I'd just like to, if I could, point out that this court in Elizabeth--

Unknown Speaker: Is there any administrative mechanism for imposing civil penalties under the Clean Water Act?

Mr. Nageotte: --No, sir.

not at--

Unknown Speaker: None at all?

Mr. Nageotte: --not in this context in this case.

The Clean Water Act covers numerous things that have to do with other areas like NPDS permits and that type of thing.

But in the context of filling wetlands that comes clearly within this one which is just simply the various forms of relief.

And I think that distinction is important to bear in mind while we discuss Congress' intent, because you see unlike the statute, the Title VIII statute in Curtis v. Loether where the cause of action and all of the relief including the injunctive relief which was equitable and the legal relief in the form of compensatory and punitive damages were a part of the same section of the same statute.

In this case Congress went out of its way to break apart the legal and equitable relief.

The equitable relief is provided in 33 U.S.C. 1319(b); criminal relief in 33 U.S.C. 1319(c); and legal relief in the form of civil penalties in 33 U.S.C. 1319(d).

Now if the follow the government's argument to its logical conclusion then the criminal penalties of 33 U.S.C. 1319(c) are magically transformed into equitable relief because all three flow from one cause of action, violation of the Clean Water Act.

And, that's the same thing that Justice Marshall dealt with in Curtis v. Loether.

The punitive damages and compensatory damages flow from the single cause of action, violation of the Fair Housing Statute.

The--

Unknown Speaker: Would you be satisfied with an advisory jury?

Mr. Nageotte: --Justice Marshall, as a trial lawyer, I would never be satisfied with any advisory jury because I... well, I have to say as a trial lawyer I take anything I can get, but I don't think that the advisory jury can supplement the Seventh Amendment requirement for a jury because we have issues out of chancery in which there are--

Unknown Speaker: Well that's the usual chancery rule xxx called it an advisory jury.

Is that right gone, or is it still there?

Mr. Nageotte: --It's... well, it's rarely, I just have to say from my own experience in Virginia it's not granted very often anymore because the trial court just usually doesn't grant it.

If you can show a very clear situation in which there's a direct conflict of evidence which needs to be resolved or something like that perhaps you can get them, but it doesn't help a, it doesn't help a defendant because it does exactly what the Seventh Amendment was designed not to do and that is to put back in the hands of a judge or the government, whether or not the citizen gets a trial by his peers, a jury.

And that's precisely what the Seventh Amendment sought to avoid.

And it doesn't help the defendant in federal court or any court if you say, well, you can have a jury if we decide we'll give you one, but you can't have one as a matter of your right under the Constitution.

The cases, Elizabeth v. American Nicholson said that punitive damages could not be awarded in an equity court.

And also, and more importantly in Livingston v. Woodworth this Court says that punitive damages are incompatible with the principles and practices of equity and for the same reason civil penalties are incompatible with the principle and practice of equity, because equity courts were never designed to punish and that's what civil penalties do.

That's what punitive damages do.

They punish.

I point out, if I could, that the government statement in Mugler, that the Seventh Amendment did not apply to causes of action which were nuisance and tryable inequity.

That's certainly the true test of the law, but Mugler like all of the other cases cited by the government did not hold that an equity court can impose penalties, fines, forfeitures of punitive damages.

That's the distinction.

Unknown Speaker: Isn't Mugler a state court case?

Mr. Nageotte: Yes, Your Honor.

Unknown Speaker: So the Seventh Amendment wouldn't be involved there anyway.

I mean, that wouldn't be precedent against the use of the Seventh Amendment.

Mr. Nageotte: Well perhaps, but most clearly, most clearly there was, jury trial was never even an issue in Mugler.

Unknown Speaker: And even if it had been the Seventh Amendment has never been held to guarantee jury trial in state courts.

Your client was tried in a federal court.

Mr. Nageotte: That's correct.

That's correct, Your Honor.

The, I had prepared a, quite a detailed analysis of Curtis v. Loether versus this case, but I won't have time to give it.

I certainly would ask that the Court consider the petitioner's brief in Curtis v. Loether against the government's brief in this case.

They precisely mirror on all of the points that the government seeks, and as we point out this Court unanimously rejected those positions.

I would state that the, it's important to discuss for a moment this business of equitable relief whether it's incidental to, or part of the equitable clean up doctrine for just a moment for this reason, it's very important to trial lawyers and trial judges that we don't go back to the old rule which has since been discarded by Dairy Queen, Beacon Theatres and Ross v. Bernhard for this reason.

Under the requirements of notice pleading only in the federal court, when you have to decide somewhere along in the trial whether equitable relief is really incidental to the legal relief sought which is the main case, or the legal relief is merely incidental to the equitable relief as you go along through the trial.

And on the other hand you have to make your jury trial demand with the first, at the beginning of the case.

You have to do these things.

What's going to happen if we ever go back to that old rule, you're going to end up half way down the line in a trial and find out that based on the evidence that came in because there was notice pleading that you may have to go back and redo the whole thing and then afford a jury.

It's better to leave it the way it is with Dairy Queen and Ross v. Bernhard to insure that that doesn't happen.

Simply have the civil penalties, or punitive damages or forfeitures be the legal relief which is split off from the equitable relief tried first as to issues of fact and the relief and then the court can provide whatever additional equitable relief might be necessary in the case.

I'd like to point out that in this particular case it's clear that when you apply the three element test which Justice White set out in Ross v. Bernhard, it's clear that the civil penalties require a jury trial.

Those three elements are: What was the pre-merger custom with reference to such questions.

Now as we point out there's no question here in this case that as to civil penalties the pre-merger custom would have been trial by a jury because equity courts simply, even though they had jurisdiction to award complete relief, never had jurisdiction to award penalties or punitive damages.

Second, I'd also point out that in the case of Hepner v. United States, and I acknowledge to some extent the character of that, of those statements that of course, they were entitled to have a jury summoned.

I've seen it written as dictum, on the other hand that's pretty strong dictum when you cannot impose, or when you cannot get to the underlying question, which in those cases were whether or not a directed verdict could be granted, whether that would, whether that would violate the Seventh Amendment.

In the government's brief, their own brief, their own brief in that case said that it is evident therefore that the distinction between civil action for penalties and technical criminal prosecution was an old distinction in common law, well-known at the time of the adoption of the Constitution, as we cite in our brief.

Penalty actions were well known at that time.

Secondly, in their supplemental brief at Page 7 and 8 in Hepner the government said, we answered that such a suit is not a criminal prosecution, that the defendant is not entitled to a jury at all, except be it under the Seventh Amendment as to civil actions and then in such actions the court can direct a verdict.

Last, I'd simply point out that in this case the civil penalties are clearly, when you compare them, with punitive damages, clearly on all fours match punitive damages.

Even in the EPA guidelines they say, and these are guidelines of June 3, 1977, and civil penalties bear similarities to punitive damages.

They were imposed in this case as punishment.

Last--

Unknown Speaker: Now is there, if a government cleans up a site or something and spends money for it does it have a cause of action to recover from the, from a private party, the cost of the clean up?

Mr. Nageotte: --Not in--

Unknown Speaker: Is there an action like that under the Clean Water Act?

Mr. Nageotte: --Under the Clean Water Act, no, Justice, I would say under this particular section of the Clean Water Act, it's different than RECWA and the answer is no.

They can have injunctive relief, they can have civil penalties and they can have criminal relief, but there is no suit for compensatory damages as such.

Unknown Speaker: If there were would you suppose a jury trial would be required?

Mr. Nageotte: Well, I would have to see it in that context but I would suspect--

Unknown Speaker: Well, it just says, when the, if the government undoes the pollution they can sue the party responsible for the costs of undoing it.

Mr. Nageotte: --Well, if what resulted was a judgment, an enforceable judgment--

Unknown Speaker: Yes.

Yes, for money, yes.

Mr. Nageotte: --for money, then I would say that the Seventh Amendment would apply.

If it were some other category and that's the distinction, is that it's a money judgment?

Unknown Speaker: It just isn't disgorging?

Mr. Nageotte: Well, I wouldn't see where clean up costs would be disgorgement in that sense.

Disgorgement presupposes that I have taken something from you and won't give it, unlawfully, and I won't give it back and therefore you have to force me to give it back to you.

Unknown Speaker: Well, you may have taken it, but you've done something to me and I refuse to pay you for it.

Mr. Nageotte: Well now that's a, now that's a different story when, if it's an action in debt--

Unknown Speaker: Yes.

Mr. Nageotte: --or an action in assumpsit then you have a little different situation.

That's not disgorgement, that's not disgorgement, that, otherwise we could simply wipe it up with Seventh Amendment xxx.

Unknown Speaker: But the key is not whether it's a money judgment.

Because you get a money judgment in disgorgement and you get a money judgment in restitution which you acknowledge is equitable relief.

Mr. Nageotte: Yes, sir, Justice Scalia, but what I'm saying is that it takes more, I was answering it strictly in the frame of--

Unknown Speaker: Yes.

Mr. Nageotte: --Justice White's question if it was a money judgment to get X dollars because I went out and had to do something.

That's the same as a breach of contract action.

If I agree to you sell you widgets and I breach and I won't sell, you have to go buy the widgets somewhere else.

Unknown Speaker: But, the key is what it's for--

Mr. Nageotte: Yeah.

Unknown Speaker: --not that it's a money judgment.

Mr. Nageotte: That's correct.

But, being a money judgment is one of the factors involved because there are judgments other than money judgments.

Last was the practical limitation of juries.

I've just stated that it's obvious that juries routinely hear antitrust, medical malpractice, products liability.

They can handle those cases.

There is no practical limitation for a jury to hear a Clean Water Act case.

Thank you.

xxx.

Unknown Speaker: Thank you.

Thank you, Mr. Nageotte.

I'll hear from you now, Mr. Wallace.

Argument of Lawrence G. Wallace

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court:

I'd like briefly to address some questions that were raised from the bench before proceeding with my argument.

With respect to whether penalties are mandatory under the Act, we have addressed that briefly in Footnote 23 of our brief, Justice Scalia, on Page 29.

We do not take the position that penalties are invariably mandatory although some government counsel have made that argument in the past.

It's only in preparing this brief that we focused on that issue.

Unknown Speaker: You haven't addressed it at all.

You've just said some penalty ordinarily is assessed xxx--

Mr. Wallace: That is what has been held and that is the xxx.

Unknown Speaker: --Have you addressed whether it must be assessed.

Mr. Wallace: I'm addressing it right now.

Unknown Speaker: Good.

Mr. Wallace: And, I've said that we don't say that it has to be assessed in every case.

The discretion we rely on is not the discretion of whether or not to assess a penalty.

It's the fact that the penalty under the Act is not for a fixed sum or a readily ascertainable sum, but it's a penalty to be arrived at through the exercise of discretion on the part of the judge.

That is the discretion on which we rely.

Unknown Speaker: Forever to the expense to the government for cleaning up?

Mr. Wallace: Well, under this statute the government doesn't undertake to clean up.

It may through collateral proceedings.

I don't say that it's unfettered discretion, Justice White, but I do--

Unknown Speaker: Well does it have, is it, should it have some relation to the cost of undoing the pollution if you're ever going to undo it?

Mr. Wallace: --It has relation to various factors which I plan to discuss in connection with the legislative history of the statute, but there still is a--

Unknown Speaker: Is willfulness one of them?

Just sheer willfulness?

How much warning the individual had?

Mr. Wallace: --Yes, that is it.

Unknown Speaker: And he went crashing ahead--

Mr. Wallace: Yes, that is it.

Unknown Speaker: --and even though he caused--

Mr. Wallace: That is a factor.

Unknown Speaker: --little damage to the government you'd hit that kind of an individual a lot harder?

Mr. Wallace: The penalties have a--

Unknown Speaker: Right.

Mr. Wallace: --deterrent component.

They're intertwined with the other remedies which are injunctive and restorative.

Unknown Speaker: Well, what were you arguing in the district court was the $1,000 a day, I gather from your opponent.

Or, $10,000 a day.

Mr. Wallace: For the particular violations we specified that those penalties were available.

We asked for penalties.

But the remedy--

Unknown Speaker: Mr. Wallace, that doesn't sound like it has anything to do with restitution.

That sounds like it's a penalty or a fine, you know, thirty days/$30, something like that.

Mr. Wallace: --Well, that is the statutory maximum which is what was referred to for purposes of the complaint.

When the plan was submitted during the course of the trial in proposing a remedy, we've summarized the plan briefly in Footnote 31 of our brief on Page 38.

The plan, the main features of the plan were to provide for restoration and mitigation through the converting of other properties to wetlands when some of those that had been unlawfully filled could not be converted because of the need to protect innocent third parties, and--

Unknown Speaker: But, in addition to the plan you also asked for these civil penalties.

Mr. Wallace: --We also asked for civil penalties and the penalties that were provided in all instances except with respect to the filling in of a navigable canal, Fowling Gut Extension, they were calculated on the basis of disgorgement of the net profit.

I'm not talking about what was asked for, but I'm talking about what the judge actually ordered.

On Page 60 (a) of the Appendix to the Petition for Certiorari we have the rationale used by the judge in deciding on various components of the penalty and in the very first full paragraph on page 60 (a) the judge said that he realized approximately $5,000 net profit per lot with respect to the lots that the court was then considering and thus for the filling of wetlands lots 120, 121, etcetera, there were seven of them if you count those numbers, the court is assessing a penalty of seven times $5,000, or $35,000.

Unknown Speaker: Mr. Wallace, in this case, he may have done that.

Do you think he was required to do that?

Mr. Wallace: He was required to take that factor into account.

Unknown Speaker: Could he of--

Mr. Wallace: He isn't limited to that.

Unknown Speaker: --Having computed $5,000 per lot could he have also said, well, this fellow had notice over and over again, he deliberately did things we told him not to do, he's a bad man for all sorts of reasons so I'll add an extra $1,000 per lot.

Could he have done that?

Mr. Wallace: Yes, he could have done that.

xxx--

Unknown Speaker: Then the measure is not limited to the same remedy with the inequity, is it?

Mr. Wallace: --It's not limited to disgorgement.

It's a discretionary remedy but it's intertwined--

Unknown Speaker: Couldn't the trial judge in a criminal case decide an appropriate fine would be measured by the amount of money the person stole or something like that?

And that wouldn't make it disgorgement would it?

I mean I suppose you can always take it into account.

Unless you're required to take it into account, why is that legally relevant?

Mr. Wallace: --We're looking for historical analogues to the modern statutory action.

There was no precise action, there was no Clean Water Act at common law and no precise action such as we have here.

So--

Unknown Speaker: But we're looking for analogues to the action, Mr. Wallace, not to analogues to what happened to have been done by the judge in this case.

Mr. Wallace: --That is correct.

And I was--

Unknown Speaker: The disgorgement if not an analog to the action.

Mr. Wallace: --Well it is a component part of what is supposed to be considered with respect to the penalty remedies which are a part of the remedies that may be imposed under the action.

Unknown Speaker: On Page 61 (a), the page right after, when you--

Mr. Wallace: Yes.

Unknown Speaker: --the judge goes on to say for the unlawful filling of a navigable waterway of the United States, the Defendant shall pay a fine in the sum of $250,000.

Mr. Wallace: Right.

Unknown Speaker: He doesn't seem to say there that that's tied into any restoration costs.

Mr. Wallace: It is not.

That portion of the penalty order, Mr. Chief Justice, is in the alternative.

If he has the choice of restoring this navigable canal or paying $250,000.

Since he filled in lots and has sold them on this waterway, in order to restore the navigable canal he would have to re-purchase those lots so that the penalty, which is not, incidentally, anything that we asked for in the case, the penalty serves in effect as a cap on the expense that he would be required to go to, to repurchase those lots.

I mean, since the court could not order the new owners to sell the lots, if the court simply ordered him to restore the canal regardless of the costs, the new owners would be in a position to charge him as much as they could possibly get for them.

As it is this serves as a cap on what he will have to pay for the lots plus the work of restoring the canal.

And if it comes to the point where it exceeds $250,000 he will have the choice of paying the $250,000.

This kind of equitable adjustment of the remedy to the needs of the case is part of the reason why--

Unknown Speaker: xxx... but you also had the order to restore.

Mr. Wallace: --In that case he had the alternative with respect to Fowling Gut Extension.

He could either restore or pay the $250,000 under that paragraph of the order.

Unknown Speaker: Well I know, but what was the, and what were the fines imposed?

Mr. Wallace: The other fines were imposed on the basis of $5,000, his average profit per lot for the number of lots that he unlawfully filled in.

Unknown Speaker: Oh, I xxx.

Mr. Wallace: In this case, that was the way the fines were imposed.

Unknown Speaker: I know, but he could, he had never recovered those fines.

Mr. Wallace: Well he's ordered to pay them.

They're--

Unknown Speaker: Oh, ordered to pay them and to restore?

Mr. Wallace: --And, to do some--

Unknown Speaker: So where does that leave--

Mr. Wallace: --restoration work where it needs to be done.

Unknown Speaker: --Well so how does, where does that leave these fines that he can't get out of?

He has these fines to pay but he also has to restore.

So the fines can hardly be to represent the cost of restorations since he's going to have to do that again.

Mr. Wallace: No, those fines were not designed to represent the cost of restoration.

Unknown Speaker: So they are just plain old fines.

Mr. Wallace: They are more in the nature of disgorgement of profits.

If one looks to the history of the Clean Water Act, after all the inquiry into an historical analog that's required under this Court's Seventh Amendment jurisprudence is basically a two-step process.

If one, the first step is to identify with some care the particular modern statutory right and remedy that are at issue--

Unknown Speaker: xxx--

Mr. Wallace: --and only then can the historical comparison meaningfully be drawn.

And the statutory provision at issue here is the civil remedy provisions of the Clean Water Act which are applicable to all violations of the Clean Water Act, whether they involve the filling of wetlands as in this case, and it's a mistake to concentrate too much on the filling of wetlands, or whether they involve discharges of pollutants into rivers or other waters of the United States by industrial discharges, etcetera.

Those are the statutes that we are dealing with here.

This is the remedial provision.

And the Clean Water Act originated as the Federal Water Pollution Control Act of 1948, without any civil penalty provisions.

It embodied only an embatement remedy.

The Clean Water Act embodies a series of numerous amendments that were designed to strengthen that law over the years and the civil penalty provisions were first added to the statute in 1972.

Prior to that time the abatement remedy was quite cumbersome and relatively ineffective to the point where the United States attorneys were more frequently relying on the old Rivers and Harbors Act remedy when they could.

Either the civil injunctive remedy or the criminal provisions but that had certain disadvantages in that it didn't apply to sewage discharges at all or to discharges into the tributaries of streams that were navigable in fact.

The Clean Water Act has a broader reach in that respect.

And the basic purpose of adding the civil penalty provision in 1972 was a purpose that this Court identified in the Albemarle Paper Company opinion as one of the purposes of the back pay remedy under Title VII of the Civil Rights Act.

The need to have an incentive, or a spur or catalyst to bring about compliance with the Act.

Experience showed that this was needed because otherwise somebody could profit from discharging pollutants into the waters and just wait to be sued and for an abatement remedy to be issued.

But, if--

Unknown Speaker: --What if they used a criminal penalty for that purpose, you wouldn't be here arguing that you don't need a jury trial xxx--

Mr. Wallace: --The criminal penalty was added at the same time as the civil penalty provision in 1972.

Prior thereto there was no incentive in the Act to bring about compliance and the criminal provision is sometimes resorted to in the case of willful violators.

Of course, we have a higher burden of proof--

Unknown Speaker: --What, my point is, what does that have to do with what I understand everyone agrees is the issue before us, whether in 1791 this would have been essentially an equitable or a legal action.

Mr. Wallace: --But, what it has to do--

Unknown Speaker: Anymore than the fact that it added the criminal penalty later to achieve the original goals of the act has anything to do with whether that's a criminal action now.

Mr. Wallace: --What it has to do, it's essentially a recognition that this was one ball of wax added to in order to accomplish the original purpose of the Clean Water Act, which is defined right in the statute and has been quoted by this Court to restore and maintain the chemical, physical and biological integrity of the waters.

That is the focus of relief and what is sought to be xxx.

Unknown Speaker: Well that's very interesting, but that's the purpose of the criminal penalty too.

Mr. Wallace: Well, that's--

Unknown Speaker: I just don't see what it has to do with the point before us.

Mr. Wallace: --What it has you see, the civil penalty provision is an adjunct to that purpose.

This is not a statute designed to secure revenues for the federal treasury.

It's a statute designed to preserve and maintain and restore the waters in their ecosystem.

Unknown Speaker: Is that what penalty provisions normally are?

Civil penalties are mainly designed to raise revenue.

They may not be.

In an another statute--

--They're usually designed to--

Mr. Wallace: --to either but, we're talking about this statute and whether the fact that the penalty provision is part of the remedies changes the nature of the equitable action that was available prior to the 1972 amendments because this additional remedy has been added.

Unknown Speaker: --Nobody is arguing that the nature of the other action, which is equitable, is altered.

The issue is not whether the nature of that action is altered the issue is whether this action for--

Mr. Wallace: This is not a different action.

Unknown Speaker: --civil penalties is equitable.

Mr. Wallace: This is not a different action, Mr. Justice.

It is the same cause of action.

It is just an additional remedy that's available to the court at its option under the same cause of action.

Unknown Speaker: But, you had both set of--

Mr. Wallace: It's not an additional action.

That's our point.

Unknown Speaker: --Mr. Walsh, you had those same kind of things in Beacon Theatres and Dairy Queen and the court said where it's equitable you go without a jury, but where you add in something that is legal then you get a jury trial.

I don't think the whole ball of wax argument works.

Mr. Wallace: Those two cases both involved a combination of two causes of action with overlapping factual controversies whereupon a collateral estoppel effect would control the legal cause of action if the facts were determined in the equitable cause of action.

Unknown Speaker: Well, but I'm sure it could have been argued that it was all one ball of wax and that sort of thing, but the court said, No, you don't get off that way.

Mr. Wallace: The court recognized that it was two causes of action rather than one cause of action with two remedies.

Unknown Speaker: Well, do you think this turns on whether we decide that these claims on the complaint on the Clean Water Act are "one cause of action" or "two causes of action"?

Mr. Wallace: Well I don't think it's our only argument, but I do think that the distinction between the Beacon Theatres/Dairy Queen line of cases and what some people take to be a line of cases in conflict with that the Porter line of cases which we discuss in our brief is--

Unknown Speaker: Well, the Porter case never referred in any place to the right to jury trial.

I just re-read it.

Mr. Wallace: --And Mitchell against DeMario Jewelry, they did say that remedies otherwise available at law could be given by a court of equity.

Unknown Speaker: But, I don't think you can take that phrase or that dicta and apply it to the jury trial situation when there was no question of jury trial rights in Porter.

Have you prevailed on this claim before any other Court of Appeals?

Mr. Wallace: No Court of Appeals has ruled to the contrary and I--

Unknown Speaker: This is the first time it's ever come up in a Court of Appeals, the right to jury trial on a civil penalty under the Clean Water Act?

Mr. Wallace: --There is another case pending before the court on petition from the Eleventh Circuit, the MCC case in Florida which is being held for this one, in which we also prevailed.

It was not a wetlands case.

Unknown Speaker: And you take the same view towards the Court of Appeals Case, Judge Friendly's case, as the Fourth Circuit did in this case where he said--

Mr. Wallace: The J. B. Williams case you're speaking of?

Unknown Speaker: --Yes.

Mr. Wallace: Yes.

Well, we have taken the point of view that that case while it--

Unknown Speaker: Just out of--

Mr. Wallace: --apparent conflict with our two holdings under the Clean Water Act did not have a persuasive answer to the point that the remedies under this Act are discretionary and require the exercise of equitable discretion.

Unknown Speaker: --Judge Friendly didn't understand the one ball of wax doctrine.

[Laughter]

Mr. Wallace: Well, I don't want to belittle a very scholarly opinion on his part.

He later wrote an opinion that we cite called Securities and Exchange Commission against xxx--

Unknown Speaker: I don't think the Chief Justice was belittling it, I don't think it--

Mr. Wallace: --I know, I think he was hinting that we might be, and that is far from our mind.

There was a dissenting opinion in that case which is also of some persuasiveness, but Judge Friendly later wrote the opinion in Securities and Exchange Commission against Commonwealth Chemical Securities in which he rejected a claim of a right to a jury trial for disgorgement of profits in an action by the Securities and Exchange Commission in federal court.

He said that that was equitable in nature and has been recognized as such.

Unknown Speaker: --Well, think of how efficient it would have been to have an administrative agency to collect these fines.

Mr. Wallace: That was precisely the question during the 1977 Amendments, although no one ever thought that it would effect whether there was a right to jury trial, but these were the amendments at which the policies of how to calculate the penalties were most specifically considered by Congress.

And at that time, the Conference Report said that they had decided against giving EPA an administrative remedy for the penalties but expressed approval of EPA's enforcement policy and said that they were going to wait and see whether it will have success

"in implementing its penalty policy through the courts. "

Unknown Speaker: When was that?

Mr. Wallace: That was the 1977 Amendments, the Conference Report, which appears in Volume 123 of the Congressional Record... we have cited this... at Page 39190.

And appended to this committee report then is a letter from the EPA to Senator Muskie, responding to his request for the agency to elaborate upon the agency's policies with regard to the calculation of civil penalties which it had developed for purposes of entering into settlements under the statute.

And what the agency points out is that the penalties should be utilized first of all to at least remove any economic gain achieved by non-compliance and emphasized it was important to do so in order to relieve competitive inequities between industrial polluters for example, who would profit by violating the law for several years as against their competitors who were complying with the law.

Unknown Speaker: Mr. Wallace, are you saying that the government is only going to seek that degree of penalty in the future, only disgorgement?

Mr. Wallace: Well it's not only disgorgement in these policies that were approved by Congress.

I am saying that these are guidance to what we seek and what the courts should give.

But they added on that when the degree of environmental harm is great or the degree of willfulness something should be added, then of course, they discounted it by the likelihood of success.

They were talking about settlements.

In some cases they would defer or reduce it because the payment of the full amount would render it too difficult for the source of the pollution to install the required pollution controls, et cetera.

This requires a balancing of equities of considerations such as these which is equitable in nature and which is not unfettered in the discretion of the district court.

But it still is in the district courts a proper exercise of discretion and the application of the penalties would be subject to proper appellate review.

That is what the court held in Albemarle Paper Company, that ordinarily the back pay remedy should be awarded.

It isn't up to a district court to decide without basis not to award the back pay remedy quoting from Chief Justice Marshall's opinion sitting on Circuit in the Aaron Burr case that when a matter is committed to the discretion of a court that means that it is committed not to its inclination but to its judgment and that judgment must be based on sound legal principles.

So there is some statutory guidance in the legislative history of the 1977 Amendments for the way the penalty provisions should be applied in the exercise of discretion.

But we had in this case something difficult to foresee in any guidelines... the need to put a cap on the remedy that was required because of the filling in of a waterway, of a navigable waterway.

There are other possibilities there.

As Counsel for the Petitioner mentioned there was a subsequent hearing in December of 1983, and this appears in Volume 21 of the Court of Appeals Appendix, in which petitioner asked instead to be allowed to re-route this canal through other areas where he still owned the land and the court said it couldn't hear that claim at that time because he did not substantiate his request with any scientific evidence and didn't have an expert witness with him who could substantiate it.

But that possibility remains open for possible modification of the decree.

The basic purpose of the remedy, as in administration of the statute in general, was to try to protect these wetlands which are on the eastern flyways and the ecosystem of these wetlands.

And the penalty is very much ancillary and adjunct to this and used to assure there will be an incentive to comply and to bring about the purposes of the Act, which are to protect the waters.

We think that the proper historical analog, when the Act is understood this way is to the common nuisance or public nuisance cases that are well-recognized in opinions of this court, such as Justice Frankfurter's concurring opinion in the steel workers and in the English Common Law.

We have discussed it in some detail.

The petitioner's reply brief takes issue with our reading of one of the English cases and I would like to refer briefly to that.

On page 4 of the Reply Brief, in Footnote one there is a quotation from the English case which we pointed to as particularly close to ours in which petitioner contends that the case turns on the fact that the Crown claimed ownership of all tidal lands including harbor lands.

As we read the case, we don't think that's what it turns on.

The italicized sentence in this excerpt is where the question is of nuisance only and the evidence doubtful there may be a need for a jury which probably referred to the advisory jury that was used by the Chancery.

But this is not a case where the question is of nuisance only.

This is a case, as it goes on to say of purpresture and nuisance, purpresture being a form of common or public nuisance where there is an obstruction of a common waterway, so the detriments of many people and not just a nuisance to the particular land owner.

Unknown Speaker: Well, Mr. Wallace,--

Mr. Wallace: That is the--

Unknown Speaker: --In order to win your case and cases like this, in this particular case were there real factual disputes?

Mr. Wallace: --There were some factual disputes.

There was no dispute that filling occurred, et cetera, but there was some factual disputes.

Unknown Speaker: And would it be a really serious matter for a jury, those factual disputes?

I take it there is some claim on the other side that the jury would have to determine the penalty also?

Mr. Wallace: Yes, well we think that there is no basis for that and we cited the appropriate--

Unknown Speaker: Right, right, but--

Mr. Wallace: --case law on that.

Unknown Speaker: --Put that aside--

Mr. Wallace: Yes.

Unknown Speaker: --put that aside.

You think in the run of the mill case like this it really wouldn't be a terrific burden on the government to have a jury because of the complicated facts or what?

Mr. Wallace: Well, the jury's--

Unknown Speaker: It would cost money wouldn't it?

Mr. Wallace: --Yes, and the juries might not always be sympathetic with this kind of enforcement action.

It would be the same kind of facts that the court would determine in issuing an injunction.

These aren't facts that a court can't ordinarily determine.

Unknown Speaker: Thank you, Mr. Wallace.

Mr. Nageotte, you have two minutes remaining.

Rebuttal of Richard N. Nageotte

Mr. Nageotte: Unless there are any questions from the Court I really have nothing further to add.

Unknown Speaker: Mr. Nageotte, are you really serious in your claim that the jury would have to set, if you have a right to jury trial, you have a right to have the jury set the fine?

Mr. Nageotte: Yes, Your Honor.

Both find the facts and to set the amount of the civil penalty, the same as they would in a case of punitive damages, where they would set the amount of the punitive damages using the same grace factors.

Chief Justice Rehnquist: Thank you, Mr. Nageotte.

The case is submitted.

Print this transcript Transcript: 

Argument of Speaker

Mr. Speaker: The opinions of the Court in No. 85-1259, Tull against the United States, and No. 86-39, Burlington Northern Railroad Company against Brotherhood of Maintenance of Way Employees will be announced by Justice Brennan.

Argument of Justice Brennan

Mr. Brennan: Tull versus the United States is here on certiorari to the Court of Appeals for the Fourth Circuit.

The government sued the petitioner in this case for civil penalties of $22,890,000 for violations of the Clean Water Act.

The question for decision is whether the Seventh Amendment guaranteed petitioner right for a jury trial on both liability and the amount of the penalty.

Petitioner demanded a jury trial, and the demand was denied by the District Court and the Court of Appeals affirmed.

Also rejecting petitioner's arguments that under the Seventh Amendment he was entitled to a jury trial.

We reverse and remand.

We hold, for reasons stated in the opinion filed with the Clerk that this suit for civil penalties is analogous to an action for debt, within the jurisdiction of English Courts of Law prior to the adoption of the Seventh Amendment, and therefore that petitioner's liability for penalties must, on the next demand, be tried by a jury.

But we hold further that the statute, which provides that the amount of the penalty if the jury finds liability, shall be assessed by trial judges and not by the jury does not infringe on the constitutional right for a jury trial.

Justice Scalia joined by Justice Stevens joins parts 1 and 2 of the opinion and has filed an opinion concurring in part and dissenting in part.