GULFSTREAM AEROSPACE CORP. v. MAYACAMAS CORP.
Legal provision: 28 U.S.C. 1291
ORAL ARGUMENT OF GREGORY H. WARD, ESQ. ON BEHALF OF RESPONDENT
Chief Justice William H. Rehnquist: We'll hear argument now in No. 86-1329, Gulfstream Aerospace Corporation versus Mayacamas Corporation.
Mr. Bien, you may proceed whenever you're ready.
Mr. Bien: Mr. Chief Justice, and may it please the Court.
I'd like to open this afternoon with a very brief statement of the case and next comment on the nature of the issue as it was faced by the District Court, and then turn to the matter of appellate jurisdiction.
As set forth in the briefs, while appellate jurisdiction does not stand or fall on the merits of any particular rule, it seems quite clear that the presence of appellate jurisdiction does turn on both the nature and the importance of the ruling, and on the practicalities of delaying appellate review.
Now, the underlying facts and legal issues of this case are completely unremarkable from a Federal point of view.
What is remarkable from that standpoint is the notion that a Federal Court should undertake to adjudicate this type of dispute when a competent State court was already doing so on the exact same issues, exact same parties, and when removal had been available to the State Court defendant but had been foregone.
After summarizing the case, I will argue that the Federal suit that resulted was not only identical and duplicative of the State Court lawsuit, but because removal had been available the duplicative Federal suit was wholly unnecessary even from the Federal plaintiff's point of view.
And wholly without justification under this Court's decisions or under the intention of Congress since 1789 when Congress created the removal process.
Unidentified Justice: Mr. Bien, as I understand it, the Georgia suit went to trial and there's a judgment.
Mr. Bien: I will be addressing that.
Unidentified Justice: Is that right?
Mr. Bien: Yes, Your Honor.
Unidentified Justice: And have you filed any motion in the Federal District Court now to dismiss the suit on res judicata grounds or something?
Mr. Bien: No.
The Georgia case, as I reported in our Reply Brief, went to a jury trial in early November and a verdict for Mayacamas, the respondent, was entered and judgment ensued.
I'm advised by counsel for the respondent that today or Friday, Mayacamas has filed papers in the trial court in Georgia seeking a new trial, and because of the outcome, we certainly expect on Gulfstream's part that whatever the outcome of the new trial proceedings in Georgia, it will be followed by an appeal by Mayacamas as well.
Unidentified Justice: But you haven't reached the appellate stage yet?
Mr. Bien: No.
Unidentified Justice: Surely you will appeal?
Mr. Bien: I can state on Gulfstream's behalf that we will not appeal.
Unidentified Justice: You will not appeal?
Mr. Bien: We will not appeal.
We may cross appeal if Mayacamas appeals, but we will not appeal.
So in answering your question, Justice O'Connor, I believe that--
Unidentified Justice: No further motions have been filed in the Federal District Court as a result of what's transpired?
Mr. Bien: --Not as of yet.
Not as of yet.
Unidentified Justice: You would acknowledge that it's moot if Mayacamas doesn't take an appeal?
Mr. Bien: If Mayacamas does not take an appeal and if a Federal Trial Judge, District Judge finds res judicata to be applicable, and if there's a dispute that is resolved in favor of res judicata on appeal, then I think technical mootness would apply.
However, I would still argue, as I would argue now, but I think there's more strength--
Unidentified Justice: Wait a minute.
Before you do that, why do each one of those things have to happen.
Part of your argument is that it would be res judicata.
I mean, that's essential to your whole contention here.
Mr. Bien: --Well, we don't reach the res judicata issue here.
Unidentified Justice: You don't think that's essential to your contention that this is duplicative litigation?
Mr. Bien: Well, assuming that a final decision in one forum or the other, let's say in a State forum, was reached and there was finality, then we would certainly argue that--
Unidentified Justice: Right.
So res judicata is assumed.
So isn't it the case then that if an appeal is not taken this is over?
If Mayacamas does not take an appeal, this litigation is over?
Mr. Bien: --I think the judgment would have to be afforded full faith and credit in the Federal Court, and that would effectively end the dispute.
Unless there were some reason why a res judicata would not follow but I can't envision any such reason at this point.
Unidentified Justice: Indeed, you're arguing that there is res judicata, that's part of your argument?
Mr. Bien: Well, again, I don't believe that the reason to avoid duplicative litigation is that the prospect of a res judicata now here in the Federal Court, but in either Court, creates the kind of tension and pressure on both courts that's undesirable.
So I don't know if I'm quibbling with you, but I'm saying that we don't argue the, and in this particular case, we haven't argued it in the briefs and I'm not arguing it this morning what the specific res judicata effect would be.
I assume, without arguing, that there would be a res judicata effect eventually.
But I do want to address the mootness problem in one more step and I think that even if the res judicata did arise as a result of the verdict that was reached in Georgia, I think you have a classic situation where the issues now before this Court would be capable of repetition even as addressed to Gulfstream which is a party which is a large corporation may face that situation.
And the issue always arises at the beginning of the lawsuit.
And I think it's a classical case where it could evade review if even a technical mootness would have the result of--
Unidentified Justice: Between these parties?
These parties are planning to go through this--
Mr. Bien: --Not these particular parties.
Unidentified Justice: --But isn't that what the capable of repetition requires?
Mr. Bien: Well, I believe that under the Roe v. Wade in the pregnancy situation and some others, that it doesn't necessarily have to affect the particular party.
Unidentified Justice: But what of the some others?
Mr. Bien: I believe the Blumstein case, the Dunn v. Blumstein, where the challenge to election rules where even if the particular plaintiff that brought the case may not have been in a position to vote in a state with a challenged election procedure that there might have been other voters who are facing the exact same situation which if it was not adjudicated by this Court might once again have the issue evade with you.
But I don't believe we'll have to get that far.
I just did want to complete my answer to that question.
Unidentified Justice: May I ask just one question to be sure I understand the result of the trial.
The $900,000 award to your opponent, is that a net award or a credit against what you claimed.
Mr. Bien: No.
This is as I understand it a net award.
Unidentified Justice: Net award.
Mr. Bien: We would have to pay them $900,000.
Unidentified Justice: Okay.
That's what I thought but I wanted to be sure.
Mr. Bien: Right.
Just very briefly in terms of the facts of the underlying case, run through this quickly.
It's a garden variety commercial dispute, not a single federal law is involved as to the decision on the merits.
Gulfstream makes fine aircraft down in Savannah, Georgia.
In June of 1983, Mayacamas, a California Corporation, agreed to buy one of these planes for about $13 million.
The next progress payment was due about two years later by the end of August of 1985.
Two weeks before the deadline, Mayacamas claimed that Gulfstream had breached the contract and violated representations made about the production schedule so that the value of Mayacamas' purchase had been diminished.
As the deadline for the second payment, which was equal to the original payment, passed, there were mutual threats of each side being in breach of the contract, threats of litigation on both sides.
And about a month and a half later, Gulfstream elected to file a lawsuit for breach of contract in a State Court in Georgia.
This came on October 9, 1985.
Now, its undisputed in this case that Mayacamas being a corporate citizen of the State of California, could have removed Gulfstream's State court action to the Federal Court in the State of Georgia, but did not do so.
Unidentified Justice: Do I understand you to say that they could have removed it of course?
Mr. Bien: Why is that?
Unidentified Justice: You have just said that they could have removed it to Federal Court?
Mr. Bien: That's correct.
Unidentified Justice: If that step had been taken, could the case have been transferred to the Northern District of California... is that where it was?
Mr. Bien: Mayacamas, if it felt that California was a more convenient forum, certainly had a Motion under Title 28 Section 1404 for a transfer for the convenience of parties and in the interests of justice.
And I might point out that there is a concession in its brief on the merits here that Georgia may not have been inconvenient enough a forum to have prevailed on such a motion.
That statement is made in the answering brief.
Unidentified Justice: And if we thought that the action could have been filed in the California District Court, I guess you could have filed a motion there to change venue back to the Georgia District Court.
Mr. Bien: Certainly.
Unidentified Justice: Did you ever file such a motion?
Mr. Bien: No.
Unidentified Justice: No.
Mr. Bien: Our position was that the case shouldn't even proceed in California.
Well, in that Mayacamas did not exercise their removal right but filed an independent lawsuit in the District Court in Northern California.
Gulfstream moved under the Colorado River doctrine for a stay or dismissal of that lawsuit.
The motion was in the end of November, 1985.
The order of Denial was issued about a month and a half later on February 21, 1986.
The District Court said that as it viewed the Colorado River doctrine, notwithstanding the logic of Gulfstream's position about duplicative litigation, the District Court stated in its written order that this Court must exercise its jurisdiction.
Gulfstream appealed to the Ninth Circuit.
Opinion emerged some ten months later.
Unidentified Justice: Mr. Bien, as a practical matter, what were the consequences to your client of the District Court's denial of your stay motion?
Were discovery proceedings started in California or other things done there?
Mr. Bien: There were discovery proceedings, as I understand it, going forward in both forums.
So you had a typical parallel proceeding in both courts where all the potential for conflicting discovery rulings were taking place.
Certainly Gulfstream had to incur the cost of two sets of attorneys and proceeding in the two different courts.
So those impacts were certainly taking place.
Our primary argument on the practical impact is that when the District Court insisted on proceeding with this duplicative lawsuit, that it was creating a practical impact on Federalism concerns.
Unidentified Justice: Of course, you said that they insisted on proceeding with it.
The District Court denied a stay and that could have a number of different interpretations.
I mean, that doesn't necessarily mean they were just Hell-bent to race for trial with the Georgia State Court.
Mr. Bien: I think that at the threshold that the ruling in question on our motion citing the availability of removal and arguing under Colorado River that the District Court shouldn't proceed at all, I think that was... and I'm anticipating the problem of appealability here... I think that was a conclusive type of ruling.
There are other kinds of circumstances that might have taken place down the road, the District Court perhaps considering purely prudential matters, looking at the practicalities of one suit or another, may possibly have ordered a stay, a temporary stay or a permanent stay later on.
But I think the particular ruling that it made came up squarely and appropriately at the threshold that the suit had no business being allowed to proceed at all, given the duplicative lawsuit in the State Court.
And that ruling, I don't think there was any chance that there would have been a reconsideration or reevaluation of that legal ruling based upon any future circumstances.
I think that in effect... I don't know that it would have been a Colorado River motion say a year and a half later... but perhaps it would have been purely a... I guess it would have been a discretionary Colorado River motion, after the Court had said that, well the removal factor does not bring this case out of the ordinary realm of discretionary stays.
And a year and a half later, it might have said, well, now the Georgia case has proceeded faster or whatever, maybe it would have stayed it, but I think that would have been a fundamentally different kind of ruling down the road.
And that is where I think the Moses Cone Hospital analysis does not govern our particular case as far as appealability is concerned.
Perhaps I should turn to that.
In Moses Cone Hospital, you had a Court granting a Colorado River type motion, and the question was at the threshold was is that appealable.
And the Court ruled that it was appealable for two different reasons.
One was the rationale under the Idlewild case that the plaintiff had been put effectively out of court.
But then the Court reached a second ground for appealability, and that is the doctrine that I primarily rely on here.
And that is the Cohen collateral order doctrine where the three or perhaps four categories of a narrow class of preliminary orders, of interlocutory orders are deemed appealable.
And we certainly I think have all four here.
We have an important issue, indeed I would say we have an historically important issue, given the origins and the purpose of the removal jurisdiction.
We have an Order that Moses Cone Hospital, itself, held squarely was separate from the merits.
I think when you flip and say that we have an order denying a stay, I think it's still equally separate from the merits.
We have an order which is not effectively reviewable if you wait until the end of the lawsuit.
All the conflicts and tensions between the State and Federal courts are moving along as the case proceeds to the final judgment.
And to reverse the judgment at the end I think provides no effective recourse at all for this particular problem.
And finally, as I was stating in response to the Chief Justice a little bit earlier, you have a ruling which, under the analysis of the Moses Cone Hospital, I think is clearly conclusive in that it's a determined, it's a considered judgment on the significance of the removal factor in the context of identical duplicative lawsuits, and I believe that it's conclusive for two kinds of reasons, both found in Moses Cone Hospital.
One is if you look at the decision of the District Judge, it's a memorandum opinion.
The Judge considered the Colorado River issue, and said the Court must exercise its jurisdiction on those grounds.
And I believe it fits Moses Cone Hospital quite clearly.
And we also argue in our briefs if you look back at the two companion cases in 1963, one was the Curry case involving National labor relations proceeding, and the one that followed it involving a national bank.
You had a trial judge, just as here, making a decision at the threshold simply to proceed with the lawsuit.
And the defense, similar to our defense here, was that the very fact that you're proceeding with the lawsuit is inimicable to a very important federal policy.
In the one case, the policy to have a labor dispute adjudicated by the Labor Board, and in the second case, in the Langdo case, the policy was not to have a national bank sued in a venue not its home venue.
Unidentified Justice: Well, what if the District Court here had said, Mr. Bien, I'm going to deny your motion to dismiss but I'm going to stay all proceedings in this case for six months, and then you people come back and tell me how the Georgia litigation is coming.
Do you think that would be appealable?
Mr. Bien: I believe so.
Because I think when you have the removal factor... and this certainly is our primary argument... there is a preliminary legal determination there that has been made, even if the Court might act differently six months from now.
The preliminary determination has been made similar to Curry and Langdo that this case belongs here notwithstanding the availability of a removal action.
That situation can never change.
It's presented fully at the threshold and its ruled on.
Unidentified Justice: Well, you say then that the Northern District of California actually did not have jurisdiction of this action?
Mr. Bien: No, no.
We concede that there is diversity jurisdiction, concede that there's diversity jurisdiction.
Unidentified Justice: So it's just a question whether the Court should have proceeded with the case?
Mr. Bien: That's correct.
That's similar to Colorado River in 1976.
In fact, it's very similar to Iowa Mutual v. LaPlante, which was decided in February of this year where an insurance company in an insurance coverage dispute with some people on an Indian Tribe came to the Federal District Court asserting diversity jurisdiction over a coverage dispute which was in excess of $10,000.
The same dispute looking on the mirror image side of it had already been before a Tribal Court of the Black Feet Indians, so a Colorado River motion was made and granted.
And the reason was, conceding the presence of diversity jurisdiction as certainly we do, that the important Federal policy of I think the way it was framed was of maintaining the ability of the Indians to have their self-government and respecting that self-government, called for a stay and a deferral to the Indian Court system.
And I think the analogy is quite close here.
We concede jurisdiction, subject matter jurisdiction.
I think what takes this case even beyond Iowa Mutual and beyond Colorado River and all five cases that have come up under the Colorado River doctrine since 1976, is that the insurance company in Iowa Mutual had invoked Federal subject matter jurisdiction in the only way it could.
There's no removal from the Black Feet Indian Court system.
There was no prior pending action in Colorado River or in the San Carlos Apache case where somebody could have removed.
These plaintiffs had come to Federal court in the only way they could and if the Federal court didn't exercise its jurisdiction there, the Federal plaintiff would have had no Federal adjudication.
In our case, Mayacamas could have had a Federal forum under the diversity jurisdiction by removal.
It had an absolute right to that forum.
It simply had to file a petition for removal within 30 days.
It would have had its diversity adjudication.
Then it could have moved for a transfer and so forth.
The reason why this Court has allowed a duplication of efforts when there is concurrent jurisdiction as the reason was explained in the Colorado River case, was that Congress had created the jurisdiction for a reason and that there's a presumptive... I think the court said... virtually unflagging obligation to exercise that jurisdiction.
Here that jurisdiction could have been exercised, and in way that I think Congress intended since 1789 as a preferable method of exercising diversity jurisdiction in this type of case.
As we set forth in our briefs, I think the framers in the debates made quite clear that they were concerned about Federal diversity actions duplicating State court proceedings on the exact same issue and the same parties.
And each of the language of that debates is very reminiscent of this Court's language in such cases as San Carlos Apache, where it talks about an unseemly race to decide the same issues first creating concurrent conflicts and tensions between the Federal and State courts.
And I think Justice Frankfurter used very similar language in the Brillhart case talking about an exercise of declaratory judgment jurisdiction.
Unidentified Justice: Suppose you had filed in the Federal Court when you filed your suit in Georgia.
Mr. Bien: Right.
Unidentified Justice: And then there was a suit filed in California.
You'd have had a different argument but would you have objected to going forward in the California court?
Mr. Bien: --You're assuming a State court?
Unidentified Justice: Neither, both Federal Courts, you filed in the Federal court, and the defendant in your suit filed in a Federal court in California.
Mr. Bien: I think in that instance, I think we would have objected to having to try the same case twice, but I don't think it would have been so much of a problem.
In the Colorado River opinion, the Court noted the general rule which I think is rather unarguable that when there are two cases pending in two Federal courts, the rule is that you don't duplicate, that one is stayed and one is not.
Unidentified Justice: One or the other is stayed, isn't it.
Now, which one would you... how do you decide that?
Mr. Bien: Well, I think that decision is a prudential one, purely prudential and discretionary.
Unidentified Justice: You filed one day in Georgia, and the defendant filed the next day in California.
What's the California Judge supposed to do if you move for a stay?
Mr. Bien: When there's nothing of the importance of the removal policy involved, I think the Federal judge in that case has to look to a whole panoply of practical considerations.
I think there Mayacamas and Gulfstream would have been able to argue to the judge that one suit was a reaction, a tactical maneuver responding to the other.
Unidentified Justice: I take it then that the only difference between the case I posited is that here, removal was available from the State court.
Mr. Bien: This is the over arching concern here where you've got an historical policy not to allow duplicative suits like this.
That is in fact the heart.
Removal does very funny things to the arguments for and against duplication of efforts.
It really eliminates the main reason cited in the Colorado River decision for allowing a Federal District Court proceeding to duplicate a State Court.
Unidentified Justice: Mr. Bien, I may have missed something here but is jurisdiction over your opposition still contested, jurisdiction of the Georgia Court over your opposition still contested?
Mr. Bien: Mayacamas I believe maintains its position that it's not subject to in personam jurisdiction on long arm principles.
And it's position on that score has so far been turned down.
The Georgia Court certainly felt that in personam jurisdiction lies.
Unidentified Justice: What kind of an appearance have they made?
A special appearance all the way through the litigation there in Georgia?
Mr. Bien: Have they made a special appearance?
Unidentified Justice: Yes.
Mr. Bien: I believe they have.
I assume they've preserved on a procedural basis their right to continue to press the lack of in personam jurisdiction.
Unidentified Justice: So that that issue is undecided in the Georgia litigation?
Mr. Bien: That's correct, until the appeal is final.
Unidentified Justice: Well, isn't that an important issue?
Mr. Bien: I believe it's main importance is deciding whether the proper ruling by this Court... or if you look from the District Court's point of view... deciding whether to stay or dismiss.
Unidentified Justice: Well, it seems to me that that makes a distinct difference in the State litigation in Georgia on the one hand, and the Federal litigation in California on the other.
Mr. Bien: Well, I don't think it does when you consider that on removal to a Federal Court in Georgia, all of Mayacamas' concerns about in personam jurisdiction and inconvenient forum would have been handled by the Federal District Court under the exact same principles, the same Fourteenth Amendment concerns, the same Georgia Statute, presumably, would have been citable in the Georgia Federal District Court.
I don't think Mayacamas lost anything, would have lost anything if it had removed its lawsuit.
I think all those concerns would have been dealt with equally in Federal District Court in Georgia.
With the Court's permission, I'd like to reserve five minutes for rebuttal.
Chief Justice William H. Rehnquist: Thank you, Mr. Bien.
We'll hear now from you, Mr. Ward.
Mr. Ward: Mr. Chief Justice and may it please the Court.
As Mr. Bien has pointed out, the underlying facts in this particular case are essentially unremarkable.
And the issues which are raised, particularly with respect to determining the appealability of this question are also essentially unremarkable.
What we have here is a garden variety civil suit and a garden variety procedural question which was resolved by the District Court, and which should not have been appealed under any doctrine which currently exists or which should exist, and which certainly does not expose the District Court Judge to review by the Court on a writ of mandamus.
Unidentified Justice: Mr. Ward, can you state categorically at this point whether your client is going to appeal from the Georgia judgment if your motion for a new trial is denied?
Mr. Ward: Your Honor, it is the intention of Mayacamas to move the trial court for a judgment notwithstanding the verdict.
Unidentified Justice: I understand that.
Mr. Ward: And also to request a new trial.
It is Mayacamas' position that the amount of the award which it received was reduced by local sympathies and that in the event this matter were retried, or tried in California, that the amount of the judgment would be greater.
Unidentified Justice: Are you going to answer my question?
Mr. Ward: Yes.
Unidentified Justice: Are you going to appeal if--
Mr. Ward: Oh, are we going to appeal if those motions are denied?
Unidentified Justice: --Yes.
Mr. Ward: Yes, Your Honor.
First of all, with respect to the Cohen doctrine which refers to the collateral order exceptions to the final judgment rule, it's Mayacamas' position that this particular issue falls short on all three of the points that must be satisfied for it to be applicable.
First of all, the Order of the District Court did not conclusively determine anything.
This order was inherently tentative.
The Court refused to stay its proceedings.
But there is absolutely no reason to believe that the Court could not reconsider that decision throughout the course of the litigation as various circumstances changed.
One of the principal circumstances which is to be considered in a Colorado River analysis is the relative progress of the different litigations, and that may very well change during the course of the litigation.
I think that unlike a circumstance where a Court has granted a stay, and there may be a conclusion that can be drawn from that that this is a final ruling, that is conclusive, which was this Court's ruling in the Moses H. Cone Hospital case, where we have a Court merely saying, no, let's proceed.
That is much more in the nature of a tentative ruling which can be revisited at any time.
I was rather surprised by Mr. Bien's response to the questioning by the Chief Justice that if the Court were to order a stay of six months that that would be an appealable order.
It seems under Gulfstream's analysis that any stay of any length granted by a District Court would be an appealable order under this Cohen analysis, and that clearly is an unreasonable interpretation.
Unidentified Justice: Mr. Ward, do you agree with your opponent's contention that you could have removed this case?
Mr. Ward: Yes, Your Honor.
Unidentified Justice: Is it clear that you can remove a case even when you're challenging in personam jurisdiction?
Mr. Ward: I believe that you may remove the case and maintain your jurisdictional challenge, and raise the jurisdictional challenge in Federal court.
Unidentified Justice: Do you believe that or do you know that?
Mr. Ward: I believe that, Your Honor.
Unidentified Justice: Do you know cases that hold to that effect?
Mr. Ward: No, Your Honor.
In this case, Mayacamas' decision was to bring this action in California which it felt was the appropriate forum in light of the fact that all of the transactional events which led up to this particular contract took place in California.
Mayacamas felt that it should not be obligated to travel across the country merely because Gulfstream executed its preemptive strike in instituting the action first in Georgia.
Gulfstream's argument is that because they were successful, having received notice from Mayacamas that Mayacamas felt that Gulfstream was in breach, that because they were successful in instituting the action in the first instance in Georgia Superior Court that even though Mayacamas as a plaintiff had the statutory right to bring this action in California where jurisdiction over Gulfstream is not contested, that Mayacamas is limited to Federal Court in Georgia.
Unidentified Justice: The alternative, which I presume you subscribe to, is that what both lawsuits go ahead full steam as your opponent says, duplicating the legal resources until one finally goes to judgment?
That doesn't seem an entirely happy solution.
Mr. Ward: Well, in this case, Your Honor, both cases went ahead full steam, if you will.
There were agreements made between the various parties with respect to use of discovery... excuse me, I'm speaking outside the record now if that's appropriate... to use of discovery in both cases.
Depositions were taken and conducted in both cases, captioned under both cases.
So even though both cases were proceeding full steam, there was no duplication of effort, if you will, with the exception of Mayacamas' effort to stop the Federal case.
Unidentified Justice: Is it your position that the District Court in California had no discretion to stay?
Mr. Ward: No.
The District Court did have discretion to stay.
Unidentified Justice: And you just suggest that it wasn't required to stay.
Mr. Ward: Yes.
Our position as accepted by the District Court was that there are no exceptional circumstances in this case which would warrant a stay.
Unidentified Justice: What did you just say?
Mr. Ward: There are no exceptional circumstances--
Unidentified Justice: So you say that they had no discretion to stay this case, the Federal Court in California.
Mr. Ward: --Well, the District Court in California has to balance the various factors in determining whether or not to stay under the Colorado River analysis.
So in that sense, the Court is exercising its discretion in determining the weight to be placed to the various factors.
Unidentified Justice: Do you think Colorado River is the only basis for staying the Federal suit?
Mr. Ward: No, Your Honor, there are other abstention doctrines, as well.
But prior to the Colorado River doctrine, I think that it was rather up in the air.
Unidentified Justice: Let me ask you this.
If Gulfstream had filed in a Federal Court in Georgia, and then you filed in the Federal Court in California, now I suppose you would concede that the Federal Court in California would have discretion to stay its action?
Mr. Ward: Yes, Your Honor.
Unidentified Justice: Well, why should it be different if the Georgia case was in the State Court?
Mr. Ward: Well, it should not be any different.
Unidentified Justice: Well, there's no Colorado River doctrine in my case under two federal courts.
Mr. Ward: Your Honor, I have not addressed that particular concept since in this case we do not have--
Unidentified Justice: Well, isn't it odd that the District Court in California would have discretion to stay its suit if the Georgia suit were in the Federal Court but it wouldn't have discretion to stay its case when the Georgia suit is in a State Court?
Mr. Ward: --Well, I don't think so, Your Honor, Because a party is entitled to a Federal forum.
A party is not entitled to two Federal forums.
I think there is a distinction there.
And the question is whether or not the statutory set up created by Congress permits Mayacamas to institute its Federal action in California, rather than remove a State Court case to Federal Court in Georgia.
Now, Gulfstream would argue that the Removal Statute somehow has contained in it a limitation on the forum that Mayacamas can choose.
And there is just no such limitation built into the removal statute.
The Removal Statute was created to allow an out of state defendant to escape the local prejudices by moving into a Federal Court.
This is an alternative means of original jurisdiction for the Federal courts.
One of the principal means of jurisdiction in the Federal Courts is diversity of citizenship.
Unidentified Justice: Well, if you wanted to get into the Federal Court and if you also wanted to have just one suit going, why wouldn't you have asked for removal to the Federal District Court in Georgia, and then moved for a transfer change of venue to California, if you felt the circumstances warranted it?
Mr. Ward: The difficulty with that, Your Honor, is that the standards for removal on a forum non conveniens basis are limited, and they are limited to issues primarily relating to the convenience of the parties and witnesses.
Here we have a much more fundamental concern which is a challenge to the jurisdiction of the Georgia Courts in the first instance which would not be taken into consideration by the Court in deciding a forum non conveniens motion, and the statutory scheme is set up to allow a plaintiff to have his choice of forum and the forum non conveniens restrictions would not necessarily and as Mr. Bien pointed out, we conceded that under the standards as currently applied for a forum non conveniens situation for a transfer--
Unidentified Justice: It wouldn't have been transferred.
Mr. Ward: --it may not have been.
And Mayacamas instead relied on the right provided by statute for it to institute litigation in a Federal Court which had jurisdiction, which had subject matter and in personam jurisdiction.
Unidentified Justice: Well, was there an objection on your part when the Georgia State Court action finally went to trial?
Mr. Ward: Yes, Your Honor.
Unidentified Justice: On what ground?
Mr. Ward: That the Court lacked jurisdiction to proceed in the action.
Unidentified Justice: But you didn't argue that there was another case pending in the Northern District of California that should prevent it from going to trial?
Mr. Ward: No, Your Honor.
And in fact if I may digress from the record just a little bit, Georgia has a statute which requires its courts to set the matters earlier on the calendar if there is another matter pending involving the same issues in another court.
Unidentified Justice: They've anticipated all this.
Mr. Ward: So we found ourself kind of locked up there.
We had a trial date in the California case for October 5th.
The Georgia Court set the trial for September 26th to jump in front.
We now no longer have a trial date in Federal Court in California.
Whether or not that is a stay which we could appeal from the Judge's Order taking this matter off calendar I suppose is something that Mr. Bien said.
Unidentified Justice: If this judgment becomes final in Georgia, do you agree that it would preclude the California case?
Mr. Ward: Yes, Your Honor.
Mr. Bien indicates that the issue which is of all encompassing importance here is the question of the Removal Statute, and the important Federal policy restricting the forum to the Federal Court in Georgia.
And all of the cases he cites, the Local 438 case, the Mercantile Bank case, the John Mitchell case involving immunity... excuse me, I shouldn't say that... except for the Mitchell case, they all involve the question where the Federal Court had indicated that a particular forum should be the forum in which this matter should be handled.
And it was felt by this Court that a decision not to permit the party to go forward in that particular forum constituted a conclusive determination of an important issue which was not effectively reviewable on appeal.
In the Mitchell case, you had an immunity situation where the Court felt that the obligation was that the statute provided that this individual did not have to subject himself to a trial in the first instance, and therefore that was an important Federal policy effectively unreviewable on appeal.
We do not have that situation here.
We do not have an important Federal policy which says that a case which is filed in a State Court must be removed to the State Federal Court, otherwise, we're going to have a lot of problems between State and Federal relations.
That's not found in any of the federalist papers and in the anti-federalist papers, the purpose for the Removal Statute was merely to help out of state litigants get a fair trial by removing the case to Federal Court.
Unidentified Justice: That's going to the merits of the argument, and for purposes of determining... are you arguing the finality point now?
Mr. Ward: Yes, Your Honor.
Unidentified Justice: For purposes of the finality point, don't you have to take your opponent's argument at face value, that his, assuming that there is such a Federal policy?
Otherwise, we'd have to decide the merits in order to decide finality.
Mr. Ward: Well, if you assume that there is such a policy, a Federal policy which favors that forum, then I think that what Gulfstream is asking the Court to do is one of two things: either create a new abstention doctrine which says that in effect that an action brought outside of that forum, the Court must be dismissed.
And Gulfstream has indicated in its papers that it's not asking the Court to do that.
What it is saying is that it wants this Court to make the failure to remove a very significant factor to be considered by the District Court in its Colorado River analysis.
In fact, I think they indicate that there should be a presumption that there should be a stay or a dismissal taken into effect by the District Court.
In that case, our position is that the District Court was aware of this argument, took it into consideration, and that is the only factor which could arguably be called exceptional.
And that is not sufficient to overrule the District Court's ruling that he should proceed and exercise his obligation to try the case.
Unidentified Justice: May I ask you a question that I'm a little puzzled by.
Do you agree that you could have removed the Georgia case to the Federal Court in Georgia and still preserve your objection to personal jurisdiction?
Mr. Ward: Well, Justice Scalia asked me that question and I believe I had to confess that I didn't have any cases to support my position on it, so I guess I would have to say that I don't know the answer to that question, Your Honor.
Unidentified Justice: Because the Removal Statute seems to assume that there would be jurisdiction of the case in the Federal Court.
I'm just puzzled by it.
Mr. Ward: Put me on the spot twice, Your Honor.
Unidentified Justice: The principal question we're interested in considering I guess is not so much who should have won in the District Court, but whether the District Court's order denying a stay was appealable?
Mr. Ward: That's right.
And under the three Cohen factors which is the only reasonable basis on which argument can be made that it is appealable, although I guess we need to address the Enelow/Ettelson rule which was relied on by the Seventh Circuit in permitting an appeal of these types of issues.
The order was not conclusive, it did not deal with an important issue which was separate from the merits, and it is reviewable on appeal.
The question of whether or not this Court should have stayed the action is reviewable on final appeal.
No significant rights are lost during the proceeding of this litigation other than the fact that the parties have to endure some expense and some irritation which has repeatedly been stated to be an insufficient basis for concluding that an action is unreviewable on appeal.
All of the points which are raised can be dealt with after final judgment and the Cohen collateral order exception is just not applicable.
Under the Enelow/Ettelson rule, which has been criticized greatly recently, the simplest way to deal with that is, other than just indicating that there's no longer any basis for it now that we have the one forum of action rule, is that Gulfstream is not attempting here to interpose an equitable defense to a legal claim.
It is merely raising an equitable consideration which should be considered by the Court in deciding whether or not to proceed with the action.
The difference is more than merely semantic.
It's a defense to an action, an equitable defense to an action is one that has been recognized in the context of an injunction situation.
Merely raising the fact that this case should not proceed because of wise judicial administration issues is merely an equitable consideration to be taken into consideration by the Court for purposes of this pretrial matter, and has nothing to do with the adjudication on the merits of the case.
With respect to very briefly on the issue of mandamus, I think we're dealing here with a question of the discretion of the District Court in deciding whether or not the criteria of Colorado River have been met.
Clearly, when you're dealing with a matter of discretion, it's very difficult to say that there is clear and indisputable evidence that this matter should have been handled differently by the District Court.
Unless there are any questions from the Court, I have nothing further.
Unidentified Justice: I have one other question.
Mr. Ward: Yes, sir.
Unidentified Justice: Maybe it's sort of a trying to predict what'll happen in this case.
Does Georgia also have a statute expediting the review of cases that are pending in another forum?
I'm just wondering if you have much chance of winning the race no matter what we do here.
They've already tried that case gone to judgment and presumably they like to help their courts decide things before other courts can decide them.
Mr. Ward: Well, that's certainly problematic, Your Honor, that at this point the battle has been lost.
Certainly if the District Court Judge decides to overturn the verdict... and certainly there were some indications from the Court during the course of the trial inviting--
Unidentified Justice: Then you're back on square one.
Mr. Ward: --Then we're back on square one.
Unidentified Justice: But if your motions in the trial court are not successful, that may well be where the case will be decided, I think.
Mr. Ward: And it's certainly conceivable that the District Court in California may choose to stay the proceedings until the appeal in Georgia is resolved.
Unidentified Justice: You can still win if you win on jurisdiction.
Mr. Ward: That's correct.
If we win on jurisdiction, then we're back to California without any doubt.
Unidentified Justice: If you had removed to the Federal Court in Georgia, and you had the separate suit pending in California, you would have had the situation where you'd have two Federal suits, one of which contains as a counterclaim and the other one of which contains as the principal claim the very same contention, right?
Mr. Ward: Yes.
Unidentified Justice: And you think even under those circumstances, there wouldn't have been a transfer?
I mean, it isn't just... it's only the convenience of the parties and not the fact that you have exactly the same issue involved that the Court could take into account?
It seems a very strange situation.
You would have two Federal suits, one counterclaim and the other one the claim involving exactly the same contention.
We don't have that all the time.
Mr. Ward: But we avoided that in this situation, Your Honor, by having Gulfstream file in State Court and not removing to Federal Court.
Certainly we felt that the issues that would be raised by removing to Federal Court and then filing an action in State Court in California would increase Mayacamas' difficulties in getting the case tried in California rather than decrease them.
Unidentified Justice: If it isn't the transfer for the convenience of the party that gets rid of that situation, there must be some other doctrine that gets rid of that situation because you know, I'm just unaware of that proceeding with two Federal courts adjudicating the very same thing.
Mr. Ward: I agree, Your Honor.
Unidentified Justice: Although, if there are two Federal courts, one or the other of them's going to stay, isn't it?
Mr. Ward: That certainly would be the presumption.
Chief Justice William H. Rehnquist: Thank you, Mr. Ward.
Mr. Bien, you have four minutes remaining.
ORAL ARGUMENT OF ELLIOT L. BIEN, ESQ. ON BEHALF OF PETITIONER -- REBUTTAL
Mr. Bien: Thank you.
Just to begin with the last point, I think it's the Colorado River and the Kerotest decision on which it relied in the two Federal court situation that would create the solid case law basis for one or the other of those Federal courts deferring to the other.
There's a strong presumption in that situation that you don't have two duplicative Federal court law suits.
And I think the law is very strong and certainly clear on that.
The question arose by Justice Scalia and Stevens about whether there might be a waiver of objection to personal jurisdiction in this situation.
The Removal Statute itself says that the defendant in a State court can remove any time the District Court would have had original jurisdiction, whether diversity or federal question.
And I think it's clear that we're talking about subject matter jurisdiction then.
That there's no premise in the Removal Statute itself that there must be in personam jurisdiction.
Unidentified Justice: You say it's clear.
Is that based on some decision or do you just think it's clear on those words?
Mr. Bien: Well, the next comment that I was going to make was that this Court had a decision called Polizzi v. Kels Magazines, I can give you the cite now or subsequently, in which there had been a removal.
Unidentified Justice: Do it now.
Mr. Bien: Certainly.
Polizzi v. Kels Magazines, 345 U.S. 663.
Unidentified Justice: Thank you.
Mr. Bien: It's a 1953 decision in which this Court ordered the District Court following removal to proceed to examine the challenge to in personam jurisdiction to the sufficiency of the service of process.
That case, and also the Morris Treatise also cites Section 1448 of Title 28 as instructing the District Court following a removal, to look into all questions of the adequacy of service of process.
And the Polizzi decision, I think, comes pretty close to the question that you raised, that certainly there would be no waiver by Mayacamas in that situation.
I think some of the colloquy about the trial setting, one judge set its trail to effectuate the purposes of the Georgia Priority Statute, and there was a certain lightness about the colloquy, and Mr. Ward indicated that they were trying to achieve a certain practical advantage in this fashion.
I'm simply motivated to cite the language that this Court used just a few years ago in the San Carlos Apache case which I had mentioned earlier, that when you've got a Federal Court proceeding on a parallel track with a State Court lawsuit over the same issue, now I'm quoting,
"it's an unseemly and destructive race. "
And I think it's that very spectacle even though it can be, I think, made light of in some fashion, if you look at it that way, that this Court held is something that's very disfavored as a matter of federalism.
I think that that same concern was expressed by the framers in the debates that I cited in my brief.
I think that same concern about avoiding Federal court/State court tensions in litigation of this kind has been cited with concern over and over again by this Court, most recently in the Pennzoil Texaco case in a different context of younger abstention.
But there once again, you talk about the premise upon which basis our federal system was established, that the Federal courts are not to gratuitously intervene in situations where it would put itself into a posture of this very kind of conflict and potential tension with the State court.
With respect, my opponent belittles those concerns about Federal and state relationships as something that, and I'm quoting, "of dubious relevance" in today's world of modern interstate commerce, as if this nation had no further reason to be concerned about conflicts between the national courts and the state courts.
With respect, I think that's a striking notion.
I think this case can be seen as just perhaps a garden variety procedural dispute and so forth, but I think with removal, it implicates a very fundamental Federal concern.
Thank you for your attention.
Chief Justice William H. Rehnquist: Thank you, Mr. Bien.
The case is submitted.