RICHARDS v. JEFFERSON COUNTY
Jason Richards and others, who are privately employed in Jefferson County, filed a state court class action suit claiming that the county's occupation tax violates the Federal and Alabama Constitutions. The Alabama trial court found that their state claims were barred by a prior adjudication, Bedingfield v. Jefferson County. The unsuccessful Bedingfield adjudication of the tax was brought by Birmingham's acting finance director and the city itself, consolidated with a suit by three county taxpayers. However, the court found that their federal claims had not been decided in that case. On appeal, the county argued that the federal claims were also barred. The State Supreme Court agreed, concluding that the doctrine of res judicata applied because Richard and others were adequately represented in the Bedingfield action.
May the Alabama residents, who claim that the Jefferson County occupation tax violates the Federal and Alabama Constitutions, proceed with their class action suit in court in light of a prior, similar adjudication?
Legal provision: Due Process
Yes. In a unanimous decision, authored by Justice John Paul Stevens, the Court ruled that because Richards and others received neither notice of, nor sufficient representation in, the Bedingfield litigation, that adjudication, as a matter of federal due process, may not bind them and thus cannot bar them from challenging an allegedly unconstitutional deprivation of their property.
Argument of William J. Baxley
Chief Justice Rehnquist: We'll hear argument now in Number 95-386, Jason Richards v. Jefferson County.
Mr. Baxley: Mr. Chief Justice, may it please the Court:
This is a res judicata due process question that we're here on today.
To lead in, I'd like to give a short quote out of a case of Chase National Bank v. Norwalk.
Justice Brandeis said, unless duly summoned to appear in a legal proceeding, a person not a privy may rest assured that a judgment recovered therein will not affect his legal rights.
That quote was also cited by Mr. Chief Justice in the Martin v. Wilks case and quoted along with some other quotes from Justice Brandeis in that case.
The second little lead in quote I'd like to give... because it was cited, the case was cited by the respondent.
It's a Fifth Circuit case, Southwest Airlines v. Texas International, and they quoted Judge Widdeson as saying, quote, denial of the opportunity to bring a suit raises serious due process questions.
Further in the opinion, they quote, again, Judge Widdeson, because res judicata denies a nonparty his day in court, the Due Process Clause prevents preclusion when the relationship between the party and the nonparty becomes too attenuated.
In this instance, it's not only a attenuated relationship, there's a nonexistent relationship.
Unknown Speaker: Well, Mr. Baxley, there... your opponents cite a string of cases, many of them State cases, in which some kind of claim preclusion doctrine, or res judicata, if you will, has been applied despite a change in the identity of the plaintiff taxpayer in suits by citizens challenging tax laws in State court.
Now, there is that body of authority, and how do you deal with that, and what's the extent of it?
Mr. Baxley: --All of those cases that they cited in that footnote, only two or three of them do I think really have application that they should have to be arguable.
All of them are State cases.
I believe all of them are State cases.
I don't believe there's a single case from this Court or even a circuit court that they cited in that footnote.
I think common sense is the best answer.
These are cases that I think that the law, especially when you're dealing with a constitutional right to have your case litigated--
Unknown Speaker: Well, you take the position that there is no doctrine of claim preclusion in these citizen taxpayer suits in State court?
Mr. Baxley: --I think the position that we would take is... was enunciated in your dissent, in Justice O'Connor's dissent in the Harper v. Virginia case which is--
Unknown Speaker: But remember, that was a dissent.
Mr. Baxley: --But it did not conflict with the majority, either--
Unknown Speaker: It didn't carry the day.
Mr. Baxley: --and you quoted United States v. L.A. Tucker Trucking Company and Webster v. Fall, and I think your quote there was something to the effect that questions which are merely lurk in the record have no basis of precedent in--
Unknown Speaker: Well, what if the court in the Bedingfield case here had actually decided the issue that you're raising now, would you be here?
Mr. Baxley: --It would be a closer question.
I think that--
Unknown Speaker: And what is your answer?
Would you then be precluded, a new taxpayer, from bringing the same challenge?
Mr. Baxley: --I think you could make a good argument that you would not, because of nonprivity under the law as set out by this Court, but I think that... certainly I think that candidly the respondent would have a stronger case, because here this argument, a major constitutional right, has never, ever been decided by any court at any time.
It's never been argued.
It was mentioned in one amicus brief at the Alabama supreme court level, just mentioned in passing.
You've got a trial court that wrote a five or six page opinion that never touched on this major right.
Unknown Speaker: Mr. Baxley, just to be clear on what's at issue, if, in fact, the matter had been decided in the prior suit, raised, litigated, and decided, then really it wouldn't be too significant whether you put a preclusion, it wouldn't be a plain preclusion, an issue preclusion label on it, because you'd have precedent from the highest court in your State.
You'd be bound by stare decisis, so it wouldn't... if they actually decided the question, if the Alabama supreme court actually decided the question in the Bedingfield case, then wouldn't you realistically be out of court in your suit?
Mr. Baxley: I think common sensewise, yes.
I think you could argue that the claim... I don't think technically under the law that either res judicata or collateral estoppel would apply.
Unknown Speaker: But how about stare decisis?
Mr. Baxley: Stare decisis I think would be... would be enough to where it would make your burden almost unable... you couldn't overcome it, but I... we don't have that--
Unknown Speaker: So your case really depends on this issue not having been fully litigated and decided.
Mr. Baxley: --Not having been litigated in any way, and I think that's the law from this Court, repeatedly.
Unknown Speaker: Well, what if the State of Alabama decides to authorize taxpayer suits not in the sense of people who are being subject to a tax, but in the sense of challenging expenditure of public money?
In other words, any person in the State who pays taxes may challenge the... and I think many States have this.
Do you think a State has to allow more than one of those suits?
Mr. Baxley: No, sir, I don't think they have to--
Unknown Speaker: Where there really isn't any personal property interest at stake.
Mr. Baxley: --I think my answer there would be that you pretty well hit it on the head in Martin v. Wilks in your opinion, where you said it's really, the burden is on the parties, on the parties that are litigating it to determine what the issues are going to be.
When this issue was litigated in Bedingfield, if the county had really wanted to come in and have the due process... I mean, and the due process rights provided and the equal protection matter settled once and for all, they could have brought it up.
Unknown Speaker: That... I don't believe that's responsive to my question.
My question was, if the State says, we're going to authorize taxpayer suits, any taxpayer can come in and claim that the public moneys are being misspent, and A comes in and brings a taxpayer suit saying that you... this is a violation, say, of the First Amendment, the religion clause, for the State to spend money this way, and then that's... the highest court in the State decides that case against that taxpayer.
And then taxpayer B, who wasn't a party to that suit at all, comes in and says, now, I wasn't a party to that suit, I'm bringing a taxpayer's action to challenge that same expenditure of money under the same provision of the Constitution.
Now, can a State say, we're just not going to do that, this is a special kind of suit?
Mr. Baxley: --I think for the same reason, the principle of stare decisis that Justice Ginsburg--
Unknown Speaker: I'm not talking about stare decisis.
I'm talking about, maybe it's a brand new supreme court of Alabama now, and maybe the supreme court of Alabama might be inclined to depart from its earlier ruling, but can the State simply say, we're not going to entertain this action?
Mr. Baxley: --I don't think they could and get by a due process test if they preclude... now, if... in your... and what... your example, if somebody came back and raised... you gave the First Amendment, raised the First Amendment, it had already been decided, yes, I think a statute that set that out would preclude others from doing it.
But if then they, somebody came in and said, now, wait a minute, this has not been decided on another constitutional ground, then I don't think that a... I think a State statute--
Unknown Speaker: What if the law of Alabama is that anything that was... might have... was raised in the first taxpayer's action might have been raised is just, it's all over, there isn't going to be another suit, does that violate some provision of the Federal Constitution?
Mr. Baxley: --Yes.
I think it violates due process.
Unknown Speaker: Why?
Mr. Baxley: Because this Court has held basically that and the Alabama supreme court has held that over and over, repeatedly.
Unknown Speaker: Well, held... are you talking... you say, held that.
You suggest that the Alabama supreme court and this Court has held that in the hypothetical example I've given you it violates due process?
Mr. Baxley: If you deny someone the right to fully and totally litigate a constitutional issue, however you cut him off, whether by case law or by a statute, then it would not meet the test of this Court, that this Court says the due process rights transcend and, so to speak, would overcome... whether it be case law at the State level or a State statute--
Unknown Speaker: Mr. Baxley, but in many of these instances, these so called taxpayer suits, you wouldn't even have any right at all to be in court were it not for the grace of the State that allows you to be kind of a private Attorney General.
I would think... your taxpayer is someone who is paying tax and doesn't want to.
These taxpayer suits, where the taxpayer emerges to represent the public, are quite a different animal, are they not?
Mr. Baxley: --Well, I think--
Unknown Speaker: Do you have any due process right to bring a case that, if you were in the Federal court, they'd probably say you don't even have standing?
Mr. Baxley: --I think that you always have standing if you've got a major constitutional right that you say is being infringed upon.
Unknown Speaker: That's not... certainly not true.
I mean, let's assume that you have a... I mean, we have cases where the Constitution contains a statement of accounts clause, and we have held that a private citizen cannot sue, has no standing to sue to compel the expenditures of the CIA to be disclosed under that provision.
We say, maybe it violates the Constitution, maybe it doesn't, but no individual has standing because it's a generalized interest.
Now, we have that doctrine at the Federal level because of separation of powers concerns, because we have a distinctive Federal doctrine of separation of powers.
The States don't have to follow our separation of powers doctrine, and if they choose to allow a suit in that situation, why is it a denial of due process for them to say, we're going to allow the suit, but only one, whereas we don't allow the suit at all?
How can they be in worse shape constitutionally than we are?
Mr. Baxley: I think the best answer there is a case of this Court of Waters v. St. Louis, and it's so parallel to the situation we have here.
The legislature of Missouri passed a law that said cities of over 700,000 people can impose an occupational tax on businesses and individuals, but they said that on businesses and on proprietors that ran their own businesses they could do it on the net and deduct their taxes.
Before the tax actually went into effect, a taxpayer in Missouri filed suit on constitutional grounds.
It got to this Court, and I believe it was Justice Jackson who wrote the majority opinion--
Unknown Speaker: But you very carefully and quite appropriately pick a case in which there would have been standing in Federal courts.
All that has been suggested by the Chief Justice and by Justice Ginsburg, and I'm suggesting the same thing, is that you're casting your net too widely, that there are certain... you have... there are certainly some actions in which the State allows a citizen to proceed with a suit where we don't.
The construction of a bridge.
If someone says that the construction of a bridge is contrary to law... the person is not harmed at all.
He just says, I don't like Federal money being spent for something it shouldn't be spent for.
Could he bring suit in Federal court?
He can bring suit in many States simply on the ground that this money shouldn't be expended by the county, or whoever it is.
Now, your position is that although it's perfectly okay to deny the suit to anybody, the State cannot say, well, we'll allow the suit, but only once, that the latter violates due process of law, but the former does not.
That is not a very appealing proposition.
Mr. Baxley: --I think that the State does not have the right to, by statute or any other way, cut off someone's right to litigate a constitutional issue--
Unknown Speaker: But if you have no right to begin with under the Federal Constitution... you have a taxpayer, an actual taxpayer who doesn't want to pay tax out of his pocket.
Isn't that quite a different case from what is labeled, taxpayer suit, and what that note in the brief is of... the other side is filled with what we call taxpayer suits, where someone emerges as champion of the public in general, but is no more affected than the public in general.
Mr. Baxley: --Yes, Your Honor.
Unknown Speaker: But we are talking about real taxpayers, and that's a little different, isn't it?
Mr. Baxley: We're talking about real taxpayers, and in the Hansberry v. Lee, this Court said that the State is free to call these actions whatever they want to.
They can call them virtual representation, they can call them class actions, if they call them class actions they can set certain rules, but the State cannot... whatever they call them, they cannot deny someone's due process rights and--
Unknown Speaker: Wait, do you say that a State can't even authorize a class action and have the result of that class action binding on members of the class?
Mr. Baxley: --I think they absolutely can, but I also think you go back to the decision of this Court 3 weeks ago, roughly, in the Matsushita case, where... and your dissent, you say... I'm sorry, Justice Ginsburg dissent says that a State... you can have these class actions.
I don't think this part of it conflicted with the majority.
You still, even in a consent settlement you've got to make sure that due process rights of the, and adequate representation and things of that nature, that they still have got to be fulfilled.
You can't cut that off in any way.
Unknown Speaker: What was the name of your Missouri case, Mr. Baxley?
Mr. Baxley: Waters v. St. Louis, and there's--
Unknown Speaker: Where is it... I don't see it in the index to your brief.
Mr. Baxley: --Your Honor, it's in our... I know that it's in our... oh, the amicus... the amicus found this case for us, the amicus of the counties found that case and had that in their green brief, and then we, I think, cited it in our reply brief.
Unknown Speaker: Thank you.
Mr. Baxley: But that was Water v. St. Louis, and there is a concurring opinion, two sentences, one paragraph, by Justice Douglas, joined in by Justice Black, where Justice Douglas says that I'll go with the rest of the Court on the reading that the Missouri supreme court has not considered this scheme right now so it's not right, but when it comes up again and is considered, this case... but I bow to their reading of the record, saving for a future day the serious and substantial question on the Equal Protection Clause raised by the regulations which grant employers deductions for taxes paid the Federal Government, yet do not allow employees a deduction for the same tax.
Now, when this first case came--
Unknown Speaker: Well, that sounds like a case in which the employees and the employers all had some property interest that was being taken away from them by the tax.
I mean, they were being able... they were being required to pay the tax.
Mr. Baxley: --That's what we have here, Your Honor.
Unknown Speaker: I know it is, but the questions we have been propounding to you are... which you simply haven't responded to, at least so far as I can tell, are the other situations, where, as Justice Ginsburg puts it, you have a taxpayer's action where the taxpayer is really a private Attorney General saying, we don't like... we think this money is being spent in violation of the Constitution, even though they suffer no particularized injury, and the question is whether that kind of a case isn't perhaps different.
Mr. Baxley: I think it is different.
I think it's very different.
Unknown Speaker: Well then, in order to agree with you, we don't have to go as far as you initially urged us, to say that in every case where a State allows suit it has to allow that a later plaintiff can bring the same suit.
Let me put the question more specifically.
Do you believe that your client would have had standing under Federal law to challenge what was done here if it had been done by the Federal Government?
Mr. Baxley: I think at the time of the first action our client didn't have any standing, period, because the scheme had not gone into effect yet.
Unknown Speaker: No, but let's assume this scheme is in effect and it's a Federal scheme rather than a State or county scheme.
It's a Federal scheme.
Would there have been standing under our Federal law of standing to sue?
Mr. Baxley: Yes.
Yes, Your Honor.
Unknown Speaker: Well, it seems to me that that's the only point you need sustain, that in the type of a lawsuit where there would be standing under the Federal law of standing, in that type of lawsuit, at least, you cannot preclude a plaintiff who was not actually bound by the first judgment.
Mr. Baxley: I agree.
Unknown Speaker: Can I agree with that more limited proposition and perhaps find for you on that basis?
Mr. Baxley: Your Honor, you can find for us on any basis.
Yes, sir, I would concur totally.
I think that there are really four cases.
There's another case that I think is very much in point about bringing this up again, when it involves a basic constitutional right, and this was a case that, again, they found for us.
Respondents cited it.
It's Quong Wing v. Kirkpatrick, I believe, the Montana case, and they cited it I suppose because it looked like it was a horrible case for us on the equal protection issue, but when I read that case, lo and behold, Justice Holmes... it was a case where the State of Montana had imposed a what looked like blatantly discriminatory tax aimed at the Chinese laundries.
And Justice Holmes mentioned in the opinion that in oral argument he tried to ask the counsel that was arguing about the equal protection issue and counsel wouldn't respond, denied it, might have been asleep like I was when Justice Scalia was asking me.
But Justice Holmes said in his opinion, he said that we brought this up, this is going to come up again, and when it does come up again, and laws are frequently attacked by... that the lawyers don't give the Court anything to sustain them and we don't want to sustain them, but when this issue comes up again, when it's properly attacked, because it's a constitutional issue, that if it comes up again we're going to rule with them.
So I would think that Justice Holmes would be wondering... if he thought that that opinion would be cited in later days by people in the position of respondents, saying that this opinion does not allow the same party to attack it on the constitutional issue... he said they could.
How horrified he would be if they said that that opinion by Justice Holmes prevented every future American of Chinese ancestry to not attack a ruling on that basis because the issue could have been raised and wasn't.
Unknown Speaker: But here... isn't it true that in this case, although it wasn't litigated, it was raised in the complaint, wasn't it, in the earlier case?
Mr. Baxley: It was raised... it was alluded to in the complaint--
Unknown Speaker: Well, they quote... the allegation is that the statute violates the equal Protection Clause.
It's not just alluded to, it was alleged in the--
Mr. Baxley: --It was alleged--
Unknown Speaker: --But not passed on by the--
Mr. Baxley: --It was not passed on by any court, and I would cite there--
Unknown Speaker: --But it is clear that it could have been raised in that case--
Mr. Baxley: --Yes.
Unknown Speaker: --because it was before the court.
Mr. Baxley: In fact, I think--
Unknown Speaker: What if they had... what if they had actually litigated it?
Would you then take the same position?
Say they'd offered evidence on the... and the trial judge had said, no, I don't think there's any merit to it, and then the plaintiffs had said, well, we don't think this is our strongest point, as a matter of tactics we won't appeal the trial court's ruling, we'll just accept the trial court's ruling--
Mr. Baxley: --I don't think that our position would... we might take that position, but I don't think our... we would succeed.
Unknown Speaker: --Well, wouldn't you still claim that there was no privity?
Mr. Baxley: Yes.
Unknown Speaker: So on that--
--But the key to your case is not privity, then.
Mr. Baxley: Not privity.
Unknown Speaker: No.
Mr. Baxley: We've got... if you look at what... issue preclusion, or collateral estoppel doesn't apply here.
We say res judicata doesn't apply.
In fact, I think this thing gets back to Justice O'Connor's thing... quote in that Harper case about it lurking in the record.
It lurked in the record here, but it was never addressed.
Unknown Speaker: Well, it lurked in the complaint... it didn't lurk, it was there in plain English.
Mr. Baxley, is... you said that privity is not the key to your case.
I thought it was one of the keys to it.
I thought that was one of the prongs of your argument, and if you won on that you would, on your view, be entitled to win the case.
Mr. Baxley: Yes, Your Honor.
Unknown Speaker: The absence of privity.
Mr. Baxley: Yes, Your Honor.
Unknown Speaker: Yes.
Mr. Baxley: The absence of privity is certainly one of our strong arguments, and in every... almost every case that's cited in their briefs that in any way is contrary to us is... where you did have--
Unknown Speaker: But I... but the... Justice O'Connor raised it earlier.
Aren't there a lot of statutes out there and a lot of procedures in State courts where they allow one challenge only to some kind of a public expenditure of funds, or a new taxing statute?
They just simply don't allow a second.
Mr. Baxley: --I'm sure there are, but this is not--
Unknown Speaker: But they're all unconstitutional?
Mr. Baxley: --what we're talking about here.
No, sir, not at all.
Unknown Speaker: Typically it would be a statute allowing a challenge to the issue of municipal bonds, or something--
--where the bonds are going to be sold, and they need a declaratory judgment in advance.
Mr. Baxley: A validation suit.
Unknown Speaker: Yes.
Mr. Baxley: Bond validation type suits.
Your Honor, I've thought about that, and I think it would be appropriate here.
I think certainly you could have one challenge, but however, I think you've got to look at what Hansberry v. Lee says, and the danger of collusion, that you don't want to okay in advance one challenge where there's possible collusion, a friendly type suit to validate--
Unknown Speaker: --That's not alleged here, is it?
You don't have to get into that, do you?
Mr. Baxley: No.
Unknown Speaker: You're not--
--All you have to worry about is the suit by the taxpayer who is actually paying the tax--
Mr. Baxley: That's right.
Unknown Speaker: --and that's what you've got, and you're claiming that in those cases--
Mr. Baxley: That's right.
Unknown Speaker: --you've got to have some privity for a... issue or claim preclusion.
Mr. Baxley: Yes, sir.
Unknown Speaker: And we just finished discussing that whole taxpayer suit category, and now we're into taxpayer who says, I got this tax bill and I've paid it and I want a refund, or the situation that you're in.
There's an occupational tax, and your client says, it's not fair to make me pay that tax, so... but why isn't it fair for the State to say, it's good enough to have in this category, too, one taxpayer with a good lawyer fight out the case so we're going to apply in this taxpayer as taxpayer area the same thing we apply in the municipal bondholder's suit, and the people who want to challenge the annexation of a county, or Mrs. Frothingham who wants to challenge how public money is spent.
We're going to apply the same doctrine to all of them.
You get a good lawyer in suit number 1 and fight it out, and that's it.
Mr. Baxley: Because the... I don't think you can cut off someone's right to litigate a constitutional issue that's affecting them, and... but we don't have that situation here.
This is not an action that was allowed by statute.
It just came on a declaratory judgment.
And also, one important thing, and it goes back to the question Justice Stevens asked, the complaint in Bedingfield, the first action here, never at any time was there any attack made on the exemption scheme.
It had not even gone into effect yet.
Probably most people didn't even understand it at the time, because the tax hadn't started taking effect yet, and so no one ever, even though it was in the complaint with the equal protection part, nobody has ever attacked the exemption scheme until the instant case right here, and we submit there are some possibilities that perhaps it would have been premature at the time Bedingfield came on, since the tax was not being collected.
It indicates that in Justice Jackson's opinion in the St. Louis case.
It might have been premature to have attacked the exemption scheme as early as they did.
Justice Jackson mentions--
Unknown Speaker: I don't understand that at all.
If it would be... they didn't rule... dismiss the case as a whole because it was premature, did they?
Didn't they rule on the merits of what the... the issues that were raised?
I don't know why the exemption issue would be any more premature than any other issue.
Mr. Baxley: --Nobody had been collecting it from them yet.
Unknown Speaker: Yes, but they... that's true of the whole case, wasn't it?
Mr. Baxley: Yes.
Unknown Speaker: And the court nevertheless went ahead and adjudicated the merits of the issues that it thought important.
Mr. Baxley: Yes, sir.
Unknown Speaker: I don't understand your prematurity argument.
Mr. Baxley: That was just mentioned in the St. Louis case, and the exemption scheme was definitely never even attacked.
If I could be permitted to reserve the remainder of my time.
Unknown Speaker: Very well, Mr. Baxley.
Mr. Slaughter, we'll hear from you.
Argument of William M. Slaughter
Mr. Slaughter: Mr. Chief Justice, and may it please the Court:
I do not think it would be an exaggeration to say that if this Court were to adopt the petitioners' truncated view of the Due Process Clause with respect to representational suits, that they would overturn several hundred years of equitable development of class actions as culminating in Rule 23 of the Federal Rules of Civil Procedure.
Unknown Speaker: Well, he claims that he's not attacking class actions.
Mr. Slaughter: Justice Souter, I believe that by trying to rest this case on the authority, among others, of Martin v. Wilks, totally ignoring footnote number 2, in which the Chief Justice reserved from the implications of that case the whole panoply of representational suits, first of all as typified by Hansberry v. Lee, and also the second cite in the footnote was Rule 23 of the Federal Rules of Civil Procedure--
Unknown Speaker: But I think his point is that there is no legitimate sense in which this can be called a representational suit.
Mr. Slaughter: --Well, I think he--
Unknown Speaker: He is claiming that his clients want to sue simply as taxpayers.
They were not in privity with any other taxpayers who were sued and, in fact, they want to sue on an issue which was not litigated, and he is saying that in no sense can you call a prior action a representational suit as to my clients.
I think that's as far as his argument goes.
Mr. Slaughter: --That may be his argument, but it is both historically and factually incorrect.
The laws of Alabama have historically allowed, like the laws of other States, declaratory actions in which private citizens act as Attorney Generals to challenge public law--
Unknown Speaker: But that is not... we've just been all around that.
Let's concentrate on the case of a taxpayer, a true taxpayer.
This is not somebody who's coming forward as a private Attorney General.
This is someone that the State of Alabama is saying, you owe an occupational tax.
All right, that's standing in the Federal court, and it's certainly standing in the Federal court, so let's forget about the taxpayer suits of the kind where you wouldn't have standing in Federal court, where you're just one of everybody in the public, and nobody is hitting you in your own pocket.
Let's concentrate on those.
Now, I do not know of legions of precedent that say, you can have a virtual class action without notice to anybody in the class.
That's what we're dealing with, and that's what I'd like you to address.
Mr. Slaughter: --Well, class actions under (b)(1) and (b)(2), which he is trying to certify in the petitioners' case, is exactly that kind of case.
(b)(1) is the class action which in the advisory opinion was deemed suitable to test taxpayers' questions on the bond issue--
Unknown Speaker: That's usually an injunction case.
Mr. Slaughter: --No.
No... I beg your pardon, Your Honor, (b)(1), not (b)(2).
Unknown Speaker: Give me an example of a money relief case, a case involving money, where people can be cut out without any notice.
Mr. Slaughter: (b)(1) is an appropriate vehicle--
Unknown Speaker: (b)(1) of what?
What are you talking about?
Mr. Slaughter: --Rule 23 of the Federal Rules of Civil Procedure, as well as Rule 23 of the Alabama Rules of Civil Procedure, which are exactly identical.
Your Honor, if I may, this suit, the Bedingfield case represents a stepping stone along the evolution of English bills of peace, Justice Story's equity class actions in the 19th Century--
Unknown Speaker: Well, Bedingfield was not a class action, was it?
Mr. Slaughter: --Yes, it was.
Unknown Speaker: I thought it was brought by--
Mr. Slaughter: It was--
Unknown Speaker: --It was two actions brought by individuals in the City of Birmingham.
Mr. Slaughter: --That is the important distinction here, Your Honor, if I may make that.
There is essentially no difference whatsoever between the Bedingfield case and if this had been a class action brought and certified under Alabama Rule 23, paragraph (b)(1), and there are--
Unknown Speaker: Bedingfield was not... let's clarify this, if we may.
Mr. Slaughter: --But it was a class action.
Unknown Speaker: Was it brought--
Mr. Slaughter: In the name--
Unknown Speaker: --expressly as a class action--
Mr. Slaughter: --No.
Unknown Speaker: --and allowed as such?
Mr. Slaughter: No, but it did not need to be in order to be so treated for due process purposes, and that's the precise point.
If we can go through and compare the cases--
Unknown Speaker: Mr. Slaughter, how does your argument stand against an important precedent in this Court, a case called Mullane v. Hanover Bank, where the Court explained if someone's interest is being affected there has to be an effort to tell that person, not the best service that money could buy, but some notice?
Mr. Slaughter: --The distinction between due process and Mullane v. Central Hanover Bank is that the holders of the trust, common trust interest in that case were not represented by anybody.
The issue in this case is whether you have--
Unknown Speaker: Why weren't they represented by the people who were there?
There were some of the beneficiaries there.
Mr. Slaughter: --And that element to some degree was used by the court as a justification for not requiring a stricter standard of notice.
The idea that some of the people would in fact, local people in New York received the notice, but nonetheless they felt that due process required going the extra distance in that case.
Unknown Speaker: Why, if... assuming that... I mean, you may... I think you may be right that (b)(2) is implicated here, but I thought there's a mistake the State court seemed to have made.
They thought that this taxpayer action was like the private Attorney General taxpayer action, which is where these cases originated, but that isn't this.
This is a case, isn't it, like a bunch of 10,000 people living in a city, and the city puts up some noxious fumes, and all 10,000 people breathe them, so they want to proceed against a nuisance, or there's a giant accident, and it happens to kill or hurt 10,000 people, and there you would have, let's say, a (b)(2) action for nuisance.
But very well, I didn't find any contrary authority to the proposition that if you have a class action of that kind, you have to give notice to the other people.
At least you should give notice.
If Joe Smith is going to be the first person to run in and sue the city for the nuisance, or the first person to collect, Jones and 14,000 other people should at least have notice of what's going on and a chance to talk to the judge before they can be bound in res judicata.
At least, I don't know why that shouldn't be so.
Mr. Slaughter: Justice Breyer, neither under (b)(1) or (b)(2) of Rule 23 is notice required.
Unknown Speaker: I know it does not say that in the rule.
That's the basis of my question.
What I want to know is, I couldn't find any authority that explained to me why there is not notice in (b)(2), why there shouldn't be notice, how those class actions work, or what conceivable thing was going through the rulemaker's mind in not saying you should have notice, given the precedent in the Supreme Court that you can't take a person's action away from them without notice.
That's my question.
Mr. Slaughter: The explanation of that is to be found in the history of Rule 23 and the version that existed from 1938 to 1966.
That version was, in fact, merely a codification of the kind of historic equity class action that had been governed by this Court's Rule 48 and then Rule 38.
It did not require any kind of certification for a class, nor did it require any kind of notice.
The nature of the class was defined by the jural relationships between the members, by their common identity, if you will, in terms of their interests which were to be adjudicated.
Unknown Speaker: Did they bind?
I mean, I would have thought--
Mr. Slaughter: And it was binding.
Unknown Speaker: --Why, because normally you'd think, in a situation where you're proceeding against an injunction, for example, for a nuisance, you would have thought the first person to sue is going to win or lose, and then stare decisis will take care of the rest.
But I was rather surprised that in such suits that first person's suit could bind other people who suffered from the nuisance on issues that were not litigated.
Now, if, in fact, that did happen under (b)(2) or this historic practice in equity, I'd like to know why it happened, because it happening without notice would seem, (a) very unfair, and (b) contrary to the precedents of the Court that say you can't take a person's action away from him without notice.
Mr. Slaughter: The notice provisions of current Federal Rule 23 and all of the--
Unknown Speaker: Do not relate to (b)(2), you're right--
Mr. Slaughter: --Neither to (b)--
Unknown Speaker: --and I'm asking why.
Mr. Slaughter: --Neither to (b)(1) nor (b)(2).
Your Honor, my--
Unknown Speaker: Mr. Slaughter, that's not quite right, is it?
There isn't mandatory notice because there is such a variety of cases that come under (b)(1) and (b)(2), but look at (d)(3), which instructs the court to require for the protection of the members of the class or otherwise for the fair conduct of the action that notice be given in such manner as the court may direct.
I assume from that provision that in a case comparable to the Mullane situation a district court, if we were operating under the Federal rules and in Alabama, since they have virtually the same rules, would say in this kind of action you have to give notice.
You don't have to hire a process server, but you have to put a summons and complaint in the mail, or--
Mr. Slaughter: --I think that provision of the rule is a very useful admonition and a very cautionary one, and a very valuable tool in the management of class actions, but I do not think it is mandatory for due process analysis where you have plaintiffs, representative parties who truly represent the class in a public and impersonal question of the kind implicated in this case, namely, just the constitutional validity of this tax.
Unknown Speaker: --Well, why isn't that... why isn't that not a (b)(1) or (b)(2) kind of suit, but, rather, a (b)(3) suit?
I mean, you're almost quoting (b)(3), the court finds the question of law or fact common to the members of the class predominate over any questions affecting only individual members.
I mean, you're talking--
Mr. Slaughter: I submit, Justice Scalia, and I believe the historical precedent for this kind of suit is on my side, that in this kind of case there is really only a pure public question in a purely legal sense.
Not in terms of the economic consequences of the tax, or the differences in burden that may result from its application, but for purposes of the litigation of the pure legal question, there are no private rights involved, and therefore--
Unknown Speaker: --Well, why isn't... why isn't this a property right here?
Mr. Slaughter: --I beg your pardon?
Unknown Speaker: Why isn't there a property right here being asserted by the plaintiffs in the present action, a right of action created by section 1983 authorizing individuals to sue for violation of their individual, equal protection rights?
Now, why isn't it that kind of claim being made here?
Mr. Slaughter: Well, the fact--
Unknown Speaker: Isn't it?
Mr. Slaughter: --Well, I agree, Your Honor, it is a kind of--
Unknown Speaker: And in order for a prior suit to somehow take away that property right and that cause of action, wouldn't we think due process would require some kind of notice, and wouldn't we also think it would require some kind of adequate representation of these plaintiffs in the prior suit?
Mr. Slaughter: --Absolutely, Your Honor.
Unknown Speaker: Has there been any determination of adequate representation in Bedingfield of these plaintiffs and their suit?
Mr. Slaughter: You have put your finger on the essential due process issue in this whole case, and the one that we would submit, if it is due for remand, that would be the first question that would be appropriate for the Court to determine, namely the adequacy of the representation in Bedingfield.
With regard to--
Unknown Speaker: So long as the Court satisfies itself that counsel is an adequate counsel, other people who don't want to be represented by this counsel must be held to whatever he achieves, is that the principle you're urging for?
Mr. Slaughter: --Yes--
Unknown Speaker: --I thought if I had a cause of action, even if it involves a legal issue that's common to causes of action that other people have, I'm entitled to hire my own counsel and go litigate that myself.
You say that we can dispense with that, and we can say, so long as we satisfy ourselves we have a good lawyer in front of us, and that this lawyer is going to do as good a job as any other, we can tell the other people go away, you must be represented by this person.
The State can do that?
Mr. Slaughter: --To a limited extent in this kind of case, Your Honor, and--
Unknown Speaker: What kind of case is that?
What is different--
Mr. Slaughter: --And--
Unknown Speaker: --about this kind of case from the cases that--
Mr. Slaughter: --The litigation--
Unknown Speaker: --Justice Breyer was asking about?
Mr. Slaughter: --The litigation of purely public questions that are necessary to the operation of State and local government with some degree of reliability and finality.
Unknown Speaker: What is the purely public question, in your view?
Mr. Slaughter: --Many, Your Honor.
You mentioned several earlier.
For example, the validity of the process by which bonds are issued, the validity by which a tax is levied and collected.
Unknown Speaker: The validity of any State statute?
Mr. Slaughter: Many, but--
Unknown Speaker: Well--
Mr. Slaughter: --more so with regard to those that govern the nature of State and local government, and I can't give you an ironclad rule to sort them out, but--
Unknown Speaker: --Well, why does a county occupation tax govern the nature of government?
Mr. Slaughter: --It does not govern the nature of government, Your Honor.
It is merely a kind of issue that... the levy of a tax is totally useless to a local government if it can be challenged in endless litigation.
Now, admittedly, stare decisis after a certain point may provide relief, but it has been the historic Anglo American practice to use res judicata in this context rather than stare decisis.
Unknown Speaker: When you say historic--
--Can you think of anything more governmental than the criminal law?
Is it really your position that when one individual challenges the constitutionality of a particular criminal law provision and loses, and maybe even chooses not to appeal, that everybody else is bound by the decision that that criminal law provision is constitutional?
You say, well, you had a fair run at it.
This person represented you.
Mr. Slaughter: No, that's... absolutely not.
Unknown Speaker: Why is that any different?
I don't understand that.
Mr. Slaughter: Because of the nature of the representational suit, whether it be formally, structurally certified as a class so that the representative proceeds under those rules, or whether it proceeds in the manner represented by Hansberry v. Lee, and which was prior to the adoption of State rules--
Unknown Speaker: Mr. Slaughter, why do we bother having class actions at all?
I mean, it's so much easier just to say, champion, come forward, get yourself a good lawyer, forget notice, it's much more efficient.
If you are right, then there's no need for a class action.
Why would anybody want to bother to go through all that business of getting it certified, if all you have to do is get somebody who is similarly situated, that person gets a decent lawyer, and that's the end of it?
The case is decided once and for all for everybody.
Mr. Slaughter: --Those who verge on the... on legal anarchy I think would advocate that, and there is a strong--
Unknown Speaker: But you are... are you saying that there are... sometimes you do need a class action with the court to certify the class and notice to the members.
Can you distinguish for me the cases where you do need a class action, if that is your position, and those where you don't?
Mr. Slaughter: --I cannot distinguish all, but I can tell you that the very class of case that we're talking about today, cases which need to determine with some degree of finality and reliability State and local government issues do need the possibility of class adjudication, whether it be in the traditional form which I say the Bedingfield case was, or certified as a (b)(1) or (b)(2) class, as the petitioners seek to do in this case.
In either case, it would constitute a final litigation of the matter, and would enable government to proceed without the constitutional cloud of uncertainty hanging over its head.
In that respect, I think class actions are very useful, though they do conflict with this tradition in a free society that Justice Scalia was talking about.
Unknown Speaker: But isn't it true that in the governmental context, normally the government feels comfortable proceeding with all the risks, reliance on the doctrine of stare decisis?
Once they've got a... the supreme court of a State has ruled on and passed on most of the issues, they figure things are okay.
And something... somebody can always come up with some new idea, but to say they have to have claim preclusion to give the government authority sufficient confidence to go ahead with their project seems to me carrying it a little farther than you really have to.
Mr. Slaughter: Well, as I mentioned in our brief, Justice Stevens, we are not going to insist on claim preclusion in this case.
I think an adequate argument can be made for issue preclusion on the equal protection case.
And admittedly... admittedly, there are a number of cases where, if a matter in question, for example, the proper procedure for a bond issue had not been followed and the prior test case only dealt with the legality of its purpose, then clearly the second case would not be blocked.
But in this case, the county, bond attorneys, everyone relied upon the fact that the equal protection argument had been raised in the earlier case, and assuming that it was a class action that had the same preclusive effect as a (b)(1) class action, it was deemed to be res judicata with regard to that--
Unknown Speaker: Mr. Slaughter--
--But don't you--
--I'm a little confused.
You just said you were not insisting on claim preclusion.
Instead, you said issue preclusion, but issue preclusion, or what some people call collateral estoppel, requires not merely the issue be raised, but that it be actually litigated, and decided, and essential to the decision, and it's those two things, actually litigated and decided and is central to the decision, that you don't have with respect to the equal protection claim.
Mr. Slaughter: --With all due respect, Your Honor, I think it is present in this case.
First of all, the customary rule with regard to judgments is that if an issue was raised by the litigants, whether or not the evidence was sufficient, or whether or not the Court specifically addressed it, if it was consistent with the judgment and a contrary position would have negated the judgment, then the decision of that issue is merged in the judgment.
Unknown Speaker: But that only goes to res judicata.
That does not apply in a claim preclusion situation.
I mean, Justice Ginsburg's very question is, I think, that if you are going to insist on the position that they are cut off on an issue which was not, in fact, litigated, even though it may have been raised, then you've got to rest your case on res judicata, not on issue preclusion.
Mr. Slaughter: Your Honor, what I am trying to say in that argument, and for that purpose we cited Grubb v. Public Service Commission of Ohio, was that as a rule of decision, not... having nothing to do with res judicata, just what first of all was decided, before we get to whether or not that decision precluded anything, the proper rule is that the equal protection question was decided in the case.
Now, whether it should then have preclusive effect either on a res judicata or on an issue preclusion basis was a different question.
Unknown Speaker: Right, and that's the reason for Justice Ginsburg's question and my question.
If you are saying, as I thought you were saying, that you didn't insist on res judicata, that you were satisfied to rely on issue preclusion, then you lose, it seems to me, on any claim of issue preclusion on the res judicata point, because it was not, in fact, litigated.
It was merely raised.
Mr. Slaughter: You're absolutely--
Unknown Speaker: It may have cut off the parties to the first case, but it is not going to cut off anyone else.
Mr. Slaughter: --On that point, you are correct, Your Honor.
If we cannot persuade this Court that the appropriate rule of decision was that the equal protection question was, in fact, decided by Bedingfield, then we may indeed be vulnerable, unless the representational nature of the class action of the suit is sufficient to invoke the broader standard of claim preclusion.
Unknown Speaker: Well, on that, could you go back to Justice Stevens' and Justice O'Connor's question for just a second, because it seemed to me that on... there are two equal protection claims, I think, that were raised.
One was 500,000, and they might have litigated that one, I don't know, but the other one is the licensed professionals versus the other, and that was stated in the claim and then abandoned, all right, I guess, or they never got to it, so think of the second one, all right?
Now, I take it no notice... is there... you were talking about tradition, the tradition of these class actions.
Did you find any case... because I couldn't find one, but did you find a case which, going back as long as you want in tradition, would say, take, e.g., a nuisance run by the city that hurts 10,000 people, not a taxpayer action that is a private Attorney General action... that's out of this case.
This is more like a nuisance, or an accident that hurts 10,000 people in their cars.
Did you find any case where the first person to bring the nuisance suit would bind later people who did not have notice on an issue that wasn't litigated?
That's the tradition that I think would be relevant here, and I'm not saying there is or there isn't.
I'm saying I couldn't find such a thing, and I do see the possibility of such a thing falling under (b)(2), and maybe the appropriate action order thing that Justice Ginsburg takes care of it, but did you find any such case?
Mr. Slaughter: No, I did not, Your Honor, and that is precisely the reason why in the brief I said that perhaps the Alabama supreme court painted too broadly with the claim preclusion brush for purposes of due process, and that it might be more... a kinder and gentler due process application if, in fact, it were limited to issue preclusion.
Unknown Speaker: And if that were so, then I guess it wasn't just that there was no finding that the representation was adequate.
What concerns me more than that is the fact that there was not even any notice.
Mr. Slaughter: Well, Your Honor, with regard to this notice, I can answer nothing, other than usage that has been sanctioned for many years as a settled practice meets the requirements of due process, because in fact, if you examine the history of this kind of representational suit in equity, the precursor of Rule 23 between 1938 and 1966 and its present operation with regard to (b)(1) and (b)(2) classes, which are the suitable vehicle for this kind of public issue, notice is not required in order to establish a class that is binding on all of the members of that class, provided that there has been fair and adequate representation of the class interest.
And that was the issue in Hansberry v. Lee, which I submit governs this case completely.
First of all--
Unknown Speaker: Mr. Slaughter, you mentioned that you case is a little shaky on the claim preclusion part, but you say it's solid on issue preclusion, and since you do have a decision of the highest court of your State, is there, in fact, any difference between stare decisis and issue preclusion with respect to these issues, the ones that were actually litigated and decided all the way up the line in Alabama?
Is there any significant difference between those two labels?
Mr. Slaughter: --Just the necessity of going through the relitigation of this particular case again, Your Honor, and the fact that if someone doesn't like the opinion of the Alabama supreme court in that case, yet another plaintiff may bring the public law equivalent of a strike suit.
Unknown Speaker: But you can always bring a suit, and in both cases it seems to me the other side would move for summary judgment and one case would say, issue preclusion, and the other case would say, stare decisis.
Mr. Slaughter: But, Your Honor, I think you would acknowledge that there is always a little bit more of a chink to get through the opening provided by stare decisis than there is with res judicata, because the law evolves, and that is taken into account with stare decisis.
Unknown Speaker: There's a little more wriggle room.
Mr. Slaughter: More wriggle room, because you have more cases.
It is not the authority of the single prior case, but all of the cases that may be of a similar nature that are to be taken into account for stare decisis.
Unknown Speaker: May I ask you one question on the distinction of stare decisis and preclusion?
Can you cite me any case in which a plaintiff was found to be barred by res judicata, estoppel, whatever it might be, not stare decisis, but a judgment in a case in which he was neither a party nor a privity to a party?
Mr. Slaughter: If he was represented adequately in the class, yes.
Unknown Speaker: I'm saying no... not class action, because Bedingfield was not a class action.
Mr. Slaughter: Well, the most--
Unknown Speaker: Can you give me a case that--
Mr. Slaughter: --Yes.
I think the Southwest Airlines case versus the Texas International case is very much on point in that regard, Justice Stevens, because the privity, if you will, was created in that case by the identity of interest in the single, narrow legal issue that was presented, which was the litigation of the validity of a Dallas ordinance prohibiting the use of Love Field, and it had been decided earlier that that ordinance violated Texas law.
All of the airlines who wanted to exclude Southwest from Love Field had a tremendous economic interest, but the court held that they were precluded from further litigating that question because their legal as opposed to their economic interest was indistinguishable from that of the City of Dallas and others who had litigated the same public question before, and that is a case, I think, that meets your criteria.
Now, they had notice, though, in the sense of actual notice, because of all the publicity attending the case, but not necessarily legal notice within the procedural requirements of Rule 23.
As I said earlier, I believe that this case is really governed by Hansberry v. Lee, which stood for several very fundamental points.
One, I agree with the petitioners that it said the States are free, subject to Federal due process, to devise any kind of procedural vehicle for representational suits they desire.
Secondly, those representational suits will bind the members of the class who are represented.
Thirdly, it is a violation of due process if the representative of the class has a conflict of interest or does not adequately represent the members of the class, and that was a specific holding in Hansberry v. Lee, and finally, Hansberry v. Lee stands for the proposition that the question of adequate and fair representation in this kind of suit is a matter for retroactive examination by the courts when res judicata becomes a question.
And in that regard, it is consistent with the principle of Rule 23 that the certification of a class does not establish its preclusive effect for the future.
Unknown Speaker: --Thank you, Mr. Slaughter.
Mr. Slaughter: Thank you.
Unknown Speaker: Mr. Baxley, you have 3 minutes remaining.
Rebuttal of William J. Baxley
Mr. Baxley: No question, Bedingfield was not a class.
Nobody ever considered it one, and contrast the lack of notice there with what was deemed not sufficient in Martin v. Wilks, where there, you had the Birmingham Firefighters Association that appeared, these later plaintiffs were members of the association, the court ordered that notice be published in both Birmingham newspapers for, I think, 30 days or so, they solicited opinions, asked everybody to come in, these organizations represented these people, you had much, much more notice type in the Martin v. Wilks than you had here, where you had none, zero.
Secondly, it could have been a class.
The county, if they had wanted it to barr everything forever, they could have come in... the Rules of Civil Procedure were in effect in Alabama for class actions 10 or 12 years before Bedingfield.
The county didn't want to do that.
They didn't want to make it a class.
They hoped nobody would ever raise legal protection.
They didn't want to litigate it then, they don't want to litigate it today, they don't wan to litigate it tomorrow, but that's the party that should have made it that way by your dicta, or your ruling of both parties are the ones that best know.
And lastly, in the Southwest Airlines case that he mentioned just then, that was a very different situation that the Fifth Circuit ruled in that instance.
The attorneys for the parties that were "nonparties" also filed amicus briefs.
They attended the... they sat through the actual first proceeding, there was a lot of different fact situations different in the Southwest Airlines case than here, where you had absolutely no relationship--
Unknown Speaker: Of course, that was a Fifth Circuit case, wasn't it?
Mr. Baxley: --Yes.
Yes, Your Honor.
Chief Justice Rehnquist: Thank you, Mr. Baxley.
The case is submitted.