Cases by Issue - Federal Preemption of State Jurisdiction

San Remo Hotel v. San Francisco - Oral Argument

Fri, 09 Jan 2009 14:49:00 +0000

Case:

San Remo Hotel v. San Francisco

Media File:

04-340_20050328-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Paul F. Utrecht

Chief Justice Rehnquist: We'll hear argument now in No. 04-340, San Remo Hotel v. the City and County of San Francisco.

Mr. Utrecht, is that--

Mr. Utrecht: Yes, Your Honor.

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

The Ninth Circuit decision in this case should be reversed for three reasons.

The first reason is that the result is unfair and the rationale of the court is unfair.

Justice O'Connor: Well, what are your... exactly what claims are... is your client now raising in Federal court?

I mean, we don't take a case to just decide if something is unfair.

What are the precise claims your client is raising now in Federal court?

Mr. Utrecht: My client is making a facial and as-applied takings challenge to both the hotel conversion ordinance and the regulatory scheme of which it is a part.

And that claim... that Federal--

Justice O'Connor: I somehow thought that your question had boiled down to whether there was issue preclusion here.

Am I wrong?

Mr. Utrecht: --The issue before this Court is whether there's issue preclusion--

Justice O'Connor: I'm talking about the issues in this Court.

Mr. Utrecht: --Okay.

The issue in this Court is whether the Federal takings claim should be precluded under issue preclusion by a State court judgment that did not decide the Federal takings claim and could not have decided the Federal takings claim.

Justice Souter: Well, as I understand, I... I would... I will grant you that there are moments in the... in the Ninth Circuit opinion in which there seems to be a shift back and forth in the rhetoric between claim preclusion and issue preclusion.

But as I understand what the Ninth Circuit held, it did not hold that your claim was necessarily out of court because of claim preclusion.

It held that your claim failed because of the effect of issue preclusion on elements that were common, factual elements common to both the claim in the State court and the claim that you sought to bring in the Federal court.

Am... am I correct about that, about what the Ninth Circuit held?

Mr. Utrecht: The Ninth Circuit did limit its holding to issue preclusion.

It did not rule on claim preclusion.

Justice Souter: Okay.

Mr. Utrecht: The other part of your question about whether it was based on factual determinations could not have been based on factual determinations.

Instead, it was based on the prior State court determination that we did not state a claim... state a cause of action under California law for State compensation.

Chief Justice Rehnquist: Well, the Supreme Court of California decided only the State constitutional question, did it not?

Mr. Utrecht: That's correct, Mr. Chief Justice.

And because of that, we have never had an opportunity to have our Federal takings claim decided on the merits.

We believe that that undermines the Federal courts' primacy in deciding Federal questions, particularly Federal constitutional questions.

We also believe--

Justice O'Connor: Well, it was this Court's decision in the Williamson County case that led you and I assume other lawyers in these takings cases to return to State court and try to litigate everything.

Isn't that right?

Mr. Utrecht: --This Court in Williamson County said that before you could bring a Federal takings claim, you had to go to State court and seek compensation under State law.

Justice O'Connor: And you haven't asked us to revisit that Williamson County case, have you?

Mr. Utrecht: We have not asked that this Court reconsider the decision in Williamson County.

Justice O'Connor: Maybe you should have.

Mr. Utrecht: Well, at this point I don't think that we can.

Perhaps we could have in 1998 when the Ninth Circuit applied the Williamson County case and ordered us to go to State court with our unripe Federal claims, unripe under this Court's holding in Williamson.

But I think that at this point the question before the Court is given that we've complied with the procedural requirements that this Court established in Williamson County, are we now precluded by issue preclusion in the second litigation that this Court ordered because of the State court compensation ruling.

Justice Scalia: Mr. Utrecht, you... you refer to the primacy of Federal courts.

I'm... I'm not clear as to whether you are arguing for a different disposition where suit is first brought in Federal court erroneously because there's been no exhaustion and then the plaintiff is sent back to State court from the situation in which a plaintiff does the right thing and goes to State court immediately.

Now, in that case, would... would you still argue for primacy of the Federal court?

Mr. Utrecht: Absolutely, Your Honor.

I think that what this Court established in Williamson County is a two separate litigation scheme.

The first litigation concerns State compensation, and the second litigation concerns the Federal takings claim.

Justice Scalia: So... so your case does not hinge on the fact that when the State court acted, there was a pending... a pending Federal case asking for the Federal constitutional question to be resolved by a Federal court.

Mr. Utrecht: That's correct.

I think that the Second Circuit got this issue correct in the Santini case when it concluded that whether you started in Federal court and were ordered to proceed to State court under Williamson County or you looked at the Williamson County case and said, I'm going to start in State court because that's what Williamson County says that I'm required to do, it doesn't matter.

It shouldn't matter for purposes of issue preclusion on the Federal takings claim once it has been made ripe under the procedures required by Williamson County.

Justice Ginsburg: Is it your position that issue preclusion doesn't apply at all, or that there was no issue decided in the State court proceeding that carries over into the Federal proceeding?

Which one is it?

What... you suggested... you said, number one, no facts were found.

The question was whether there was sufficient statements to survive a 12(b)(6) or its counterpart dismissal motion.

Mr. Utrecht: Our... our primary position is that issue preclusion does not apply for the same reasons that this Court found that issue preclusion did not apply in England when you were required to do two separate litigations.

The question of whether the Ninth Circuit correctly applied issue preclusion law... we also raise that as our last argument in our opening brief, but our primary argument here today is that issue preclusion should not apply at all to Federal--

Justice Ginsburg: And if it did... if it did apply, what issues would be precluded?

Mr. Utrecht: --In our position no issue should be precluded because under California law, which the Ninth Circuit was obligated to apply, only identical issues that are resolved under a different set of laws can be precluded in the second proceeding, and there was no identical issue finding by the Ninth Circuit.

Instead, the Ninth Circuit applied its equivalent determination finding.

But I think that the... the real issue before this Court is not the California preclusion law question, but the real issue is whether this Court's decision in England should... or the rationale of this Court's decision in England should be applied to the very similar circumstances raised by--

Justice Kennedy: Is... excuse me.

Is... is it your position that there is an exaction here?

Mr. Utrecht: --Yes, Your Honor.

Justice Kennedy: It... are... are you bound by a finding in the State court that there was no exaction, or was there no such finding?

Mr. Utrecht: I don't believe there was such a finding.

I think that the California Supreme Court decided that the exaction met the State law compensation requirements and did not--

Justice Kennedy: Was the... was the Ninth Circuit wrong in indicating that there was no exaction?

That's the way I read its opinion.

Mr. Utrecht: --I... I don't read the Ninth Circuit's opinion as saying there was no exaction.

I think the Ninth Circuit held that the exaction was imposed by legislation rather than by an administrative proceeding, and because of that, it was subject to a different standard than exactions imposed in administrative proceedings.

But I think there's no question in this case that an... an exaction was imposed and was actually paid.

This is not a... this is not a case where there's an issue about whether the exaction was imposed.

The issues were what standard was used to review that exaction and whether the exaction was constitutional.

Justice Kennedy: But... but the Ninth Circuit seemed to think that Dolan doesn't apply, and I take it that you would say that it does.

Mr. Utrecht: Well, I think this Court has not decided whether exactions imposed by legislation are treated differently than exactions imposed by administrative proceedings.

The State court in this case determined that under State compensation law that mattered.

But this Court has not decided that.

The Ninth Circuit seemed to indicate that it was in general agreement with the California Supreme Court, but again, because it didn't actually decide the merits, it just decided that there was an equivalent determination under State law, it didn't get to the final question of whether this was an exaction and what the proper standard was.

Justice Scalia: And you don't want us get that... to that question either, whether Dolan applies or not.

Mr. Utrecht: I did want this Court to get to that question, but when this Court rejected question 2, I think this Court decided that it did not want to get to that question.

But we... and we did not brief that question because this Court did not grant certiorari on question number 2.

But we definitely did want this Court to decide that question, and obviously, if... since the Court can't decide it in this case, we would, obviously, want the Court to decide it in some other case, hopefully before this case is finally resolved in the courts.

Justice Ginsburg: Mr. Utrecht, if I understand the respondents' brief correctly, there is on pages 10 and 11 a whole list of issues that they say were determined... raised, litigated, and determined in the State court.

So, for example, that the HCO's housing replacement fees bear a reasonable relationship to loss of housing, the use of a defined historical measure... measurement point reasonably related to the HCO's... and it goes on for a paragraph, citing issues that respondents say that were raised, litigated, and decided in the California Supreme Court.

Mr. Utrecht: I think that technically what the California Supreme Court decided was that our facts did not state a cause of action under State law.

What they cite here as findings are actually discussions of the legal issues raised by the State court complaint under State law.

They don't amount to a factual finding.

There was no trial.

There was no summary judgment motion.

There was no evidence presented on any of these points.

These are--

Chief Justice Rehnquist: How did the case go up?

On a motion to dismiss?

Mr. Utrecht: --The case in State court went up on a motion to dismiss, which was granted by the trial court, reversed by the State court of appeal, and then affirmed by the California Supreme Court.

Justice Souter: So, in effect, then maybe... are you saying this, that there is no issue preclusion here because the... the ruling that there was no statement of a cause of action was, in fact, a disposition of the claim without there being any resolution of any fact issue upon which the claim might depend.

Is that what you're saying?

And therefore... and... and that is the reason why there is no issue preclusion?

Is that your argument?

Mr. Utrecht: That's not the argument that we made in this Court.

That is an argument that we made in the lower courts.

The argument that we're making in this Court is rather that under the England case... or rather, the rationale of the England case, there shouldn't be any issue preclusion whether or not the State courts made any factual findings.

I don't think that the question as framed by Your Honor is presented by the briefs.

I mean, obviously, that was a contention of ours.

We think that's a correct statement of how the case should have been resolved by the Ninth Circuit, but the Ninth Circuit instead chose not to look at that issue or not to decide the case on that issue, but instead to decide under its prior precedents of Dodd and Palomar, that issue preclusion applied and then applied its own formulation of the equivalent--

Justice Ginsburg: But... but isn't there an essential step to find out that there were issues?

Because I think the way you're phrasing the question, it says, if there were issues decided, they weren't precluded.

But if there are no issues, that's... that's not what's involved in this case.

The simplest ground on which you could knock out issue preclusion is that no issues were decided.

Mr. Utrecht: --That would be a simple route to knocking out the case.

The Ninth Circuit rejected that argument.

That question did not seem cert-worthy and--

Justice Ginsburg: What... what were the issues that the Ninth Circuit thought were decided?

Mr. Utrecht: --I can't quite tell.

I think what the Ninth Circuit said was that because State law and Federal law on this question was similar, at least in the Ninth Circuit's understanding, that the State court determination was an equivalent determination.

Once they made that finding, that there was an equivalent determination under State law, the Ninth Circuit decided that the claim must be precluded by issue preclusion.

Justice Ginsburg: Well, issue preclusion does extend to questions of law, as well as fact.

Mr. Utrecht: It does extend to questions of law.

The problem, of course, is that the State court question of law that was decided was whether our... we were entitled to compensation under State compensation law.

The State court did not decide whether we were entitled to just compensation under the Fifth Amendment.

Justice Scalia: I thought they said that their... their compensation law was congruent with ours?

Mr. Utrecht: The California Supreme Court did say that its compensation law--

Justice Scalia: What do you... what do you think that means?

Mr. Utrecht: --I think that means that the California Supreme Court would like to believe that its law is congruent with this Court's decisions.

I think that, in fact, the California Supreme Court does not follow this Court's precedents in this area of law, and I think we actually argued the first time that we were in front of the Ninth Circuit, that it was futile to go to State court precisely for that reason.

That argument was also rejected by the Ninth Circuit.

I think that it cannot be that the State courts are going to be the... our final arbiter of whether their law is in fact congruent with Federal law or not.

It left either to this Court--

Chief Justice Rehnquist: What do you understand the word congruent to mean?

Mr. Utrecht: --I think congruent means that it's equivalent.

I think... I think the Ninth Circuit's view of an equivalent determination is that it's close.

It's close enough for government work, perhaps.

[Laughter]

Justice Breyer: What... what is the claim you want to make?

That is, my reading of the California State court opinion says you came into their court and you said, look, this ordinance in San Francisco violates the Fifth Amendment, I guess, because it doesn't make any sense.

The... there's no good basis, no sound basis for requiring us to pay a fee in order to convert rooms.

Anyway, the room isn't a house.

Anyway, it makes no sense as applied to us.

Anyway, they admit they just want to raise revenue.

Anyway, we're going to give the tenant a place to live for the rest of his life.

All right.

Those were the claims.

And in each case, the California Supreme Court said you're wrong.

You're wrong because it does help preserve rooms, because it does have a reasonable purpose in a city that's crowded, because the tenant who's there for life might move out, and we want to keep the room even if he moves out because he dies.

And anyway, it's not an issue of whether your case is special.

This makes sense as a general rule.

All right?

They decided it.

You raised it.

They decided it.

Now, what else is it you want to raise in Federal court?

Mr. Utrecht: I think that what's important is the very beginning of your question.

You said that we said in State court that it violated the Fifth Amendment.

Justice Breyer: I don't know if you said it.

I just said that that is what I read in the California Supreme Court opinion that Justice Werdegar wrote.

And so what I'm asking you is whether they should have or whether they shouldn't have, they did seem to decide those five issues.

And so my question to you is, what else do you want to raise?

Mr. Utrecht: The California Supreme Court decided whether those legal propositions were relevant under the State constitution and the State compensation--

Justice Breyer: I thought it decided a different thing.

I thought that it decided that in part that was the reason for their decision.

But the reason they reached their decision is they thought on each of those five matters that the City of San Francisco had a reasonable legislative purpose for its ordinance.

Mr. Utrecht: --And they made that decision under State law.

They... they--

Justice Breyer: Just as, suppose, for example, they had decided that the hotel clerk or the temporary manager did speak English, and in fact, he was a scholar of English.

And suppose that that had been the key matter for its decision of State law.

I take it, if you came into Federal court, even if the issue were quite different, you would be bound by that factual determination.

That's why I'm asking you.

It seems to me here they have decided matters of whether there was a reasonable purpose or not for this particular ordinance and as applied to you.

Now, what else do you want to raise in Federal court that was not encompassed by what I just described?

Mr. Utrecht: --In the hypothetical that Your Honor gave of a factual determination that the clerk spoke English well, that fact under the England case and under England's rationale would be subject to relitigation in Federal court in the Pullman context.

And we believe that there's no significant difference between our context and the Pullman context.

I do recognize that that is contrary to the normal rules of res judicata.

The normal rules of res judicata are designed to prevent exactly what this Court decided should be... should happen--

Justice Breyer: No, but am I right?

I'm just trying to narrow the issue in my mind.

Am I right you want to raise one, two, three, four, or five of those issues that I just described and nothing more?

Mr. Utrecht: --The factual claims--

Justice Breyer: Am I right about that?

Mr. Utrecht: --Yes, Your Honor.

The factual claims that we're making in Federal court are the same factual claims that we made in the State court--

Justice Kennedy: Well, but is there precedent that what is reasonable for the State constitution is always reasonable for the Federal Constitution?

Mr. Utrecht: --That--

Justice Kennedy: I mean, this is somewhat different than simply a specific factual finding.

Mr. Utrecht: --Well, in this particular case, they found that the facts that we alleged did not give rise to a right to compensation under State law.

And this Court in Williamson said once you've been denied compensation in State court, once it's certain that the State courts will not provide you relief under State law, you have a ripe Federal takings claim.

At that point, the Federal courts must be able to look at the factual questions underpinning the Federal takings analysis, so that the questions of whether in fact this law substantially advances a legitimate government interest or it interferes unduly with the reasonable investment-backed expectations under Penn Central, which requires a detailed ad hoc factual analysis, that that must be done by the Federal courts and cannot be precluded by a State court determination that is not considering the Federal questions at the time or... and it cannot even under this Court's decision in Williamson County... cannot consider the Federal question that's at issue.

The... the city... the city contends that... that a decision in our favor would result in--

Justice Stevens: May I interrupt?

Because I'm just not following one part of your argument.

Are you saying that the Pennsylvania analysis, the ad hoc analysis, was not made in the State court?

Mr. Utrecht: --No, I'm not saying that it was not made.

I'm saying that a State court disposed of that claim without doing a factual trial, but simply based on the allegations in the complaint.

Justice Stevens: Why... now, why should that not be binding on you if your allegations were, in fact, insufficient under Penn Central?

Mr. Utrecht: The court did not find that they were insufficient under Penn Central.

The court found that under State compensation law, which it believed was congruent with this Court's decision in Penn Central--

Justice Stevens: Well, I can understand how you should be free to argue that in fact the two rules are not congruent, that there's broader recovery under the Federal system.

But if we decided that the two... if we agreed with them that they were congruent, then why should not issue preclusion apply?

Mr. Utrecht: --Issue preclusion should not apply because it prevents the Federal courts from deciding the Federal takings questions.

If--

Justice Stevens: Yes, but... but it's just a conclusion from issues that have... have been resolved on which normally we would defer to the State court.

Now, why... why shouldn't we defer here again?

Mr. Utrecht: --You shouldn't defer here because in Williamson County, you required that parties go through two litigations.

Justice Stevens: Right.

Mr. Utrecht: And all the rules of res judicata are designed to prevent two litigations and to require a single litigation.

It makes no sense, in the context of a two-litigation system that this Court set up, to then impose issue preclusion.

Otherwise, Federal--

Justice O'Connor: But it isn't--

Justice Stevens: That doesn't make sense.

Justice O'Connor: --It isn't clear from Williamson County that this Court envisioned two... two separate determinations of fact issues: one in State court and one in Federal.

That isn't clear from the face of Williamson County.

That was a case where it was thought, at least, by members of the Court that the claims in that case just weren't ripe yet.

Mr. Utrecht: --Correct.

Justice O'Connor: And I don't... I didn't understand it to set up parallel systems of factual determinations.

Mr. Utrecht: It clearly set up parallel systems of litigation.

It did not discuss the question of what happens in the second litigation, but I think that this Court in England decided the proper solution to a situation where the Federal law requires--

Justice O'Connor: Well, England was an abstention case and had to deal with the effect of 28 U.S. Code 1738, the Full Faith and Credit Act.

But I didn't think that the England case just totally destroyed the notion of full faith and credit--

Mr. Utrecht: --The England case--

Justice O'Connor: --as... as applied section 1738.

Mr. Utrecht: --The England case held that when you're required to do two separate litigations, the first in State court and the second in Federal court as a result of Pullman abstention, that in the second case there would be no factual or legal issues that were decided in the State court that would be preclusive in deciding the Federal claims--

Justice Breyer: My--

Justice O'Connor: This is not a... a Pullman abstention case here.

Mr. Utrecht: --As it comes to this Court, it is not a Pullman abstention case.

Justice O'Connor: No.

Mr. Utrecht: It is a case where Williamson County has held that before you can bring your Federal takings claim, you must first go to State court and obtain a determination of whether you're entitled to compensation.

Chief Justice Rehnquist: I don't think that Williamson County ever contemplated that you would have to take your case all the way to the supreme court of the State.

Now, it may be that you had no choice once you got into the State court.

Mr. Utrecht: I think that's correct, Mr. Chief Justice.

The Williamson County case says that you have to go to State court and use the State procedures available for State compensation.

You cannot do that without going through the appellate procedure provided by the State courts--

Chief Justice Rehnquist: Do you think Williamson County by its terms spoke of going to State court and... rather than just a State administrative proceeding?

Mr. Utrecht: --As... as I read the Williamson County opinion, it says that you have to use the State procedures that are available to obtain compensation.

And the State procedures in California are an inverse condemnation claim under State law, i.e., a State compensation claim, which, as I read Williamson County... and I think all the other practitioners of takings law read Williamson County... means that you have to go to State court and ask for compensation before you can proceed to Federal court.

Now, it is possible that a State could have an administrative procedure instead of a judicial procedure in order to decide takings claim... rather, to decide State compensation claims.

If there were such an administrative procedure for obtaining State compensation, then that perhaps is what Williamson County envisioned that you would follow.

But I think Williamson County says whatever procedure is provided by the State, you have to exhaust that and obtain a denial from the State of your right to compensation before you can proceed to Federal court.

Justice Scalia: If you... if you disagreed with the resolution of an issue by the State court, which issue would be determinative of your Federal claim, if we hold against you here?

Do you think you would have a right to appeal that State court... State supreme court resolution of that issue to this Court?

Mr. Utrecht: No.

Justice Scalia: What... what strikes me as strange about this... this system is... is not leaving it to the State courts to make these decisions.

That's perfectly fine.

We do that all the time.

But these are decisions that are going to be conclusive on... on a Federal claim, and yet there's no way to... to appeal from the State supreme court here.

Mr. Utrecht: I think that's exactly the problem.

That was the problem we faced when the California Supreme Court did not decide our Federal claims.

I think because they only decided our State claims, we were not able to seek certiorari on the merits from the State supreme court decision, and then I think the procedure contemplated by this Court in Williamson County was that you could return to Federal court with your Federal claim once the State compensation claim--

Chief Justice Rehnquist: Didn't you seek to reserve the Federal question in the... in the State court litigation?

Mr. Utrecht: --We did reserve the Federal question in the State court litigation.

I'd like to reserve the balance of my time.

Argument of Seth P. Waxman

Chief Justice Rehnquist: Very well, Mr. Utrecht.

Mr. Waxman.

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

The respondents had a full and fair opportunity to litigate every issue relevant to their Federal claims.

When they came to Federal court, they agreed that, with one exception, all of the relevant issues, both the ultimate issue of a reasonable relationship and all of the predicate issues that we recited, as Justice Ginsburg noted, at pages 10 and 11 of our brief, had already been litigated.

They said that they... there was one difference, which is that they claimed that under the Fifth Amendment, the level of scrutiny under a substantially advances claim, which is what they were litigating, was the Nollan/Dolan test of rough proportionality, not the more deferential standard of review that the California Supreme Court applied in its decision.

And as to that issue, they received a full litigation and adjudication on the merits in the courts below.

They petitioned this Court on that substantive question.

Chief Justice Rehnquist: You say the courts below.

Are you talking about the California State courts or the Ninth Circuit?

Mr. Waxman: Mr. Chief Justice, here I was referring to the district court and the Ninth Circuit following the California Supreme Court's decision.

They came to the courts and said there's one thing that's different.

There's one element that's different, and that is Nollan and Dolan.

Heightened scrutiny should apply to a financial exaction of this sort.

The California Supreme Court disagreed under California law.

We want to litigate that issue here, and they did.

The district court ruled against them on the merits.

The Ninth Circuit ruled against them on the merits.

They petitioned this Court in question 2.

This Court denied review.

In all other respects, their claims... their case under their Federal claims, which were not claim-precluded, were, as the district court found, quote, based on the exact same facts and circumstances argued before the State courts.

Now, they... their case here boils down... and it's quite clear from their reply brief, and Mr. Utrecht has reaffirmed it... to an argument that this Court's 1963 decision in England ought to be extended to the Williamson County context.

Now, I believe that England is distinguishable... highly distinguishable from the facts or the circumstances of a Williamson County remand for any number of reasons that I can explain.

But ultimately my point is this.

England is fatal to them.

If England were extended to this circumstance, they would lose, and that is because in England, the Court was entirely clear that as to the State law issue that the Supreme Court said should be presented to the Louisiana courts first for determination, there was no doubt that issue preclusion was going to apply to that.

The question was whether or not principles of preclusion would bar them from coming back to Federal court otherwise.

In other words, in England, the question... there was a challenge by chiropractors to a State law that said chiropractors have to go to medical school or something like that.

A Federal complaint was raised under 1983, saying that violates our Fourteenth Amendment rights.

That's wrong.

The Supreme Court said, well, wait a minute.

We're not sure that the Louisiana law covers chiropractors, and if it doesn't, we can avoid the Federal constitutional question.

So we're going to, in effect, certify to the Louisiana courts the question, the State law question, whether chiropractors are covered.

Now--

Chief Justice Rehnquist: Well, I mean, they didn't really certify it.

Mr. Waxman: --No.

They used... they... they abstained under the Pullman doctrine which, as this Court has explained, is a procedure that is akin to the certification process where States use it.

But in any event, no one... when... no one would have thought for a moment that having gone to litigate that State law issue in State court, if they had lost, England... the chiropractors could come back and say, okay, we think that we shouldn't have to comply with this law for two reasons: one, because we're not covered by the law even though the Louisiana courts thought so; and two, if we were, the Fourteenth Amendment would prohibit it.

They... the question on which you granted review is limited to those issues, and there is a fair question on the record in this case whether any of those issues are really before the Court now.

But as to those issues, for which Williamson County requires that a party resort first to State procedures, whether issue preclusion applies, and the... the extension of England by analogy to this would dictate the answer yes.

It may not apply if... if you extend England to all other types of issues that a party may litigate along with their Williamson County ripening exercise.

But the very determination that Federal law requires them to obtain under State law, prior to stating a ripe Federal constitutional claim, of course, gets issue preclusion.

Now, the question was asked--

Justice O'Connor: Do you think it's open to us to reconsider aspects of Williamson County in this case?

Mr. Waxman: --I don't think... well, I would have to take a very deep breath before I told the Court that it was not open to the Court to reconsider just about anything that touched on it.

I think it would be--

Justice O'Connor: It... frankly, it isn't clear to me that the Court ever contemplated just cutting off any determination in Federal court of takings claims in the way that it seems to work out by application of Williamson County.

Mr. Waxman: --Let me explain why I think it would be imprudent for the Court to resolve it and then explain why I think it's fair to say that the Court didn't consider one way or the other principles of preclusion in application of the Full Faith and Credit Act in Williamson County.

Justice O'Connor: Well, it's clear we didn't.

So now we're faced with the consequences of that, and it looks to me like the lower courts have run pretty far with Williamson County.

So what's a takings claimant supposed to do?

Mr. Waxman: Well, I think it would be imprudent to decide... I... I think that the Court will have to elaborate on the Williamson County requirement and how the procedures work.

I hope, after all the preparation for this argument, I'll be able to participate in some way in that debate because it's a really interesting question.

But it's not presented here because even if you were to reconsider Williamson County, even if you were to overrule it, it wouldn't affect the outcome here.

We know two things are true in this case, whatever Williamson County means doesn't mean or shouldn't mean.

Every issue relevant to the Federal constitutional claims was fully and fairly litigated in this case, and we also know that under--

Chief Justice Rehnquist: Well, now, wait a minute.

You don't mean that the Fifth Amendment question was fully and fairly litigated in the Supreme Court of California.

Mr. Waxman: --No.

The Supreme Court of California said that it was not deciding the Federal... the Fifth Amendment Federal constitutional question.

But they... they concede that all of the issues that make up the... the Federal constitutional question were fully and fairly litigated in the California courts except the question of whether the Fifth Amendment, as opposed to the California takings provision, is entitled to--

Chief Justice Rehnquist: Well, what--

Mr. Waxman: --to Nollan and Dolan.

And that was litigated here.

Chief Justice Rehnquist: --What preclusion law do you apply?

The Ninth Circuit apparently applied Oregon preclusion law.

Mr. Waxman: The... it's... the Full Faith and Credit Act requires that you... requires that you apply the preclusion law of the State that rendered the judgment to which--

Chief Justice Rehnquist: Which would be California.

Mr. Waxman: --Which would be California.

And I do think, with respect, Mr. Chief Justice, that the California Supreme Court... I'm sorry... the Ninth Circuit made clear that it was applying California preclusion law.

It cited the California Supreme... a... California authorities, and it correctly recited the elements of the California preclusion law in this regard.

It did make reference to its prior determination in Dodd v. Hood River, which was an Oregon case, in which the Ninth Circuit decided that an England reservation in the Williamson County context was effective with respect to claim preclusion but not issue preclusion.

And in that respect... and this I think goes back to Justice O'Connor's question about, you know, what... what could we have been thinking or not thinking in Williamson County... the... the Dodd case provides a pretty good example.

At the time this Court decided Williamson County, many, probably most States did not have a substantive takings jurisprudence that was akin to the Federal standard.

For example, California itself, New York didn't provide compensation for regulatory takings at all.

In those States, there would be no question of either claim or issue preclusion because in the course of deciding whether or not compensation was due under State law, there would be few, if any, common issues decided.

Now, as the Ninth Circuit explained in Dodd v. Hood River, Oregon recognizes... in the context of regulatory takings, recognizes an Agins type claim, that is where you are completely denied all economic value to your... I'm sorry... a Lucas claim, but they don't recognize the Penn Central standard.

They don't provide compensation unless you are denied all economic value.

Justice Stevens: Mr. Waxman, can I ask you this question?

Supposing the California court had decided the Federal... the Federal Fifth Amendment question or in the... the England supposing the Louisiana State court had decided the Fourteenth Amendment question, would there be issue preclusion on that issue in... in that... in that sequence?

Mr. Waxman: Issue preclusion or claim preclusion?

Justice Stevens: Either one.

Mr. Waxman: I think the answer is there... if England... if the England decision were extended to the Williamson County context, there would not be claim preclusion.

We think it shouldn't be extended, and therefore if they litigated both their State claim and their Federal claim in State court, we think they would be barred both by issue and claim preclusion.

Justice Scalia: Of course, they could have come up here, though.

I mean, maybe that was their mistake in not making their Federal claim in the California court.

The California court would have denied their State claim, presumably denied their Federal claim, and... and both could have come up here I suppose.

Or... or would the California's... would California's determination of the State questions preclude a separate determination of the Federal questions?

Mr. Waxman: I... I don't... I don't think so, Justice Scalia.

I think it was certainly open to them and the... the Ninth Circuit, in its first opinion, made clear that it was open to them, when they went... when they did their Williamson County ripening, to also litigate the Federal constitutional question.

And in that instance, if they lost in the California courts, of course, they could have petitioned.

They couldn't... if they lost on the State constitution, the court would have had to reach the Federal constitutional question as well.

But I think, Justice Scalia, more to your point about what actually happened here, I think that a very good argument... I... I don't think that there's really much doubt that if they had petitioned for certiorari from the California Supreme Court decision, you could easily have granted review under Zacchini and Michigan v. Long and Ruiz because the California Supreme Court said, to be sure we are deciding only the State constitutional question.

We are not ruling on the Fifth Amendment.

But they made very clear that, whatever congruent means... they made very clear that they looked to this Court's statements and expositions about the meaning of the Fifth Amendment to construe the claims the same.

And as this Court said in Ohio v. Reiner, I think 2 years ago, when a State court's interpretation of State law has been influenced by an accompanying interpretation of Federal law, we may review.

And in fact, if you think about it, think of almost every takings case that you've decided since Williamson County.

With the exception of the Tahoe compact cases, they are all from State court decisions.

Lucas, Palazzolo, First English, Nolan and Dollan, Yee, Pennell, McDonald, San Diego, they are all--

Justice Kennedy: Monterey... Monterey Dunes was from the United States district court.

Mr. Waxman: --Yes, because that was a case... that's the other one that I was thinking of this morning.

That was a case that was filed in the district court and litigated in the district court.

And it raises a real anomaly about whether or not this case even really presents the question on which you granted review because their... the theory that they have pursued in State court and at this round in Federal court is that there is a takings violation under both the State and the Federal Constitution under the so-called substantially advances prong.

Their complaints allege a Penn Central violation, but their briefs in the lower court... in the lower Federal courts in this proceeding and in the State courts don't discuss Penn Central at all, as the California Supreme Court in footnote 14 of its opinion explained.

So if this is just a substantially advances claim, it raises the question, number one, whether in the context of legislation, there is a substantially advances prong in the Fifth Amendment, a question that you're... you're asked... that you are presumably addressing in Lingle v. Chevron.

If there is, it raises the separate question posed by this Court's decision in Yee whether that is a claim for compensation.

In other words, what this Court said in Yee is when you challenge, under the Fifth Amendment, legislation on the grounds that it doesn't substantially advance a legitimate government objective, this Court said, that's not a claim for compensation.

That is a claim that the ordinance be struck down and not applied.

And that's what they're litigating here.

Now, they have... and so the question is if it's not a claim for compensation, is it subject to Williamson County ripening?

Why should you have to go to State court?

So there are a lot of this... the Conference of State Chief Justices have filed an amicus brief in support actually of us in this case, saying we don't see that the facts of this case present the question on which you granted review.

I think it's fairer to say it's not clear because the petitioners did challenge this ordinance not only on its face, but as applied.

And although the district court below found that it wasn't a real as-applied challenge because they couldn't in any meaningful way distinguish themselves from the other 500 residential hotels in San Francisco, all of whom are concededly subject to the hotel conversion ordinance.

At least I suppose in theory, there is some claim for compensation for the temporary period in which they were subject to the hotel conversion ordinance.

So I... I don't know.

I... you granted cert in the case.

We'd like to get the... the question answered, but I think the reason this long disquisition, Justice Kennedy, about Del Monte Dunes is in Del Monte Dunes, it was a substantially advance claim, and I think it was thought that there was no need to engage in Williamson County ripening.

Justice Souter: Let's take a... may I... may I, in effect, approach it with a simpler example, which... which is not this case, but I... I just want to know how... how the... the systems work together.

Let's assume that, in fact, a... a Lucas kind of claim had been involved, and the... the State courts said we understand Lucas.

We're applying Lucas.

And in point of fact, following the Lucas standard, there are plenty of uses that are still left on this land, so that there's no taking under... under Lucas.

And let's assume that they... they go through the State system.

They lose.

They don't petition here for cert. Instead, they go into the... the district court with a Fifth Amendment claim.

Is it open to them in the district court to make this argument?

Don't apply issue preclusion to our Lucas claim.

The Lucas... to... to the... to the determinations, the reasonable use determination in... in Lucas.

Don't do it because although the State court purported to be applying Lucas, it really was not.

It was not following the Lucas standard.

It was applying something much more favorable to the State.

And therefore, any determination on that issue should not get preclusion here.

We ought to be able to litigate de novo even though, on the face of it, we seemed to have litigated the Lucas issue and the State court decided it.

Could they make that argument?

And... and if it were sound, would... would preclusion principles give way?

Mr. Waxman: At most... I mean, they could certainly make the argument.

At most, preclusion would give way on the ultimate Lucas question, not all of the subsidiary issues that were resolved en route to that determination, issues akin to the ones that we recited at pages 10 and 11 of our brief.

That is, if the district... if the State court finds, you know, that the property is in such and such a place and on such and such a year, this thing happened or that the ordinance, as it applied, had this effect or that effect, there certainly would be no possible argument that issue preclusion wouldn't apply because they... those were necessary determinations and they had a full and fair opportunity to determine it.

As to the ultimate issue, this would be... the Full Faith and Credit Act directs the Federal court to ask what would the law of California say about this.

If they tried to then bring their Federal constitutional Lucas theory in State court, would issue preclusion or claim preclusion principles bar a second bite at the litigation apple?

The answer ordinarily... and you've asked me to assume that the tests that they have... they purport to be stating the Federal standard.

Ordinarily the answer would be no if the argument simply is they made a mistake.

I mean, that's... that's what happens in issue preclusion.

That's what in Allen v. McCurry and... and all of the cases in which this Court has applied full faith and credit, Kremer and... and... I'm forgetting the names of the other cases.

The argument was, yes, they thought they were adjudicating rights under the Fourth Amendment, but they were wrong, and issue preclusion shouldn't apply.

I'm... I'm qualifying my answer a little bit because I do think that if you came to Federal court and said, look, this was a sham or they... they... their analysis was so skewed that it can't fairly be said that they were really applying the Federal standard, something like, you know, the... the AEDPA standard now that... that you get review if it's an... not just an incorrect determination, but a wholly unreasonable application of law or fact.

Then I think you would look and see, well, would a State court say, well, that's right.

I mean, if your allegation is that they were so far off the reservation that it really wasn't a determination of that issue, I think you get a new review.

I mean, I do think--

Justice Kennedy: Well, was there an allegation--

Justice Souter: I guess in the--

Justice Kennedy: --at any point here... was there an allegation at any point here that the State procedures were inadequate to protect property rights?

Mr. Waxman: --No, to the contrary.

Not only... there's no Pullman issue presented in this case, but the procedural posture of this case demonstrates, if anything, a full-throated appeal to the State courts.

Justice Kennedy: Well--

Mr. Waxman: They--

Justice Kennedy: Well, it's not so much that weren't appellate procedures, but that the procedures and the variance procedures and... and a multiplicity of agencies here were just so complex that it amounted to an... inadequate remedies to protect against a taking.

Mr. Waxman: --There have been absolutely no such allegations made in this case.

And I think a... I think that the San Remo would have to concede that although there was a plethora of litigation in the State courts and in the lower Federal courts about the zoning determinations and whether a conditional use permit was or wasn't required, the... the hotel conversion ordinance, the ordinance that requires the payment of this in lieu fee, applies across the board to all residential hotels based... wherever they're located in the city, whether they're in a historic district or not and whether they have to be rezoned or not.

It was a simple, straightforward question about whether an ordinance that says if you run a residential hotel or you have residential rooms that you have certified as of the date the ordinance was enacted and you want to change them permanently to full-time tourist use, you have to bring an equivalent number of units on line or you have to pay an in lieu fee to the city's building fund.

And they made a challenge, like many people have, that substantively that violates the Federal and State takings clause.

That is a taking of private property without just compensation.

But it applies to all the residential hotels in the city wherever they're located, regardless of whether they need variances or... or anything like that.

Now, in this case they went first to the Superior Court in San Francisco and they filed an administrative mandamus claim challenging the zoning determination that was made in their case because they're in a historic district.

And at the same time, they went to the Federal court and they raised all of their takings claims with respect to the ordinance and the zoning issues.

They got a preliminary injunction in Federal court which was then... but then lost a summary... they had summary judgment issued against them on all the substantive... all the claims in their case.

When they came to the Ninth Circuit, they asked the Ninth Circuit to abstain under Pullman because they had this municipal law question pending in the superior court.

It had been pending for 5 years, and that might somehow obviate or change the constitutional question.

And they then went to... they... the... the Ninth Circuit noted that it was rather unusual for the plaintiff to be invoking Pullman abstention and certainly to be doing so for the first time on appeal after losing in the district court, but nonetheless, the Ninth Circuit said fine.

And they then went to State court, and they pressed not only their pending municipal law question, but they also made their takings claims under Penn Central and under the substantially advance prong both as applied and both facial under the State constitution.

And they received a full and fair hearing on those claims in the superior court, in the court of appeal where they won, and in the California Supreme Court where they ultimately lost 4 to 3.

There... I don't believe there is any argument made or available in this case that there was a denial of a full and fair opportunity to litigate those issues as to which preclusion is required.

Justice Ginsburg: But they said there was no litigation because it was just decided.

They didn't plead enough to state a claim for relief.

Mr. Waxman: Well, the... the California Supreme Court decision makes clear at page 113a of the petition appendix that it decided the takings claims, the substantially advance claims, on a demurrer and that they decided it, therefore, based on the factual allegations of the complaint, matters subject to judicial notice, of which there were many, and facts and circumstances that were not disputed.

I mean, it... there's no such thing, I don't believe, as the resolution of a legal claim in which no issues are decided.

There were plenty of issues decided in this case.

Justice Souter: --Decided but not litigated.

I mean, the... the problem is that... that claim preclusion normally assumes that the issue is, in fact, litigated.

Mr. Waxman: Well--

Justice Souter: And his... he's arguing it was not.

Mr. Waxman: --The... the issue of whether or not the hotel... whether or not the... San Francisco's hotel conversion ordinance was reasonably related to the city's objective was litigated with a vengeance.

It was litigated to the point of dozens, if not hundreds of pages in the State court.

The State court... the State courts made a number of subsidiary findings leading to their conclusion that, both on its face and as applied, the hotel conversion ordinance was reasonably related to the city's legitimate objective of retaining low-cost rental housing for the elderly, the disabled, and the poor.

Justice Souter: Tell me how that statement that you just made, fully litigated, squares with the fact that... I thought you said a moment ago it was decided on a demurrer.

Mr. Waxman: It's--

Justice Souter: I'm... I'm confused here.

Mr. Waxman: --It's the application of law to fact.

What the Court decided... this Court said, I think in Yee--

Justice Souter: But you're... you're saying that the facts were... were independently developed before the demurrer was filed and granted?

Mr. Waxman: --Yes.

The... the courts were asked to take judicial notice of a number of things.

They--

Justice Souter: So it was not decided simply on pleadings.

Mr. Waxman: --No.

Justice Souter: Okay.

Mr. Waxman: I mean, what the court--

Chief Justice Rehnquist: A demurrer--

Mr. Waxman: --I'm sorry.

Chief Justice Rehnquist: --A demurrer is decided on the pleadings, isn't it?

Mr. Waxman: Well, it... what the court said... and I think this is a... what the California Supreme Court said at page... I think it was page 113a and they also reiterate this point at page 139a, footnote 12... is this is a demurrer.

So we take... we accept as true the allegations of the complaint.

Plus, we take judicial notice of all the things that the parties asked us to take notice of, which are matters of public record, of which there were many, many, many in this case, including, for example, the fact that every year from 1990... well, every year from the... from 1983 on, when they took over operation of this property, they filed with the city an annual report that listed that, A, the determination that all 62 of their rooms were for residential use and then explained... and then stated out the exact number of rooms by quarter that were, in fact, used by... for long-term residences and those that, during the summer months, were used for tourist use.

The court took judicial notice of that, as it was appropriate, en route to its decision... this is a subsidiary issue I suppose... that the conversion of this hotel to full-time tourist use would, in fact, cause a loss in the stock of available affordable housing.

That was an issue that was determined in this case.

And the ultimate question decided by the court was a mixed question.

It was the application of law to fact, as this Court explained, I think in Yee, is characteristic of substantially advances claims.

Thank you very much.

Rebuttal of Paul F. Utrecht

Chief Justice Rehnquist: Thank you, Mr. Waxman.

Mr. Utrecht, you have 4 minutes remaining.

Mr. Utrecht: Thank you, Your Honor.

There's no question that Williamson County creates problems.

The Ninth Circuit in this case did not just issue a Pullman abstention order the first time we were there.

They dismissed our as-applied claims as unripe.

It dismissed our facial claim based on economic viability as unripe.

So we're squarely within the context contemplated by Williamson County; i.e., we proceeded in State court with our State compensation claim in order to ripen the Federal claim.

The city acknowledges, as a result of that, that there's no claim preclusion.

And this Court's decision in Migra says that if there's a reason not to apply claim preclusion, there should also be a reason not to apply issue preclusion, that there should be an exception for both or an exception for neither.

In this case, in addition to acknowledging an exception for claim preclusion, Mr. Waxman also acknowledged that if the State court was, as I... my notes show, so far off the reservation, the Federal court could revisit the question.

The problem, of course, with so far off the reservation is that might be a good test for this Court to adopt, but if the city's position is correct, this Court does not have that opportunity.

This Court is stuck with whatever law the State imposes under issue preclusion.

So this Court is not free, if the city is correct, to create some special exception.

I think the only basis for finding a separate exception in this case is the one that this Court set out in England.

I see no reason that it shouldn't be extended to this circumstance.

Unless there are any questions, I have nothing further.

Chief Justice Rehnquist: Thank you, Mr. Utrecht.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Bates v. Dow Agrosciences LLC - Oral Argument

Fri, 09 Jan 2009 14:49:01 +0000

Case:

Bates v. Dow Agrosciences LLC

Media File:

03-388_20050110-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of David C. Frederick

Justice Stevens: We'll hear argument in Bates against Dow AgroSciences.

Mr. Frederick.

Mr. Frederick: Thank you, Justice Stevens, and may it please the Court:

Pesticides are economic poisons designed to kill living things.

Sometimes they do not work as designed.

For more than a century until the 1990's, courts routinely permitted farmers to bring claims against pesticide manufacturers for crop damage caused by pesticides.

In enacting amendments to FIFRA in 1972, Congress did not intend to displace those preexisting State law remedies.

The farmers here allege claims for defective design, defective manufacturing, fraud, breach of warranty, and failure to warn for a brand new product that severely damaged their peanut crops.

I'd like to start with our narrowest theories for reversal and demonstrate for three reasons why those claims survive preemption.

The defective design and manufacturing claims challenge the product's composition, not its label.

The fraud, warranty, and negligence claims involve general legal duties, not pesticide-specific requirements, and the failure to warn and fraud claims are not different from or in addition to FIFRA requirements.

Now, with respect to the first point, Dow concedes at pages 43 and 49 of its brief that defective design and manufacturing claims generally are not preempted.

That concession warrants a remand here, as this case was decided before discovery, enable the farmers to develop their claims.

Justice Ginsburg: But couldn't you make every failure to warn claim a defective design claim?

That is, they didn't warn about the effects, but those effects would not have been present if the product had been designed to assure that there wouldn't be any adverse effect on the peanut crop.

Mr. Frederick: Justice Ginsburg, the way the Restatement of Torts and Product Liability in sections 1 and 2 describe, there are basically three theories that products liability claims can proceed on: a defective design, defective manufacturing, and defective warnings.

The restatement explains that they are distinct legal theories that go to different problems that the manufacturer has caused with respect to the product.

A defective design claim asserts that the composition was inadequate and that a properly designed product could have been put on the market that would not cause the harm.

Justice O'Connor: Mr. Frederick, on the defective design claim, presumably that's based on a factual theory that Dow could have reasonably designed Strongarm to be safe for growing peanuts in high-acid soil.

Mr. Frederick: Correct.

Justice O'Connor: But doesn't that mean your client should have to put forward some evidence establishing a material issue of disputed fact on that point?

Mr. Frederick: Certainly, but here--

Justice O'Connor: And it didn't do that.

Mr. Frederick: --Well here, Your Honor, the motion for summary judgment that Dow filed was not based on the merits of the claims.

It was based on them being preempted, displaced as a matter of Federal law.

They also asserted a limitation of... of remedy provision.

But we never had discovery in this case.

The district court, after finding jurisdiction, considered Dow's motion for summary judgment on preemption and locked us out of the courthouse door before we ever had a chance to prove that a safer design for the product could have been made.

And that's where we think the court's decision below was overbroad and should be reversed.

Justice Kennedy: The... the problem I have with... with the Government's case and with the respondent's case is that... it's really the obverse of what Justice Ginsburg said.

Their problem is that they would recast everything as a warning.

Mr. Frederick: That's absolutely correct.

Justice Kennedy: Does the restatement have some specific provisions that say no matter how good the warning is, you're still entitled to proceed when there's a... I don't know... dangerous product or defective product or something?

Mr. Frederick: Yes.

Restatement sections 1 and 2 address this, and what the restatement says is that if you can show that the product could have been reformulated to be properly designed, then the existence of a warning that might go to certain of its uses would not negate a defective design claim.

The Texas Supreme Court--

Justice Kennedy: Even... even if the warning specifically covered that design defect?

Mr. Frederick: --That... that's... that's correct.

And what the restatement--

Justice Kennedy: So even if this product said, warning: may not be effective in high pH soils, that's not good enough?

Mr. Frederick: --Under the restatement rule, which Texas has adopted in the Uniroyal case, which we've cited in our brief I think at page 47, that is true because the restatement explains that there are certain warnings that could be ignored or not observed or not understood properly and that if it can be proved that a properly designed product would be on the market, there are public policy reasons why that's what we want to encourage manufacturers to do.

I mean, under--

Justice Scalia: At any cost?

I mean, what if it... you know, yes, I can... I can sell you stuff that will... that will work in high pH soil, but it's going to be three times as effective.

Do I have to sell it?

Mr. Frederick: --Well, the--

Justice Scalia: Can't I just sell it for those people who don't need it for... for high pH soil at a third the price with a warning that says, hey, by the way, don't use this in high pH soil?

It's crazy to say you can't do that.

Mr. Frederick: --Justice Scalia, to answer your question in several ways, that's a jury determination to... to ascertain the reasonableness of the alternate design that the manufacturer would be asked to... to do or to market a separate product that was separately designed for high-acid soils.

Justice Kennedy: But it's never a question of the reasonableness or the adequacy of the warning?

Mr. Frederick: I don't think it's a question of warnings in this sense, Justice Kennedy.

If you take their theory, which is that a defective design claim always collapses to a failure to warn, they can put out a defectively designed product that admittedly causes harm, and all they have to do is change the label and say, if used in these particular circumstances, it may cause harm, because that would necessitate a change to the label--

Justice Breyer: Oh, not necessarily.

It wouldn't be always either way.

I would think that if in fact you have a product and the product causes harm in a subset of cases, which you could warn against, then a jury could decide whether the unreasonableness consists of not having designed the super-safe product or the unreasonableness consists of not having had a different label.

Mr. Frederick: --And that... there are... that's why the restatement makes clear that there are distinctive theories for defect--

Justice Breyer: And you're arguing that in this case you have the first.

Mr. Frederick: --That's correct.

Justice Breyer: It seems implausible on... you know,--

Mr. Frederick: Well, we have both actually.

Justice Breyer: --because all they'd have to do is don't use it in pH soil.

Mr. Frederick: No.

We have defective warning too, and... and if I can address that as well.

The statute here prohibits in section 136q(1) any false or misleading statement in the label as to any particular.

Our position is that the 2000 label said, suitable for peanut-growing areas in all places where peanuts are grown.

That was false.

Under the statute, that is a misbranding, and that is actionable as... both as a failure to warn, as a fraud claim, and as a breach of warranty.

Now, the Medtronic majority made absolutely clear that that kind of claim is not preempted, and in fact all nine Justices agreed that when the State law claim is parallel to the Federal requirements, the existence of a State law remedy is not an additional requirement.

Justice Kennedy: So on... on that aspect of the case, you put in your pleadings that this was a violation of FIFRA.

Mr. Frederick: We don't necessarily need to say a violation of FIFRA is... so long as the requirement is the same, although we can certainly--

Justice Kennedy: Well, that's a... that's a bit different.

You were... you were asserting a moment ago I thought... please correct me if I'm wrong... that this was a violation of FIFRA because it was misbranded.

Mr. Frederick: --I--

Justice Kennedy: So it seems to me that you then have a suit under FIFRA, but I don't think that was the theory of your complaint.

Mr. Frederick: --No.

The theory of our complaint was a failure to warn both for negligence and as a defective product.

Justice Souter: But the reason for that, I take it, is that FIFRA does not... I mean, I think you agree FIFRA does not provide an independent private right of action.

Mr. Frederick: That's correct.

Justice Souter: So you've got to sue under State law, but you would... you would kind of have a slam dunk for your position, I suppose, if your pleading said, the failure to warn only to the extent that in fact the... the warning given in compliance with FIFRA was an inadequate warning.

That would... that would keep you within the... the... in effect, the... the Federal limit, and it would also make clear that you had a State law cause of action, not a Federal cause of action.

Mr. Frederick: That's correct, and because--

Justice Souter: And... and that's in effect what you're arguing.

Mr. Frederick: --Yes.

And... and because of the preliminary of this suit, Justice Kennedy, we certainly should have the opportunity to amend our complaint.

There are counterclaims that this is done at the motion for declaratory judgment.

Justice Breyer: In your view... in your... your opinion, if you were to follow that, would EPA... suppose EPA does the following.

EPA looks into this and they publish a reg that says in this case or in this subset of cases, or some kind of description that fits yours, we think that the labeling should be thus and so and we think that State tort suits will interfere with our ability to promote the uniform labeling and therefore they're preempted.

Can the EPA do that on your theory?

Mr. Frederick: Yes, it can and the... the interesting aspect of this, Justice Breyer, is that of course EPA hasn't done that.

EPA has made very clear it never tested for efficacy.

It never even gave notice and comment so that--

Justice O'Connor: Well, EPA has... has waived efficacy data requirements.

Right?

Mr. Frederick: --Yes.

Justice O'Connor: Now, is it your position that a State can pass a law requiring labels to have efficacy claims?

Mr. Frederick: They have to do it pursuant to their powers under 136v(a) which is the regulation of sale or use or under 136v(c) which says that when a State designates a particular locality requirement and a special need, it can impose a label... it can impose requirements that the manufacturer has to comply with.

Now, the EPA importantly... and this is in their regulations at 163.152... has specifically said that States have labeling authority.

The States can impose labeling requirements.

Now, there's no reason why--

Justice O'Connor: But you're not relying on that in this cause of action.

Mr. Frederick: --No, Justice... no, Justice O'Connor, except to the extent that if the State can affirmatively do it through a positive regulation, their theory has to be wrong that the... that any incidental effect that induces a change to label is preempted.

That theory has to be wrong, and that's what the Fifth Circuit relied on.

Justice O'Connor: Well, does... does FIFRA require the manufacturer to say on the label what the item can be used for?

Mr. Frederick: Yes, but I want to address--

Justice O'Connor: So how... how does an express warranty claim escape preemption--

Mr. Frederick: --As the--

Justice O'Connor: --where... where Dow just says the federally mandated statement is included on my label and it's true?

Mr. Frederick: --A warranty claim, Justice O'Connor, as this Court made clear in the Cipollone case, is not a requirement under State law because it's a voluntary contractual arrangement between the parties.

The Court I think has made clear that what has to be ascertained here is does the State cause of action or the State law create a requirement.

That's not true in the warranty case because FIFRA doesn't speak to requirements in... as to warranties.

It speaks to requirements in other ways.

So what Dow did here with its warranty was completely voluntary, and the fact that it breached that warranty by putting on the market a product that was not suitable for the use in all areas where peanuts are grown is a breach of a warranty that it voluntarily undertook.

Breach of that is not a requirement imposed under State law.

And that has been, I think, verified by seven Justices of this Court in the... in the Cipollone case.

Now, if I could speak to the fraud claim, it is important to understand that in both Cipollone and in a footnote in Medtronic, the Court made clear that where there are general legal duties that are not observed by the manufacturer that don't go to the specific product itself, those claims are not preempted.

Here our assertion is that Dow put on the market a... a product that was mislabeled and that they went out and told people fraudulently was suitable for their uses.

We acted in reliance on that and we suffered damages.

Those are general legal duties, not pesticide-specific ones.

And the existence of the preemption clause of 136v(b) does not displace us from the opportunity to try to prove to a court that fraud was committed here.

Now, if I could briefly address two points.

One is that the inducement to change theory should be rejected.

That was the basis on which the Fifth Circuit decided this case and it is an overly broad theory for several reasons.

First, it's not supported by the text of 136v(b) which says requirements for labeling.

It doesn't say requirements that induce a change to the label.

And that's how many of the courts have gone off track since the Cipollone decision was announced by this Court.

They have read FIFRA as saying just because the word requirements is 136v(b), thereby any State law claim that imposes a requirement that might induce a manufacturer to change the label is thereby preempted.

We think that's overly broad because it confers way too much discretion on manufacturers to decide what to put on labels, and they can claim immunity for any overly broad claim of efficacy so long as when they are sued, they can say we're induced to change the label.

Because EPA does not evaluate the specific contents with respect to efficacy or the claims that are made on... on a label, if a manufacturer makes an overly ambitious statement as to efficacy, all the manufacturer has to do under the inducement to change theory is go to court and say we would have to change the label and thereby 136v(b) preempts it.

Now, I'd also like to stress that the other side's theory creates a huge regulatory gap.

As your question, Justice O'Connor, noted, the EPA does not evaluate efficacy on the front end.

And in fact, the history behind these provisions is that EPA understood from the very beginning that common law claims would serve an important incidental regulatory effect.

If we could review the history for a moment.

Prior to the 1972 changes to FIFRA, for decades farmers had brought claims against manufacturers for design defect, for failure to warn, for the kinds of common law claims that we have asserted in this case.

It was so well established by 1972 that there was a huge section in the American Law Reports that annotated all the cases and explained what the common law duties of pesticide manufacturers were.

Yet, notwithstanding that, when Congress enacted the 1972 act, despite thousands of pages of hearings, committee reports, legislative debates, there is not one mention of any effort to displace those preexisting common law claims.

And when EPA, in discharging its responsibilities under the 1972 act, got overwhelmed by the requirement that it re-register products that were already out on the market, pursuant to the 1972 act's standards, it very promptly went to Congress and said, you should waive efficacy requirements because we simply can't do this.

Congress responded, but importantly in the administrations on both sides, EPA has always understood except until just a couple of years ago when the Solicitor General changed the position of the Government, that these kinds of incidental common law suits would have an important regulatory effect.

If we could just take the case of DDT.

For 30 years, manufacturers were sued for DDT and awarded damages until it became clear that the groundswell over the course of decades that DDT needed to be banned, and it was only at the back end that the expert agency regulators determined that in fact the product needed to be banned, but that was only after a very long history in which common law suits had provided remedies to farmers and others who were harmed by that product.

Now, in 1982, the Reagan administration's EPA expanded the efficacy waiver and it included far greater products than had been done in the Carter administration in 1979.

And in the Federal Register notice announcing that it was intending to expand that efficacy waiver, the EPA in 1982 said the reason why we think this can be done is because suits can be brought against manufacturers who put on the market ineffective products.

We cited that on page 31 of our brief.

Justice Kennedy: But do you take the position that juries can do what a State regulation cannot do, or are they much... are they on a par?

Mr. Frederick: Well, our broadest theory, Justice Kennedy, is that the word requirements in 136v(b) doesn't include common law claims at all.

Justice Kennedy: Suppose we disagree with that.

Mr. Frederick: If you disagree with that, then they would have to be the same, and that's why our point about the existence of the parallel requirements is the same.

I want to address the point of the discordance between what State juries can decide and what State regulators can decide because Dow and the Government have featured that in their case.

The Government in the Medtronic case at page 27 of its amicus brief there said there was no problem to be had with juries rendering supposedly inconsistent decisions so long as they were following one Federal standard.

The Federal standard here is clear: falsity.

Tell the truth.

That's what manufacturers are obliged to do under the statute and under the regulations.

Justice Breyer: Yes, that's their strong point.

So what is the response to that?

Because you can easily get two juries in different parts of the country to decide absolutely opposite things as to what the label should say, and in those circumstances, they say, well, they're in an impossible situation and that's why Congress passed the statute, to be sure it would be EPA and not two juries in different places.

Mr. Frederick: First, the juries... unlike a... a declaratory judgment or an injunctive type remedy, Justice Breyer, a jury for a common law damages claim is not saying what affirmatively should be on the labels.

Justice Breyer: I'm speaking practically.

And I don't have to go into all the argument.

Mr. Frederick: Sure.

Justice Breyer: You know the argument.

It's a very familiar argument.

Mr. Frederick: Sure.

The answer is that... that Congress was prepared to accept a certain level of disuniformity when it enacted 136v because it made very clear in sandwiching the preemption provision of 136b... surround... by (a) and (c) that it was prepared to allow States to depart in significant respects from what was nationally uniform.

And the way it did so was to say States can regulate sale or use and they can also impose extra requirements for special locations.

Now, what Dow did here I think illustrates the way the system is supposed to work, which is that when a problem was identified with their product in the States of Texas, Oklahoma, and New Mexico, within 7 months it petitioned the EPA to append to its national uniform label a supplemental label.

And that supplemental label says it is for distribution in those three States only and it provided 10 important changes to the label that it otherwise had as a nationally uniform label.

That's how the system is supposed to work.

If the incidental regulatory effect of jury verdicts or common law claims induces or causes some kind of change to the label, that can be done without an adverse effect to national uniformity through the supplemental labeling process.

And what Dow did here was it has its label and then it attaches the supplemental label that addresses the particular conditions that exist in the State.

And the EPA has recognized that as a perfectly appropriate and valid way to address the geographic, environmental, and climatic conditions that exist in the different regions of the country that engage in agriculture.

There's nothing that is uncertain about that if you accept the premise of the Government's argument in Medtronic, which is that juries can be properly instructed, if it came to that, so that they could follow the appropriate Federal standard.

Now, I would like to turn... sorry.

Did you... no, go ahead.

I would like to turn briefly to the... the requirements aspect of the case because we do think that, under our broadest theory, this is a different situation than Medtronic and Cipollone, and because of the important statutory indications that are in the provision 136v.

Unlike in Medtronic, there is an explicit provision that is a non-preempted provision, and that is different from Medtronic.

Where in Medtronic there was a provision that allowed the FDA to impose its own decisions as to requirements and whether or not the States should be displaced, here Congress made the determination in 136v(a) and in (c) that those kinds of requirements can be imposed.

They're in addition to what the Federal standard is.

That means that you have to look at requirements in a somewhat different way because the States have this authority that they did not have under the Medical Device Amendments.

There's a textual indicator under (b) also which refers to (a) in the sense that (b) says such State that shall issue these requirements.

Such... the meaning of it in Webster's means what has been already described... is in (a), and in (a) the States are authorized to promulgate regulations.

So we think that there is a textual basis for distinguishing the word requirements that this Court... five Justices in this Court in Medtronic said would encompass common law claims.

If there are no further questions at this time, I'd like to reserve the balance--

Justice Breyer: Let me ask one because I think you'll hear some variation of this, and you have a minute, which is the... the statute sets up a perfectly good way of keeping this branded stuff off the market.

All any complaining farmer has to do is to go to EPA and ask them to pull it, and pulling it is an unbelievable sanction.

It's like the atomic bomb on the company.

And so that's very strong.

And the only thing that leaves out is the possibility of damage remedies, but if you want your damage remedy, just go to EPA and tell them to give it to you because they can write the rule the other way that I was suggesting.

Mr. Frederick: --Well, I don't think that EPA could write a rule requiring damages to be done.

It doesn't have the statutory authority--

Justice Breyer: They would just say it doesn't preempt.

Mr. Frederick: --Well, there's no indication here that EPA can do that kind of thing.

In FIFRA, it certainly doesn't have that kind of provision.

I mean, certainly there are different ways that the statute could have been written.

That isn't the choice that Congress made.

Thank you.

Justice Stevens: Mr. Waxman.

Argument of Seth P. Waxman

Mr. Waxman: Justice Stevens, and may it please the Court:

FIFRA's preemption provision, which Congress specifically amended in 1978 to add the title uniformity, preempts by its terms, quote, requirements for labeling different from those required under FIFRA.

Justice Souter: Why... why doesn't the other amendment limit your argument?

Because Congress has also passed an amendment to the effect that unless EPA chooses to get in to the business of... of passing on efficacy, it... it need not do so.

And in fact we know it is not doing so.

Why, therefore, doesn't the uniformity argument go to those subjects that EPA does review for and why doesn't the subject of efficacy, in effect, drop out of... of the... the whole preemption claim?

Mr. Waxman: There are... there are two fundamental reasons.

The first is that it is a principal requirement of FIFRA, and has been since 1972 and remains, that a manufacturer may only sell a registered pesticide with the precise labeling to the word and font size that EPA has approved, and that requirement applies whether the wording relates to human safety, environmental protection, or efficacy.

Now, the specific amendment in 1978 was, as Mr. Frederick indicated, represented a representation by EPA to Congress... and Congress'... the... the committee report plainly indicates this... that the EPA was not saying we are no longer regulating efficacy, we are no longer concerned with efficacy.

What they said was because the Department of Agriculture and the extension services and the State universities are all involved in this and, in particular, are involved in the statutory requirement that before a manufacturer can even apply for registration, even submit a registration application, the manufacturer must do extensive, rigorous efficacy testing, which Congress has indicated correctly is very expensive--

Justice Ginsburg: But it's not monitored at all.

The... the manufacturer can say... make up reports and EPA is never going to look at them.

Mr. Waxman: --If the manufacturer makes up reports, it has committed a felony.

EPA can enforce it.

It can refer it to the Attorney General.

It's just like the--

Justice O'Connor: But maybe it isn't a labeling violation.

I mean, there are claims made here that I have trouble shoehorning into your theory.

For instance, why does a claim that Dow negligently failed to field test its product on peanuts on acid soil impose a label requirement?

Mr. Waxman: --Justice--

Justice O'Connor: I... I just don't understand that.

Mr. Waxman: --Justice O'Connor, I think... I will address the negligent testing and, of course, the design defect--

Justice O'Connor: Yes.

Mr. Waxman: --discussion that's figured so prominently in my colleague's argument.

It's very, very important to understand that unlike in Sprietsma and Medtronic and so many of the... and, for that matter, with respect to the preempted claims in Cipollone, the claims that were preempted below, we didn't file a rule 12 motion to dismiss.

We couldn't have with respect to at least one of those two claims.

We filed a motion for summary judgment that said with respect to... let me take design defect first.

With respect to design defect, it is possible under Texas State law to state a claim for products liability under defective design without impeaching the labeling.

And there is a brief filed in this case by Dean Powers, the University of Texas Law School, for the... the Texas Chemistry Council who's an expert on Texas tort law, and he goes through the Texas torts in detail to show why they are all preempted and all invalid under independent and adequate State grounds.

But what we did is we didn't move to dismiss.

We filed a motion for summary judgment, and in that motion for summary judgment, we pointed the respondents in this case to this Court's decision in Celotex v. Catrett, and we said, in effect, we know that you can allege a design defect claim without impeaching the labeling, but we think that what you are complaining about does impeach the labeling.

Therefore, show us what you have.

Now, under rule 56, they had two alternatives.

They could have filed an affidavit or a request under rule 56(f), as this Court referenced in Anderson v. Liberty Lobby, and said, hey, we don't know how this was made.

We don't know how this was tested.

We don't know how this was manufactured.

We're entitled to discovery, and district courts recognize that all the time.

What they did--

Justice O'Connor: And they didn't do that?

Mr. Waxman: --They did not do that, and what they did was to submit affidavits and documentary evidence, including expert affidavits.

Justice Stevens: Mr.... Mr. Waxman, you said they didn't file a motion to dismiss.

I thought you brought the lawsuit.

Mr. Waxman: We brought the lawsuit and we--

Justice Stevens: But then they couldn't file--

Mr. Waxman: --No, no, no.

I said we didn't file a motion to dismiss--

Justice Stevens: --You didn't file a motion to dismiss your own complaint?

Mr. Waxman: --No, no.

Their counterclaims.

Justice Stevens: Oh, okay.

Mr. Waxman: In other words, this wasn't decided... Mr. Frederick's reply brief talks over and over and over again about how this was decided on the pleadings, and you know, there was no discovery allowed.

Under rule 56, they could have asked for discovery when we basically said, okay, let's show our hands.

We got two jacks.

What do you got?

And what their expert said and what their response said was if the 2001 amended label had been on it, we wouldn't have been injured.

Now, rule 56(c) says that when you oppose a summary judgment motion with affidavit evidence, the burden is on the adverse... the adverse party must by affidavits, or otherwise provided in this rule, set forth specific facts showing that there is a genuine issue for trial, and they didn't do that.

Now, the classic design defect... let me... let me give you an example.

Justice O'Connor: Well, let's just try to boil it down a little bit for my purposes.

Do you concede that there could be a claim based on no testing--

Mr. Waxman: Well--

Justice O'Connor: --that there could be a claim based on design defect, that there could be a claim saying there were off-label oral statements made that amounted to fraud or misleading--

Mr. Waxman: --I'll take them in your precise order.

Justice O'Connor: --Okay.

Mr. Waxman: Under Texas law... and the court of appeals opinion, the Grinnell opinion cited by the court of appeals opinion, says this, as does Dean Powers.

Under Texas law, negligent testing is not an independent tort.

It is of necessity a subset of inadequate warnings.

It is an element of a... the tort... the claim of product defect related to warnings.

And so it is not possible under Texas law, settled Texas law.

Other States are different, but Texas in its sovereign capacity has chosen to make claims of negligent testing an element of the tort of defective product by failure to warn, and that--

Justice Ginsburg: And the way you proceeded in this case, you made it clear that it would be impossible for the Texas court itself to weigh in on this because you jumped the gun.

They wanted to proceed in Texas court, and then we would have known what Texas law was on these subjects.

You said, no, we want to be in the Federal forum.

Mr. Waxman: --We want... as the... as the Fifth Circuit found and the district court found, we filed a declaratory judgment in Texas after we received their demand letters because we wanted this to be adjudicated in a single forum, which the Texas venue rules would not have allowed, and we... we actually filed this in Lubbock, Texas, which is the geographic center of where these 29 farmers operate.

Now, with respect to defective design, yes, under Texas law if they had a... they have to allege and they have to prove that there is a safer alternative design for this product, which they never even introduced one quantum of evidence about.

But--

Justice Stevens: It seems to me you're... you're arguing the merits of the tort claims rather than the preemption issue.

Mr. Waxman: --Well, what we said was your claims are preempted if they impeach the labeling that we are required by Federal law to use.

Justice O'Connor: But they now say they don't.

They ought to be able to proceed on those claims.

What do we do with that?

Mr. Waxman: Well, what this... what... what happens under rule 56--

Justice O'Connor: And also the... also the claims of false, misleading statements outside the label.

Mr. Waxman: --Yes.

I'm going to get to the false and misleading statements outside the labeling in a minute, but just to finish the design defect point, they filed a complaint... a counterclaim which had as a count this was defectively designed.

It is possible under Texas law to prove that something is defectively designed.

If they had come in and said, but we filed a motion for summary judgment that says here's our evidence and we don't think that you can satisfy... that you are, in fact, complaining about a defective design--

Justice Stevens: But if they did allege a defective design claim under Texas law, would that have been preempted?

Mr. Waxman: --No.

If... if they had said, look, the problem with this, which as footnote 9 of our brief indicates, it's not a--

Justice Stevens: It seems to me your argument is not whether there's preemption.

It's whether there's a State cause of... State law cause of action.

Mr. Waxman: --No, no, no.

It's... it's both.

With respect to defective design, what we said is, your claim is preempted because you aren't going to go to the jury on defective design without impeaching the label.

If we're wrong, prove it in response to our summary judgment submission.

Justice Souter: But you can--

Justice Scalia: Is that their burden?

Mr. Waxman: It is--

Justice Scalia: Is that their burden or is your burden to show--

Mr. Waxman: --It is... it is absolutely their burden in... as the responding party to a motion for summary judgment, to show that there are material facts that are either in dispute or there are material facts that would allow them to go to the jury.

Justice Souter: --But on your theory there is no material fact, it seems to me, because your... you say they cannot make good on that claim without impeaching the label.

Mr. Waxman: And they--

Justice Souter: Every time they sue on the... on the ground that... let's say, that... that the... the actual use was inconsistent with what the label described, you could say, gee, if their theory is correct, we'd have to change our label to say that what's on the label now is in fact not properly descriptive of the product.

So it's not a... a question of needing more fact.

On your theory, whenever they, in effect, sue on the basis of what you say, your response is going to be, as a matter of law, well, if they're correct, we'd have to say something else.

That impeaches the label.

Therefore, preemption.

Mr. Waxman: --That is exactly right.

What they could have done in response to our motion for summary judgment is to say this product assertedly harms... when it is applied before the seed is planted, will harm the product it is... the plant that it's supposed to protect if the soil pH is too high.

They could have easily have come back and said if they had a... a design defect claim that didn't impeach the label to say you should have... there was a way to manufacture this product.

You could have it in pellet form rather than in the soluble form or if the problem was the alkalinity of the soil, there is a way to design this so that it is dissolved in a more acidic solution.

The classic case, which is referenced in the NRDC brief, which has many, many examples of true design defect claims that don't impeach labels, is a case involving rat poison.

It's a case called Banks v. ICI America.

It's a Georgia Supreme Court--

Justice Breyer: So you quite clearly have both.

I understand that.

Let me ask you a question about the... the preemption point because what I think they're saying is go read the red brief, your brief, pages 6 and 7, and there you see a statutory requirement and you see regulatory requirements, regulation.

And I think one of their claims is we are arguing that that statutory requirement, without any change in the regulatory, that... that it was violated.

These are false.

They're misbranded.

So we are not imposing a requirement different from or in addition to the requirement of Federal law.

We are enforcing a requirement that is the same as the requirement of Federal law, and if, by the way, the EPA were to think that tort suits in those circumstances in practice are too disuniform, let them promulgate a regulation to that effect.

But they haven't.

Now, what... what is the answer to that argument?

Mr. Waxman: --The answer is threefold.

Number one, a challenge to a... the wording of a statement on the label on the grounds that it is false and misleading is... does impose a requirement different than Federal law, not the requirement that... that labeling not be false and misleading, but the fundamental requirement that a... unless and until the EPA says otherwise, the manufacturer can only sell this product with the precise labeling that EPA has approved.

And it... if you look at page 63a--

Justice Ginsburg: Mr. Waxman, do I--

Mr. Waxman: --of the joint appendix--

Justice Ginsburg: --Mr. Waxman, do I take it from what you have just said that there is no... even though the statute prohibits misbranding, that there is no way that that can be privately enforced, that misbranding is something strictly for EPA to deal with, that the statute has a prohibition on misbranding?

I can see the argument that all we're doing is enforcing the provision that says no misbranding.

So is EPA the only the player in the misbranding league--

Mr. Waxman: --Insofar as labeling is concerned, the answer is yes, and that's because the statute... the statute has many, many instances in which it makes it clear that in service of the objective of a nationally uniform label, the expert agency that approves and dictates the language of that label be the one to decide what is or isn't--

Justice Stevens: Mr. Waxman--

Justice Breyer: Where does it say that?

Justice Stevens: --can I ask you one question here?

Justice Breyer: Because you were just going to point out where it says that--

Justice Stevens: It goes to your--

Justice Breyer: --which I think is--

Justice Stevens: --Excuse me.

Justice Breyer: --I'm sorry.

Justice Stevens: Just let me ask this one question. Supposing the label says, this product contains vitamin A.

Period.

And it doesn't contain vitamin A, and they prove that in court.

And you say you would have to change the label.

I suggest you could change the product by putting vitamin A in it.

Mr. Waxman: --Well, you can... you're--

Justice Stevens: Why isn't that an answer to the misbranding?

You change the product not necessarily the label.

Mr. Waxman: --Because the difference between a... that would be a... a manufacturing defect, which are cases that have been decided--

Justice Stevens: It would be a false statement in the label.

The label happened to be false, a misrepresentation in it.

Mr. Waxman: --If... if the... if it contains... I'm sorry.

Was it vitamin A?

If it contains vitamin A because that's what the manufacturer intended and that's what the manufacturer produced--

Justice Stevens: No.

The manufacturer knew it didn't contain it.

He falsely put that in the statement--

Mr. Waxman: --Oh, I see.

Said that--

Justice Stevens: --and... and it's... it's a misbranded, false statement.

Now, does he have to change the label or could he change the product?

Mr. Waxman: --Well, I believe that you have... you would have to... I mean, would it be efficacious with vitamin A?

I don't know, but if it... if it requires a change in the label, it has to be done by EPA because the manufacturer commits a Federal law violation if it sells the product with any different label.

If you... if I can just direct the Court's attention to--

Justice Stevens: No, but I'm suggesting he could sell the product with the same label if he just changed the product to correct the misstatement.

Mr. Waxman: --Well, the test, as the Fifth Circuit stated, Justice Stevens, is whether a judgment against Dow... I'm quoting.

Quote: whether a judgment against Dow would cause it to need to alter the Strongarm label.

I'm... and that's the... those are... that's the test that was applied here and is always applied.

Justice Souter: Okay, but why--

Mr. Waxman: That is, does the State law cause of action... is it premised on a State law duty that there... that different labeling be used--

Justice Souter: --No, but neither--

Mr. Waxman: --that is, a little bit different than what Federal law requires.

Justice Souter: --The problem that I think some of... several of us are having is that both the... as I understand it, the Fifth Circuit test in your argument draws no distinction between the two following kinds of situations.

Situation A: there's something that the manufacturer should have told you, should have put on the label, but the manufacturer didn't.

Situation B: the manufacturer puts something on the label which in fact is wrong and in Justice Stevens' example is in fact false and it causes harm.

It makes sense, it seems to me, for preemption purposes to say if the person who sues sues simply on the ground that I bought it in reliance on the label, the label was false, I should get damages for... for whatever harm was caused, that situation should be dealt with for preemption purposes differently from the situation in which the... the manufacturer made no false statement.

He simply should have said more.

And if... if you don't distinguish between those two situations, then the... the prohibition against mislabeling means absolutely nothing because... because it can never be enforced, in effect, except with respect to some prospective user.

It can never be enforced with respect to the actual user.

Mr. Waxman: Justice Souter, that is a choice that Congress could have made.

It is plainly not a choice that Congress did make because it applied the preemption provision to requirements that are either in addition to or different than.

And whether a label is assertedly misleading because it fails to include something on the EPA-approved label or--

Justice Scalia: --Requirements for labeling or packaging--

Mr. Waxman: --Yes.

Justice Scalia: --that are in addition to or different.

Mr. Waxman: Yes.

I... I--

Justice Scalia: Requirements for labeling or packaging.

Mr. Waxman: --Yes, and... and if it... if the--

Justice Souter: Yes, and the argument that's being made is that we ought to... we ought to read... we ought to read the limitation, which Justice Scalia has just described, with respect to labeling and packaging, in a relatively narrow way to allow the suit to go forward and, therefore, we ought to make a distinction between the two kinds of situations.

Mr. Waxman: --The allegation in this suit... the claims in this suit... and I... I see that my time has expired.

Justice Stevens: Ms. Blatt.

Argument of Lisa Schiavo Blatt

Ms Blatt: Thank you, Justice Stevens, and may it please the Court:

It would entirely destroy the uniformity contemplated by... contemplated by the statute if the EPA-approved and mandated label were subject to jury-by-jury invalidation based on a jury's determination of whether a label is false.

Justice Scalia: This is a new position for the Government, isn't it?

Ms Blatt: Yes, we have--

Justice Scalia: You used to take the opposite position.

Ms Blatt: --That's right.

Justice Scalia: And we're dealing here, as... nobody has mentioned it, but there... there's a clear statement rule for preemption, isn't there?

Doesn't the preemption of... of traditional State powers have to be clear in the statute?

Ms Blatt: We... we think subsection (b) is unambiguous in preempting any statement.

Justice Scalia: It's... it's ambiguous enough that the Government... the... the chief beneficiary of the... of the supposed preemption didn't see it.

It used to come out the other way.

How can you possibly say it's clear?

Ms Blatt: Well, the agency is allowed to change its position and we realize--

Justice Scalia: I understand.

It's... it's welcome to change it, but it... it's one thing to change it.

It's another thing to change it and come in to say that the question is clear.

Ms Blatt: --Well, we think that... we realize that our position was inconsistent with not only the Court's decision in Cipollone and in Medtronic that recognizes that requirement extends to common law duties.

But more importantly, a system where a jury by jury on the same facts could come up with completely different reasons why a label is false--

Justice Breyer: All right.

So... so if you have one administration thinking the one thing and the other thinking the other thing, why isn't the answer that the agency can promulgate the reg it wants?

And therefore if the reg... if the agency comes to that conclusion, let them promulgate that reg.

And if a different one thinks it can work with the tort suits, let them promulgate that reg.

Ms Blatt: --Well, unlike Medtronic where preemption occurred by virtue of the FDA's regulation, under FIFRA there's preemption by virtue of the statute itself.

And I just want to give one--

Justice Souter: Yes, but why isn't there a big difference, for purposes of your argument, between the Medtronic situation and this one for the simple reason in this case you've got a statute that authorizes EPA to do absolutely nothing on the subject of efficacy?

And EPA does nothing on the subject of efficacy.

Ms Blatt: --Well, that's just not true, with all due respect.

I mean, they... the... we don't verify the accuracy of the efficacy labeling, but the requirement, both in the preemption provision and in the requirement to use the EPA label, clearly extends to efficacy.

And you can have disuniform context whether it's safety or efficacy.

Imagine a label that directs a product to be mixed for 20 minutes.

One jury could find the label was false because the product should have only been mixed for 10 minutes.

Another jury in the same courthouse could find the label was false because the product should have been mixed for at least 30 minutes.

And this case is another really good example.

Now the petitioners are saying the label says that the soil only should be a 7.2 level.

Their expert says--

Justice Stevens: Yes, but the remedy to that would not necessarily be to change the label.

It might be to change the quality of the product that requires how much time for mixing.

Ms Blatt: --And we think it's critical that our position is that this statute only operates in the area of labeling, and it preempts only those State labeling requirements--

Justice Stevens: What do you say about my vitamin A example?

Ms Blatt: --I think your vitamin A example is an excellent example of a non-preempted claim.

If a manufacturer says that this is a pesticide and he puts Clorox in the bottle, the plaintiff wants to get to the jury on the theory that a reasonable manufacturer would not have used Clorox.

He would have used the pesticide.

If the argument, on the other hand, is Clorox was fine.

I don't have a problem with Clorox, I just wish I would have been given a warning, but that's not the way a plaintiff would frame his complaint.

We think it's critical that our theory is if the plaintiff's theory of recovery is necessarily... necessarily predicated on a requirement that the manufacturer used a label different than the EPA-approved label the Federal law required it use--

Justice O'Connor: Well, let's... let's be specific here.

If it's a failure to test, if it's a... a design defect requirement, if it's an off-labeled, false misrepresentation, why are they preempted?

Ms Blatt: --On the face of the complaint, we agree that they're not preempted.

Our only position is by the time it got to summary judgment, the courts decided that they had no evidence on what would have been non-preempted claims.

If another farmer wants to bring an expert that says Strongarm can be manufactured--

Justice Stevens: But then do you endorse the theory of the court of appeals in this case?

Ms Blatt: --Well, we think the court of appeals took it claim by claim and read the affidavit... or at least the district court did--

Justice Stevens: And you think just mere inducement to change a label is sufficient to create preemption.

Ms Blatt: --Mere inducement only to the extent that that's a shorthand way of saying the label was... necessarily had to be required.

Let me give you an example.

Justice Scalia: If Congress wanted that, surely it could have stated it more clearly than simply saying the State shall not impose or continue in effect any requirements for labeling or packaging.

A tort suit because of... of mislabeling is not a requirement for labeling or packaging.

Ms Blatt: If the--

Justice Scalia: And if Congress wanted to say that, they could have said it.

Ms Blatt: --Well, I think they did say if a common law duty is necessarily premised on the requirement that the manufacturer used a different label than Federal law required him to use.

In this case, the common law duty of a failure to warn is saying the manufacturer should have put something on--

Justice Scalia: You have... you have that provision which talks about requirements for labeling or packaging in conjunction with another provision that authorizes the State to regulate the sale or use.

Ms Blatt: --The--

Justice Scalia: I mean, you... you have to make sense of the two.

Ms Blatt: --Right, and that's--

Justice Scalia: And it seems to me that means the State can impose certain requirements upon the seller to the consumer--

Ms Blatt: --Not on labeling.

Justice Scalia, every day--

Justice Scalia: --Well, every change... virtually every change... virtually everyone... if... if you believe the respondent's theory, virtually any State regulation of the substance of the sale will require a change in the label.

Ms Blatt: --That's just not true.

Every day States and localities around the country are imposing use restrictions.

They tell... they tell applicators and users when and where to apply the pesticide and what types of--

Justice Scalia: Sale... sale or use is what it says.

Ms Blatt: --That's right and they--

Justice Scalia: Say... if they regulate the sale or use.

Ms Blatt: --That's right, and they do that every day without imposing labeling requirements.

Imagine... imagine--

Justice Scalia: Give me sale examples.

Ms Blatt: --They require the manufacturer, in order to sell the product, be registered with the State, and they can impose whatever sale restrictions they want--

Justice Kennedy: And can they--

Ms Blatt: --that don't go to the labeling.

Justice Kennedy: --Can they do the same thing by... through jury verdicts?

Ms Blatt: Absolutely not.

It would be bad enough if a manufacturer had to shop his label around 50 States and had each--

Justice Kennedy: So now... so now you say a State can do something by regulation that a jury can't do.

Ms Blatt: --No.

A State absolutely cannot impose labeling restrictions on a manufacturer.

Justice Kennedy: I'm asking if the... if juries can do anything that the... are... are prohibited under your view from doing anything that the State could do by a State regulation.

Ms Blatt: Right.

I'm sorry.

Right.

Under... it... the alternative theory would give more power to the jury to impose labeling restrictions than the State, and we don't think the State can do it.

And it would be far more pernicious if a label were subject to jury-by-jury invalidation.

No one would read the label, much less understand it.

Justice Ginsburg: Ms. Blatt, there's a brief in this case... there's a brief in this case that just shows hundreds, if not thousands, of crop damage claims.

And your theory is that with this ambiguous provision Congress wiped all that out.

It's hard to believe.

Ms Blatt: No.

Congress just wiped out labeling and only those labeling requirements--

Justice Ginsburg: But everything becomes... but every... every time... my crop was stunted.

Okay.

You have to change the label so you can't bring that suit.

Ms Blatt: --Justice Ginsburg, it's just not true.

The lower courts well understand this distinction, and they... they let go all the time claims as not preempted that are true manufacturing defect or true design defect claims.

This is not a complete immunity.

This is a narrowly targeted one as to labeling.

There is a famous example of the Benlate--

Justice Ginsburg: He says their claim is... is very simple.

You didn't tell us that using this in our kind of soil would stunt the crop and wouldn't kill the weeds.

Ms Blatt: --Right.

Justice Ginsburg: But you're saying that kind of claim can't be brought anymore.

Ms Blatt: It can be brought if there's State law and evidence to support the State law that doesn't attack the labeling.

And our--

Justice Ginsburg: I've described a set of facts which your position I think you have to say affects the label.

The... the farmer says I bought this bottle.

It said okay for all peanuts.

My crop grew and it was stunted and the weeds stayed alive.

Ms Blatt: --If they found an expert that said if you had manufactured this differently or if you had designed it differently and there was evidence to support that, our view is that those claims aren't preempted.

And the alternative to let juries--

Justice Ginsburg: No.

I'm not giving you that case.

I'm giving you exactly what happened.

Ms Blatt: --This case... they didn't have any evidence other than saying that the label was inaccurate.

But the next... another jury could rely on the respondent's evidence to say the label was inaccurate because it works better on high pH soil, and another jury could say, well, we need a margin of safety and the label should have said 6.8 instead of 7.0, which is what their expert says.

And you can have this time and time again with how often the pesticide has to be applied, when it has to be applied.

And to... and the... the whole point of section 136v(b) was to have reliability--

Justice Ginsburg: Was that happening when EPA took the opposite view?

Was there this tremendous disparity with juries going every which way--

Ms Blatt: --Well, there's... there's been preemption at least since the late '80's, and I don't know of cases where juries... or the theory for recovery was invalidating the label.

There are lots of cases that are true manufacturing defect claims, and I direct your attention to the Benlate where the manufacturer contaminated his product.

If I'm the plaintiff, my theory... the theory was you mismanufactured this product.

A reasonable manufacturer would have taken practices to prevent contamination, and it destroyed a lot of crops and EPA actually took enforcement action against that manufacturer.

The rat poison example... a 9-year-old kid died of rat poisoning because it tasted like a candy bar.

The theory of recovery was all the manufacturer had to do was put a bittering agent in it that would have made the kid throw up and the rats still would have loved the poisoning.

That has nothing to do with the label.

Justice Stevens: Thank you, Ms. Blatt.

You have about 4 minutes.

Rebuttal of David C. Frederick

Mr. Frederick: I just have two points to make.

With respect to the summary judgment posture of the case, the way this unfolded was that on one day the district court decided the motion for jurisdiction, that it had jurisdiction.

On the very next day, Dow rushed into court with its motion for summary judgment.

And what Mr. Waxman cites as the Celotex invocation merely says that on... on this point it is neither unfair nor premature to require defendants to produce evidence in support of their claims now as the Celotex trilogy requires.

I'm reading from their motion for summary judgment.

That was filed before the counterclaims.

The only thing that they knew about was the deceptive trade practices notice letter that the farmers had filed pursuant to State law.

So they didn't know what our claims were, and they were requiring or saying that the district court could throw us out of court without giving us any opportunity to file counterclaims, much less try to develop evidence that would prove them.

Now, with respect to the disuniformity point, when Congress amended the statute in 1988 to add the word uniformity, it said in that public law that it was a technical amendment.

We don't know why Congress put the word uniformity in.

The legislative history is barren.

It just says this is a technical amendment.

It didn't change the substantive provisions that empowered States to impose regulations that would have the effect of disuniformity.

Now, at the end of the day, we've got claims that have been brought historically since the late 19th century.

Until EPA had a sudden change of heart, there were decades in which juries made these decisions with respect to these kinds of products, and those preemption decisions really didn't take hold until after this Court announced Cipollone in 1992.

And it was only at that point that the courts began to have preemption, but for the previous 2 decades, juries routinely decided these kinds of cases.

The sky did not fall.

EPA didn't come in and say there's labeling disuniformity as a result of this.

There simply were no problems.

But what did happen was that the farmers who used products were able to get compensation when pesticides damaged their crops.

Thank you.

Justice Stevens: The case is submitted.

Attribution:

The Oyez Project

Featured:

Sprietsma v. Mercury Marine - Oral Argument

Fri, 09 Jan 2009 14:50:39 +0000

Case:

Sprietsma v. Mercury Marine

Media File:

01-706_20021015-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Leslie A. Brueckner

Chief Justice Rehnquist: We'll hear argument next in No. 01-706, Rex Sprietsma v. Mercury Marine.

Ms. Brueckner.

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

The question presented in this case is whether State common law tort claims that a boat engine was defective because it lacked a propeller guard are preempted either by the Boat Safety Act of 1971 or by an unpublished Coast Guard letter stating that the agency had decided not to take any regulatory action with respect to propeller guards.

There is no express preemption here because the Boat Safety Act includes a savings clause that expressly preserves the availability of common law claims.

And in light of this clause, this case boils down to the question of whether our claims are impliedly preempted because they conflict with some valid expression of Federal law.

And the answer to this question is no for two distinct reasons.

First, as the United States has argued, the Coast Guard letter itself lacks the force of law regardless of its content.

And second, even if the Coast Guard could preempt State law in this fashion, there's no preemption here because our claims are entirely consistent with the Coast Guard's stated reasons for not taking any regulatory action with respect to propeller guards.

Justice Kennedy: What would happen if there were no savings clause in this case?

Mr. Brueckner: If there were no savings clause, our position is that there would still be no express preemption because section 4306 of the Boat Safety Act, by its terms, in our view does not encompass common law claims.

But the savings clause--

Justice Kennedy: Well, except that... that this clause is different, say, than the one we had in Geier.

The Geier clause... savings clause begins... or preemption clause begins with the assumption that there is a regulation.

This begins the other way.

It says the State may not have any regulation unless it's consistent with an existing Federal regulation.

Mr. Brueckner: --That's true, Your Honor, but here, as in Geier, reading this preemption clause as encompassing common law claims would render the savings clause of this statute superfluous, and that is exactly the result that this Court rejected in Geier.

Justice Kennedy: Well, suppose a State said there can be a common law action in the courts of this State for the violation of any safety regulation which this legislature proposes, and we hereby direct that there be a propeller... a guard on every propeller.

Would that statute be valid under... under 4306?

Mr. Brueckner: In our view that statute would be valid because we read 4306 as not even preempting State positive law, that is, laws and regulations, unless there's an actual Coast Guard standard.

But this Court need not resolve that--

Justice Kennedy: But... but 4306 doesn't require a Coast Guard standard.

It... it says that there's a disability on the State legislature unless there is a Coast Guard standard and that State statute is parallel to it.

Mr. Brueckner: --Section 4306 in our view can be read... read two different ways.

One, our reading of the statute is that it only kicks in where the Coast Guard has regulated.

The United States disagrees on this point and reads 4306 as expressly preempting all forms of State positive law, that is, laws and regulations, even where the Coast Guard hasn't regulated.

But the United States and we agree that however you read 4306 with respect to State positive law, common law claims are preserved, and the reason is that 4311(g) would be stripped of any meaning if 4306 is read as encompassing common law claims.

Justice Breyer: Not... not when... I mean, that's why I think yours is the better view, actually.

But I mean, on your view you needn't drive a wedge between the common law and positive law because there's meaning for both.

Mr. Brueckner: Absolutely, Your Honor.

Justice Breyer: And I've never... I guess it's a better question for the Government.

I don't see why you'd want to drive a wedge between those two.

Justice Kennedy: Well, let's... let's take the Government's position which is that the State could not pass a statute on a... requiring a propeller... a propeller guard.

If... if that's true, if we accepted that, why is it that a jury should be able to require the same thing?

Mr. Brueckner: Because that is what Congress made clear in section 4311(g) that juries should be able to do.

Jury--

Justice Scalia: Ms. Brueckner, here's... here's my problem with 4311(g).

You can... it not only is a savings clause for common law, it's also a savings clause for State law.

It says it does not relieve a person from liability at common law or under State law.

Now, I... I do not know how an intelligent Congress could have... could have written such a thing.

But that's what it says: at common law or under State law.

Now, you can't read the savings clause portion that says under State law to mean all State law because then the savings clause would totally cancel the preemption clause.

Right?

Mr. Brueckner: --I agree, Justice Scalia.

Justice Scalia: So you... you have to limit State law to mean, well, not all State law.

And why... why would it not be natural to read common law also not to include all common law, for example, not including any common law that specifically imposes liability for failure to have certain propeller standards?

Mr. Brueckner: First, Your Honor, the fact that this savings clause is slightly broader than that at issue in Geier, because of the reference to State law, is not a reason to construe it narrowly.

Second, the reference to State law can easily be understood as a reference to, as the statute itself says, liability imposed under State law, which we read to mean a reference to State damages statutes such as wrongful death and survival.

And this case is a perfect illustration of that.

Chief Justice Rehnquist: Well, that really is a bit of a stretch, isn't it, to say you're talking... when you say State law, you're only talking about wrongfully tendered an act and that sort of thing?

Mr. Brueckner: I don't think so, Your Honor, because section 4311(g)'s language is... is quite clear and it is set forth at the blue brief at page 6.

Chief Justice Rehnquist: Well, to say it's quite clear... it does not relieve a person from liability at common law or under State law.

Whatever we may come up with as the meaning of that or you may suggest, I don't think you could say it's clear.

Mr. Brueckner: I disagree, Your Honor, because the reference to liability at common law or under State law to my mind suggests a reference to liability under State law, and liability under State law in this context is liability by which the measure of damages is a State statute, such as the wrongful death statute or the survival statute here that this complaint arises under.

Chief Justice Rehnquist: I guess you have a different meaning of clear than I do.

Mr. Brueckner: That... that may be, Your Honor.

I would note, however, that in... in Cipollone this Court noted that language exactly like this, a savings clause that specifically preserved liability at common law or... or under State law in the Comprehensive Smokeless Tobacco Act, preserved common law claims.

This is the same language.

And again--

Justice Breyer: Why do you need that?

I mean, I'm... I'm interested.

I might... why do you need that if, in fact, your interpretation of the preemption clause is correct?

There are some regs of the Coast Guard that do preempt positive common... common law and positive law, and some that don't.

And so the savings clause simply makes clear that those that don't, don't.

It gives meaning to it.

Mr. Brueckner: --You're absolutely right, Your Honor.

Justice Breyer: So you don't need this damages thing, do you?

Mr. Brueckner: No, we don't, Your Honor.

Justice Scalia: Well, no, but the savings clause says even those that do, don't.

Unknown Speaker: [Laughter]

Justice Scalia: I mean, isn't that the--

--No, it doesn't necessarily have to... the... the... I'm certain it's not clear to the contrary, but it's at least arguably to the contrary.

Mr. Brueckner: Even without the savings clause, we read section 4306 on its face as not encompassing common law claims, and the main reason why, putting aside the savings clause, is that the language of 4306 tracks the language of section 4302 of the statute, which is the affirmative delegation of rulemaking authority of the Coast Guard.

It's on the first page of the appendix to the blue brief.

And 4302 authorizes the Coast Guard to do two things: promulgate minimum safety standards and require associated equipment.

And this is exactly the same language that's in 4306.

Justice O'Connor: Well, this is the kind of thing that the Coast Guard could require, isn't it?

Propeller guard?

Mr. Brueckner: Absolutely, Your Honor, under--

Justice O'Connor: And in Arkansas Electric, I think we held that a Federal decision to forego regulation in a given area may imply an authoritative Federal determination that the area is best left unregulated and would have as much preemptive force as a decision to regulate.

Is that the situation here?

Certainly the Coast Guard looked at it and decided not to regulate.

Should we apply Arkansas Electric and say that's binding?

Mr. Brueckner: --No, Your Honor, and here is why.

This case really presents the question, putting aside the express preemption issue which we believe is resolved by Geier, of under what circumstances does an agency's affirmative decision not to regulate pack a preemptive punch such as... so as to wipe out common law claims.

And there are... there are two preconditions that must be met, neither of which is present here.

First, the agency's decision not to regulate must take the form that itself possesses the force of law, and that is lacking here for reasons I'll explain in a moment.

Second, the agency--

Justice O'Connor: That was the holding of Arkansas Electric; it doesn't have to take the form.

Mr. Brueckner: --Actually the holding of Arkansas Electric was that there was no preemption at all in that case, but perhaps Your Honor is--

Justice O'Connor: Yes, but the... the passage I read to you indicates that a decision not to regulate can, in fact, be... have preemptive effect.

Mr. Brueckner: --Yes, Your Honor, but a pure decision not to regulate or a pure agency inaction has only been held to exert preemptive effect in the context of statutes that preempt the field where there's total Federal occupation of the field.

Here, however you read 4306 with respect to State laws and regulations, common law claims we believe are excluded from the regulated field.

Therefore, there has to be a conflict.

And for affirmative... an affirmative agency decision not to regulate to preempt State law under a conflict preemption analysis, there both has to be an agency action that possesses the force of law and there has to be an actual conflict between the agency's underlying reasons for not regulating and the common law claims.

And both of these criteria are absent here.

First, as the United States has argued... and we agree... this unpublished letter... Coast Guard letter itself lacks the force of law.

It's important to remember here that not only is there no agency regulation, but there was never any rulemaking.

There was never any publication of a notice that the Coast Guard was even considering--

Justice Kennedy: Let... let me ask you this question.

Let's assume a... a hypothetical case in which the engine manufacturer is sued and is... and is found liable by the jury for having a propeller guard which makes the boat difficult to turn so the boat hits the dock.

It... it can't turn fast enough to avoid the dock.

We have that case and it's consolidated with yours.

So we have one case where they're liable for having the guard and another case where they're liable for not having the... the guard.

Would you argue the case the same way and would we have to affirm both cases?

Mr. Brueckner: --Yes, Your Honor, and... and Your Honor's hypothetical actually illustrates my point.

There's no question that a boat manufacturer could not be held liable for installing... could not be held... a... a claim alleging that a boat manufacturer was negligent per se for installing a propeller guard couldn't be based on an existing Coast Guard regulation because the letter lacks the force of law with respect to boat manufacturers.

There's no agency action here that could form the basis for any common law claim one way or the other.

Justice Kennedy: But... but if the manufacturer is subject to conflicting jury verdicts, as you indicate... I suppose we could change the hypothetical so we have two States, one which requires it, the other of which... and... and you would say those weren't preempted, either.

Mr. Brueckner: That's correct, Your Honor.

And... and this is--

Justice Kennedy: That seems to me to... to give very little effect to the wording of the clause which says that a State cannot have a standard unless it's parallel to a Federal statute.

Mr. Brueckner: --But it does give meaning to the language of section 4311(g) which says that even where a Coast Guard has promulgated a minimum safety standard, common law liability is preserved except to the extent that there's an actual conflict.

Justice Ginsburg: But you could... you could read that, couldn't you... you... you argue that to accept your... to respondent's view would mean the savings clause has no work to do, but the savings clause could still be for cases of negligent... negligent operation, for cases in... of negligent... negligence in manufacturing a piece of equipment.

So there... there would be... on any reading of this, there would be something saved.

So... so you... I think you have to modify your argument.

The savings clause would be nullified.

Mr. Brueckner: I respectfully disagree, Justice Ginsburg, and... and here's why.

The respondent here does contend that the savings clause applies to breach of warranty and negligent manufacturing claims.

And that argument fails, first of all, because such claims are not encompassed within 4306 on its face, and therefore there wouldn't have been any need for Congress to save those claims.

Secondly, this Court construed a similar savings clause in Geier as expressing Congress's intent that mere compliance with minimum safety standards would not be an absolute defense to liability in a product liability action.

And compliance with a Coast Guard regulation establishing a minimum safety standard could never be an absolute defense in a case involving negligent manufacture or a breach of warranty, for example.

So, the respondent's theory leaves really no meaningful role for the savings clause to play.

And I would emphasize that these arguments were all asked and answered in Geier, and the Court held that a similarly worded savings clause, albeit without the reference to State law, has to mean that common law claims are not expressly preempted.

Now, that doesn't mean that our claims must necessarily be permitted to go forward if they conflict with Federal law, but there's clearly no conflict here again for two reasons.

First, the Coast Guard letter lacks the force of law.

And on that point, before turning to the reasons why our claims are actually consistent with the Coast Guard's stated reasons for declining to regulate, I would further note that not only is there no regulation, no rulemaking here, but the Coast Guard letter was never even published in the Federal Register.

It was never made available to the public in any formal way whatsoever.

And it doesn't even purport to set forth a definitive agency position on the subject of propeller guards.

What the letter says is that the agency is going to continue to consider the matter and gather further data.

And so, this letter itself lacks the force of law.

The second reason, of course, is that even if the Coast Guard could preempt simply by writing a letter, our claims are not inconsistent with the Coast Guard's stated reasons for declining to regulate.

The Coast Guard was focusing on the lack of a universally acceptable propeller guard solution, the costs of a retrofit, and such other matters, and there's no inconsistency between our claims--

Unknown Speaker: What if the Coast Guard's reason had been we think putting the coast... putting a propeller guard on would make the... the vessel even more dangerous?

Mr. Brueckner: --There would still be no preemption here because the Coast Guard letter lacks the power to preempt.

Justice Stevens: Would that satisfy the second condition of... of your two-prong test?

Mr. Brueckner: It would, Your Honor, but our position is that there still has to be a regulation and there's no regulation here.

Justice Stevens: Well, I understand.

I'm just asking you about the second part of your test.

Mr. Brueckner: It would satisfy the second part of the test.

Finally, I'd like to reserve the remainder of my time for rebuttal, if I may, but I--

Argument of Malcolm L. Stewart

Chief Justice Rehnquist: Very well, Ms. Brueckner.

Mr. Stewart.

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

The Coast Guard is the Federal agency charged with administration of the Boat Safety Act and with the promulgation of safety standards.

And to understand the Coast Guard's traditional view of these issues and the backdrop against which Congress legislated, it may be helpful to look to what the Coast Guard said at the time the Boat Safety Act was proposed.

And if you'll look to page 31 of the blue brief, this is the answer provided by the Commandant of the Coast Guard when he was asked, in written form, whether it was his view that compliance with Federal safety standards would furnish a complete defense to liability under common law or State law.

And he was further asked, if there wouldn't be a complete defense, should that be made explicit in the act.

And the Commandant said: we do not believe that compliance with promulgated standards under the act has the effect of relieving a manufacturer from liability under the usual tort law concerning negligence or warranties.

For many--

Chief Justice Rehnquist: Go ahead.

Mr. Stewart: --For many years the Coast Guard has required compliance with standards by inspected vessels.

Courts have consistently held that a vessel owner's compliance with Coast Guard inspection requirements is not synonymous with seaworthiness under maritime law.

Though the analogy is apparent, we would have no objection to an express provision to clarify that a manufacturer's compliance with promulgated standards does not by itself relieve him of any tort liability which otherwise could pertain.

And I think the--

Chief Justice Rehnquist: Is he... is the Commandant a lawyer?

Mr. Stewart: --I'm not sure whether the Commandant was a lawyer, but the... the questions were submitted to him in written form.

He was given time to consult with his advisors and prepare his answers.

Justice Kennedy: But the Commandant's lawyer or the Commandant might well admit that if, as Justice Ginsburg pointed out, there's defective design, if... if the propeller falls apart and... that then there's liability.

Mr. Stewart: I think... I think what--

Justice Kennedy: So that... this... this thing that you quote us just brings us right back to where we began.

Mr. Stewart: --Well, I think a couple of things are noteworthy about the way that the Commandant responded.

First, when he gave... first, he made clear that the Coast Guard was familiar and was comfortable with the idea that even when it had inspected a vessel and had... the... the vessel had passed the Coast Guard's own regulatory standards, nevertheless there was a... the possibility of damages liability based on unseaworthiness.

Justice Kennedy: Would--

Justice Scalia: --What do we care whether the Coast Guard was happy?

I mean, this isn't even plumbing the mind of Congress.

It's plumbing the mind of the Coast Guard.

What do we care?

Mr. Stewart: Well, I think part of the argument on the other side has been that whatever the text of the statute might say, the Court should strain to hold common law claims--

Justice Breyer: Well, maybe.

That may... but what I don't see here is whether he's aware of the fact which is... and I'm aware of it and you are... that whatever standard the Coast Guard has... let's say you have to have a 1-inch wire, and what my... they mean by that is you don't have to a 2-inch wire.

Okay?

Absolutely clear.

And there is no point in telling the State of Idaho you can't pass a law for a 2-inch wire when any jury in the State of Idaho can come in with a judgment that does precisely the same thing as that rule.

I mean, maybe this Coast Guard Commandant doesn't care about whether it can preempt at all, but it doesn't seem to me logical to take the position you can't have a regulation but you can have a tort judgment that is identical.

Mr. Stewart: --Well, first of all, the tort judgment is not identical because it fulfills an important purpose that the prescriptive standard doesn't, namely compensating people who have actually been injured by reason of defects.

Justice Breyer: You could say we don't care if, in fact, the rules that we're about to promulgate are totally ignored by the States, as long as the purpose is to compensate someone.

Mr. Stewart: Well, as this Court made clear in Geier, the effect of holding that State common law suits are not categorically preempted is not that the Federal judgments can be ignored; that is, there's still a role for principles of conflict preemption.

The Court in Geier said the point of the savings clause would be eviscerated if common law claims were... that were not identical to Federal standards were categorically preempted.

Nevertheless, particular common law claims can conflict with the... the text or purposes of particular regulations.

Justice Scalia: The Commandant didn't seem to understand that.

In... in your endorsement of the Commandant's statement, I thought you were disagreeing with... with counsel for the petitioners here who... who did say that there could be conflict preemption of common law claims, anyway.

The Commandant doesn't even seem to recognize that.

Mr. Stewart: I think what he is saying is we have always understood that compliance with our regulatory requirements will not furnish a categorical defense to suits at common law and we would understand the same--

Justice O'Connor: Well... well, maybe it ought to be interpreted, to try to make sense of this scheme, as certainly covering the situation where the State by its common law doctrine tries to make a requirement that the Coast Guard has... and the Federal Government has flatly contradicted by regulation.

That may not be this case, but if the Coast Guard were to pass a regulation saying no propeller guards should be put on boats because we think it is more dangerous, if they have them, now we should interpret the savings clause as not allowing a cause of action on that same ground.

Mr. Stewart: --That's exactly right and that's precisely the analysis that the Court went through in Geier and it's the analysis we urge the--

Justice Kennedy: But... but under your... your rationale, you say, oh, but there's a duty to compensate, and that's different.

Why doesn't that same argument apply so that you tell Justice O'Connor, oh, yes, the jury can... can go full speed ahead?

Mr. Stewart: --I mean, I think the Court has often pointed out in various contexts that even where it can be said that a primary goal of Congress was X, we shouldn't assume that Congress intended to pursue that goal at all costs.

The point is simply that Congress drew a somewhat different balance with respect to common law actions than it did with... with respect to prescriptive rules.

And I think part of the reason for that was that Congress was establishing a mechanism by which the Coast Guard could itself promulgate prescriptive safety standards.

In ousting State law, it was replacing State law with something else.

But the Boat Safety Act doesn't contain any mechanism by which an injured person can seek compensation for his injuries, and therefore it was natural for Congress to determine that subject to conflict preemption principles, the remedial mechanisms that had previously been available should continue to be available.

And I think--

Justice O'Connor: Well, maybe... maybe it doesn't do that much.

I mean, maybe the savings clause allows causes of action for breach of warranty, for negligent operation of the boat, and things like that.

Mr. Stewart: --I... well, the... the same could have been said of the savings clause in Geier, but the Court, nevertheless, concluded that common law actions were not categorically preempted.

And I think the reason, as Ms. Brueckner said, was that no one could have supposed that common law claims going to an entirely different aspect of the manufacturer's conduct than the divine, design feature that was at issue in... in the Coast Guard's regulatory--

Justice Breyer: I... I don't see how you... you talk about straining.

All... there is some... number of statutes.

They all read a little differently, but there isn't really that much substantive difference between them.

And although the Court has disagreed, I've tended to take the view, treat statutes and common law alike, and probably they're not preempted either unless the agency comes in and makes it pretty clear that they are.

Now, that's pretty easy for people to follow.

If they want to argue pro and con preemption, they go to the agency.

Mr. Stewart: --I think that may--

Justice Breyer: So wouldn't I reach that same position here?

Mr. Stewart: --That... that might be a legitimate rule to follow in the absence of statutory language expressly addressing the subject, but here we have one provision that says a State may not establish a law requirement of setting forth a safety standard or requirement for associated equipment unless it is identical to a Federal safety standard.

And then in the savings clause it says... and this is at page App. 6 of the blue brief... compliance with this chapter or standards, regulations, or orders prescribed under this chapter does not relieve a person from liability at common law under State law.

So whatever that means, it has to mean there will be some circumstances under which the manufacturer complies with all applicable Federal rules and yet is nevertheless held liable under the common law.

And--

Justice Breyer: Very simple.

In those situations where you... as you just heard, the ones that the petitioner just argued for.

Justice Kennedy: Design defect.

Mr. Stewart: --But... but if... if the same rule of preemption were applied to common law suits as to prescriptive regulations, namely that the State couldn't do anything that was not identical to Federal law, it could never be the case that a manufacturer who complied with Federal law could, nevertheless, be held liable at common law.

The... the preemption clause and the savings clause, read together, compel the conclusion that Congress at least intended a different rule of preemption to apply.

Justice Kennedy: That's... that's not... that's not true.

The Coast Guard doesn't say how the... the propeller should be manufactured, out of a... an eighth of an inch or... or of a tenth of an inch blade.

And if the smaller blade falls apart, you can sue the manufacturer.

Mr. Stewart: But I... I don't think anyone would have contended that such a suit would be preempted by the preemption clause even in the absence of the savings clause.

And again, this is exactly the same situation that was before the Court in Geier.

Had... had that argument been a sound one, the Court would presumably have construed the... the Motor Vehicle Safety Act savings clause that was at issue there--

Justice Scalia: Geier didn't have the same clause, and I... I think it's a big difference when it says under common law or State law--

Mr. Stewart: --But it does refer--

Justice Scalia: --because you... you have to distinguish State... not just State common law, but State statutes.

You have to draw some line that is going to exclude State statutes as well as the common law.

Mr. Stewart: --Well, it does refer to... may I finish?

Chief Justice Rehnquist: Yes.

Mr. Stewart: It refers to liability under... at common law or under State law, and therefore State law is most naturally taken to be a reference to laws that accomplish purposes similar to those of the common law.

Argument of Stephen M. Shapiro

Chief Justice Rehnquist: Thank you, Mr. Stewart.

Mr. Shapiro, we'll hear from you.

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

I think a word of history here explains some of the mystery surrounding the statutory language.

For over 90 years, Congress has specified the safety equipment that has to be installed on motorboats, and it was in 1937 that this Court ruled in Kelly v. Washington that the States may not impose their own requirements for safety equipment on boats that travel in interstate waters.

And that was the background of this legislation.

This act preempts State law creating any requirement for boat equipment that is not identical with the prescribed Coast Guard regulation.

And this serves a critical fail-safe purpose.

Risky devices like propeller guards may not be imposed on the public under State law unless and until they're approved by the expert regulatory agency under the criteria that Congress has laid down.

Now, this preemption provision has three exceptions which are written right into the provision, but none of those exceptions fits this case.

So my friends have to make the argument that this general savings clause, which says nothing about preemption, is another implicit exception, but that's inconsistent--

Justice O'Connor: Unless there's just no Federal regulation at all on this.

Mr. Shapiro: --And... and--

Justice O'Connor: Maybe the Federal Government has not... acting through the Coast Guard, has made no requirement, no decision at all.

Mr. Shapiro: --And the... the wisdom of this statute is that until the Coast Guard makes a decision about a device like propeller guards, they may not be imposed on the public.

Think of what happens under Justice Kennedy's example.

If Illinois commands installation of these devices and backs up that judgment with millions of dollars in damages, people in 49 other States are exposed to the risks and burdens of propeller guards.

Justice Scalia: Well, not necessarily.

I mean, you say if Illinois imposes it, I mean, this is one reason, it seems to me, that you can take the statute at... at its word.

The common law never imposes a requirement.

This jury found that a propeller... that failure to have a propeller guard was negligence.

Another jury in another case in the same State may find that the failure to have a propeller guard was not negligence.

There's no State requirement being imposed.

Mr. Shapiro: Well, we agree with the statement in Garmon that the Court, for preemption purposes, should assume compliance and then ask what are the implications.

The implications are that Illinois could coerce the installation of these devices.

Another State may disagree.

Justice Ginsburg: On the basis of one jury verdict?

Mr. Shapiro: Or one or--

Justice Ginsburg: It's like in tort actions in general.

I don't see how you get from one jury verdict, that that becomes the positive law of the State, that you must have a propeller guard.

Mr. Shapiro: --Well, after the first jury verdict, then the... in come the claims for punitive damages in the next case, and there is a powerful coercive effect from damage actions.

This Court has said so.

Justice Stevens: Mr. Shapiro, isn't it true that there all... aren't there... isn't it true there are all sorts of cases in which different designs of boats may have a... be more dangerous than other designs, depending on whether they have a propeller guard?

I notice that one of the allegations in the prayer for relief in the complaint was they provided an unreasonably dangerous design in utilizing an unprotected propeller.

That... as I read that, that wouldn't necessarily mean every boat needed a... a propeller guard, but rather some particularly dangerous designs might need one.

Mr. Shapiro: Well, what's--

Justice Stevens: So that you get some preemption and some not.

Mr. Shapiro: --The... what the safety council found, the Coast Guard's committee of 21 experts, was that for all boats that travel more than 10 miles an hour, these are infeasible devices.

And the reason is you have to match the propeller guard with the particular engine and the particular hull combination.

There are thousands and thousands of hulls out there.

Justice Ginsburg: But the... the Coast Guard itself didn't find anything.

It said we're not making the standard now.

As counsel for petitioner pointed out, there is no formal action.

There's just non-action by the Coast Guard.

Mr. Shapiro: Well, the... the Coast Guard said that the available accident data compiled by the 21 experts did not support a propeller guard requirement under the--

Justice Ginsburg: But they were still watching it.

They didn't make a... a determination that propeller guards are dangerous, therefore should not be used.

They said we're still keeping this under advisement.

Mr. Shapiro: --And in April of 2001, they looked at this again, and the Coast Guard representative on the safety council said we realize we cannot mandate installation of propeller guards.

They're not feasible, and the propeller guard subcommittee said again, these will increase blunt trauma injuries.

Justice Ginsburg: This is something that's published, that's... that's a formal kind of action?

Mr. Shapiro: Yes.

Yes, Your Honor.

It's... I believe it's footnote 14 in plaintiff's reply brief.

They... they cite to the web site for these council minutes.

Justice Souter: No, but did they... did they go through any, in effect, administrative procedure kind of formal action?

Mr. Shapiro: Well, but under this statute, that isn't necessary, Your Honor.

It... they... they did have--

Justice Souter: Well, it may be... it may not be necessary in the sense that they are under an obligation to do it, but if they don't do something like that, I... I don't know that their... their announcement has any particular status that's relevant here.

Mr. Shapiro: --Well, because of the wording of this statute, which is so different from Geier... it's the exact opposite of Geier... under this statute, unless there's an identical Coast Guard regulation in place, State law is preempted.

Justice Breyer: I don't see how it is so different from Geier.

I mean, you read it as saying if there's no regulation at all, no requirements, then the State couldn't have any tort law?

Mr. Shapiro: Well, as to equipment, associated equipment, for boats, unless there's a Coast Guard regulation in place, the States can't mandate that equipment.

Justice Breyer: All right.

Then you would say, for example... not just that, but in your view if you had, like a propeller that shot torpedoes, I mean, something that was absolutely absurd, you... the State would not be able to have a tort judgment based on that even though the Coast Guard has never had the chance to look into it?

Mr. Shapiro: Well--

Justice Breyer: Now, I mean, I grant you that's a possible reading.

But I think perhaps a better reading of it would be that you can't have a... a rule or a regulation or a tort judgment or any other requirement of law different from a Coast Guard requirement when there is a requirement.

Mr. Shapiro: --Your Honor--

Justice Breyer: But not when there isn't.

Mr. Shapiro: --Your Honor, we... we think that overlooks the history that I began with because under this Court's decisions, the States could not impose requirements for equipment or... or construction, design or structure for boats moving in interstate waters.

That was Kelly v. Washington, a unanimous opinion by Chief Justice Hughes.

Justice Ginsburg: But, Mr. Shapiro, in... in this very setting, the Coast Guard said, when this Boat Safety Act was new, States, until we get around to doing this, your law controls.

So there must have been some scope for State law regulating equipment that was there for the Coast Guard to say, it will take us time to get our regulations.

In the meantime, State law applies.

So there must have been some law to apply in the States.

Mr. Shapiro: Oh, yes, there... there are three exceptions to the preemption provision.

They're explicit exceptions, and we don't have to go looking to the savings clause for a fourth, implied exception.

There... there is an exception if the Coast Guard grants an exemption under APA procedures.

They didn't do that here.

There's another exemption for local hazardous conditions, but that exception doesn't fit here either.

Justice Ginsburg: But I'm talking about in the interim.

It's from... what was it... '71 to '73?

Mr. Shapiro: Yes, Your Honor.

Justice Ginsburg: The rules that applied were State rules because the Coast Guard said, States, your law controls while we haven't got any yet.

Mr. Shapiro: That's the key point, Your Honor.

That was done by formal exemption, and that shows that this statute has the exceptions built right into preemption provision.

Justice Ginsburg: But it shows that there must have been State law.

You... you... I thought you were saying it's been forever or for a very long time that only Federal law sets the standards.

Mr. Shapiro: Yes.

Justice Ginsburg: The Coast Guard must have thought there were standards in existence that could be applied.

Mr. Shapiro: What... what was happening, according to the legislative history, is the States were beginning to require battery covers, anchors, lines, and other pieces of associated equipment, including warning decals on the boats, and Congress says, this has to stop.

There's nothing wrong with these requirements, but we can't have 50 sets of them.

So this field is being preempted for associated equipment requirements until the Coast Guard adopts a regulation or the Coast Guard gives an exemption, which it did in 1971.

And I think the structure is very important.

This is so different from Geier.

There was not a structure like this with three exceptions written right into the statute, and to treat the savings clause, which doesn't say a word about preemption and which the legislative history says is simply a matter of State law defenses, as a fourth, implied exception to preemption truly does violence to the structure of this law.

Justice Ginsburg: Well, what do you--

Justice Scalia: --How do you treat the savings clause?

What... what do you think it means?

Mr. Shapiro: It does not address preemption at all.

It addresses an affirmative defense that it... that could be available under State law.

That's the defense of compliance with Coast Guard regulations or orders or any provision of this entire statute.

Now, section 288C of the Restatement of Torts... this is an echo of section 288C which was published just a few years before Congress passed the savings provision.

It doesn't deal with preemption at all.

It deals with... with compliance.

Justice Souter: Right.

To make this clear, would you identify the kinds of cases that you envision at State law that this clause, in effect, says you may not defend conclusively by claiming compliance with a Coast Guard reg?

What kinds of cases?

Mr. Shapiro: It has a huge scope of operation, unlike Geier.

To start with the Coast Guard's example, the ordinary negligence case, negligent operation was very important to Congress because most of these propeller accidents occur because of negligent operation or reckless operation of the boat.

That's what the Coast Guard says on its web site today.

And so the defendant couldn't defend by saying, gee, my boat complies with all the Coast Guard regulations--

Justice Souter: Okay.

No, no, I understand your point.

But you've got negligent operation and what... what else do you have in mind?

Mr. Shapiro: --The... the next thing the Coast Guard referred to is express warranty.

The defendant couldn't say simply because I've complied with this long list of Coast Guard requirements, I don't have to honor my contractual promises or--

Justice Souter: Okay.

How about negligent manufacture?

Mr. Shapiro: --Negligent installation is certainly covered, and defective manufacture is also protected by the savings clause.

That's when a particular unit comes off the assembly line and it's defective.

Those were the original tort cases--

Justice Kennedy: I... I suppose there would be some close cases.

Suppose there's two ways to make a propeller.

One is to have it slightly canted with a teflon cover and... and a gear mechanism that makes it stop the minute it hits a hard object.

The other is the cheaper way, to make it terribly sharp and no... no ability to stop.

Could the injured party sue the manufacturer of the second kind, the... the cheap, dangerous kind of propeller?

Mr. Shapiro: --It is possible and for this reason.

The language of the statute for associated equipment only preempts requirements for associated equipment.

And that could be construed to mean simply requirements to install propeller guards, which you've not installed.

Now, if you took a different interpretation of requirements for, it might encompass that case, but this Court could give a narrow construction to requirements for.

And this case is the paradigm case because manufacturers have decided not to use this kind of safety equipment because they know it's a hazard.

It's a known hazard.

Several courts have disapproved these devices.

21 safety experts of the Coast Guard have pointed out the dangers that this creates.

So manufacturers have consciously--

Justice Stevens: Mr. Shapiro, I'm not sure you answered my question before.

Again, supposing 90 percent of the boats really don't need a propeller guard, using the reasoning of the committee that decided not to recommend.

But there are 10 percent that are some exotic design that's particularly dangerous and they really are dangerous unless they have a... a propeller guard on them.

Could you say that... that 10 percent has to be treated like the 90 percent?

Mr. Shapiro: --Well, because the manufacturer doesn't know--

Justice Stevens: Well, it's the design.

I'm just talking about a particular design--

Mr. Shapiro: --Yes.

Justice Stevens: --that seems to be particularly hazardous if you had the propeller too close to the person operating the boat or something like that.

Mr. Shapiro: Well, the reason that's preempted and that that is a requirement for associated equipment, even in the case that you give, is because the manufacturer has no idea what hull is going to be put together with this motor.

The motor can move from hull to hull to hull.

And what the Coast Guard found... the... the committee found in its report was that you have to have an exact hydrodynamic fit between the particular engine and the particular hull and the particular propeller guard.

So if juries, say, impose propeller guards on... on designs we think are dangerous--

Justice Stevens: Yes, but what if the manufacturer of the propeller is on notice that it's being... was being purchased for a particularly dangerous design, as I've described?

It seems to me sometimes the... the company could know what kind of boats it's going on.

Mr. Shapiro: --Well, we... we rely on the logic of this committee report which says that... that for all planing boats that go 10 miles an hour or faster, these devices are counterproductive because they interfere with steering.

They double the amount of fuel that's consumed.

They increase air and water pollution and they create serious hazards of blunt trauma injury.

So what the... the committee found was that these devices for any category of planing boat... and here we have a boat that goes 50 miles an hour.

We've got an 18-foot ski boat with a 115 horsepower engine.

Justice Stevens: But you could... it seems to me as a matter of defense to tort liability, you could put all that evidence in, and say in this particular case, our design was sensible for the very reasons you just described.

Therefore, we're not negligent.

Mr. Shapiro: Well, that's true in many of these preemption cases, but all it takes is an errant jury verdict or two or three to coerce a decision by the manufacturer to install devices that are very hazardous to the public.

Justice Breyer: Then all you'd have to do is go to the Coast Guard and say, look what's happened, and then they'd be explicit, if you're right.

And the other side there would have a chance to argue to the Coast Guard that you're not right.

Mr. Shapiro: Justice Breyer, that's cold comfort.

They would hand us this brief that they've just submitted saying that it's up to the jury to decide whatever the jury wants.

Justice Breyer: Well, fine.

If that's the policy of the Coast Guard, then I don't see why you should rely upon them for preemption.

Mr. Shapiro: Well, because Congress had a different vision.

Congress was going with the rule of Kelly, Kelly against Washington.

Justice Ginsburg: Well, why did Congress then say minimum standards?

It didn't say the Coast Guard standards are necessarily adequate.

It just said, Coast Guard, set minimum standards.

Mr. Shapiro: Well, the legislative history is very explicit on that.

The boating associations and the manufacturers associations had all kinds of very elaborate standards of their own, and everybody said during these hearings that is to be encouraged.

We want them to do more of that.

The statute shouldn't stop that.

But there was no suggestion that the States could intervene and impose their own standards and their own requirements.

And in fact, in the Ray decision, this Court said minimum standards under another similar statute do not mean... do not mean that the States can embroider on and supplement those... those standards.

And after all, the preemption provision here doesn't say anything about minimum standards or maximum standards.

It says all requirements for boat safety equipment are preempted unless there is an identical Coast Guard regulation in place.

This is the rule of Kelly against Washington which--

Justice Stevens: Mr. Shapiro, do you cite Kelly against Washington in your brief?

Mr. Shapiro: --We did not.

Plaintiffs cited it in their brief.

It's 302 U.S. And I'll give the Court the cite.

I think it's critically important.

302 U.S. at 14 through 15.

Justice Stevens: It's critically important, but you didn't even cite it.

Mr. Shapiro: Well, it's quoted in the cases that we do cite.

It's quoted in the Ray decision.

It's a... it's an early precursor of Ray and in Locke.

I was explaining it as... as the background of Congress's legislation here.

And I'd like to suggest to the Court that it makes a huge difference here that this is a case that arises in the maritime context.

At a minimum, the maritime context means there is no presumption against preemption, as the court below held.

And because Congress wanted to achieve uniformity--

Justice Souter: Well, I mean, that may be true if you're talking about commercial boating, but it's not true of recreational boating.

Mr. Shapiro: --Oh, yes, it is.

We believe it is, Your Honor, because this Court--

Justice Souter: Little motorboats?

Mr. Shapiro: --Absolutely.

Justice Souter: 5-foot skiffs and little put-puts?

Mr. Shapiro: Since the '40s and the '50s, this Court, and later in Foremost and in Sisson, this Court has held that recreational boats fall squarely within the maritime jurisdiction.

Justice Kennedy: Even in New Hampshire?

Unknown Speaker: [Laughter]

Mr. Shapiro: I... there may be some carve-out for New Hampshire in this statute.

[Laughter]

And I've tried to figure out the reasons for that carve-out, and I've never... I've never understood those.

But this is maritime context, and this lake... the U.S. Court of Appeals for the Sixth Circuit has held that is... it's a navigable interstate body of water.

Justice Souter: Yes, because it... it happens to lie on the border between two States, but not every landlocked lake is subject to... to Coast Guard maritime jurisdiction.

Mr. Shapiro: Oh, absolutely not.

It has to be an interstate body of water.

But since the 1850s, this Court has held that interstate waterways are subject to the maritime jurisdiction.

And this waterway, by the way, was constructed by the U.S. Army Corps of Engineers.

It's surrounded with marinas that rent pleasure boats, and this is big business, the pleasure boating business, on Dale Hollow Lake.

And because this is a maritime context, that says a lot about the savings clause, because this Court has held that in maritime cases, savings clauses should be interpreted narrowly to avoid obstructing the carefully constructed preemption provision in the statute and to avoid making an end run around the Coast Guard's expert supervision, which is what Congress wanted.

And we go further and say that because the court below was right in characterizing this as an admiralty case, any conflict between Illinois law and Federal law is just imaginary.

That's because Federal common law follows Federal maritime jurisdiction, and there can't be--

Justice Ginsburg: But you didn't argue that.

I mean, in Illinois... all through the Illinois State courts, the assumption was that the... the law to be applied, if you could have a common law, would be Illinois common law, not some Federal maritime common law.

Mr. Shapiro: --Well, the Illinois Supreme Court agreed with us on this point.

They have two pages in their opinion--

Justice Ginsburg: They... all they said is that the... the preemptive force is different.

They did not say that Illinois common law was displaced.

That is, if there is State law to... if there is law other than the Coast Guard regulations to apply, it was Illinois State law all... all along.

And as far as I know, it wasn't until this Court that you raised the question, never mind State law, the Federal maritime law would control in any event.

Mr. Shapiro: --Well, we think this is an included question.

It was certainly addressed by the court below.

The court below cited this Court's Jensen decision, which is the leading maritime preemption decision.

And it was using maritime analysis to support the preemption holding that the court ultimately made.

Now, this was step number one in our preemption argument below, but we're entitled to elaborate it in this Court and cite additional cases.

Justice Ginsburg: Well, why was the argument that Illinois law is preempted, why was that at issue at all if, as you say, there is no State law in this area?

It's all Federal.

Mr. Shapiro: Well, we... we proceeded to argue in the alternative that under express preemption and under a conflict preemption that... that State law was preempted.

But with a two-page discussion in this opinion on maritime, I think it is an addressed and included question.

And if the Court doesn't consider--

Justice Ginsburg: Did you... in your... in the briefing of this case in the State court, did you make the argument Federal law covers the waterfront?

There is no State law to apply?

Mr. Shapiro: --We made the first part of the argument.

We said Federal law covers the waterfront because Congress conceived of this as a maritime question and was preempting State law broadly, exerting its traditional, under Kelly against Washington, the usual Federal Government role over equipment installed on motorboats.

And we said that this is an enclave of Federal law.

And we cited this Court's Yamaha decision and we cited the Foremost decision.

We cited admiralty cases and we said it was an admiralty case.

Justice Ginsburg: But Yamaha said that this is an open question, and it didn't resolve it.

Mr. Shapiro: Right, but our... my point is that we were citing this Court's admiralty decisions.

And then the Illinois Supreme Court went further and cited a host of additional admiralty decisions.

Now, when you have that kind of discussion in a State court opinion of a Federal law issue, this Court, I believe, can reach that as an included question and it's an intertwined question.

And let me suggest it is the easiest way to resolve and the narrowest way to resolve this case because it is propeller guard-specific.

It makes no aggressive law regarding tort claims on... on the land, and--

Justice Stevens: But, Mr. Shapiro, the Solicitor General disagrees with you on this point.

Mr. Shapiro: --The Solicitor General hasn't briefed this point, the maritime law point.

Justice Stevens: I... I thought his brief said he thought they're wrong on the presumption going the other way.

I'm pretty sure that's in his brief.

Mr. Shapiro: Well, I don't think--

Justice Stevens: Are you suggesting that if this action had been in Lake Geneva, Wisconsin, instead of where it was, you'd have a different result or you might have a different result?

Mr. Shapiro: --I think you'd have the same result, but you would have fewer reasons for reaching that same result.

Justice Stevens: The argument you're making now would not apply.

Mr. Shapiro: It would not apply.

It would apply to... to Lake Michigan but not to Lake Geneva.

Now, I'd like... like to return to Justice Kennedy's comment about the conflicting judgments among State courts.

If... if Illinois were to mandate propeller guards and back up the judgment with millions of dollars in damages, that would impose these devices on all the people in the United States, and at everybody's estimate, these are risky devices with serious problems.

And in the next case in another State, we would be sued for installing these devices.

The Walt Disney World was sued.

They put a little propeller guard on a bumper boat and they were sued when a kid's arm got caught in the propeller guard.

So sure as can be, if... if one State mandates them, the next State is going to penalize them.

And the legislatures of the State... this is the worst and most shocking aspect of this theory.

The legislatures of the States could not protect their citizens against--

Justice Ginsburg: I don't see that, Mr. Shapiro.

I don't know why the Illinois State legislature couldn't say that our State law is the Coast Guard's standards and nothing else.

A State legislature could see that this kind of result of a jury never happens again.

The State would be free to say precisely that whatever the Coast Guard includes is the law, and what they haven't included, it can't be required.

The State legislature could enact such a law.

I don't see why it couldn't.

Mr. Shapiro: --What it... what it could not enact is a law that says no boats coming into the State of Illinois or California may be equipped with propeller guards.

Why?

Because that's not identical with the Coast Guard regulation.

And yet, the juries in various States could be imposing these devices.

People could be losing their lives and boats--

Justice Ginsburg: Why couldn't a State legislature say, satisfaction of the minimum standards prescribed by the Coast Guard excludes any other liability for design defects?

Mr. Shapiro: --Well--

Justice Ginsburg: Why couldn't the State legislature say that?

Mr. Shapiro: --I think that that may well be a safety standard in disguise, but it... the State could not do the thing that it really had to do which was to prohibit boats using propeller guards.

If... if juries in various parts of the United States put pressure on manufacturers to put propeller guards on their boats, the legislature needs the power to say no, this can't come into the... can't come into the State.

But that is clearly preempted under the SG's interpretation of the statute.

And I think that is a true disservice to federalism, to have these kinds of conflicting judgments, and it shows the wisdom of Congress's architecture in this statute, that the States may not impose requirements for propeller guards unless and until the Coast Guard vets these proposals, finds that they're safe, finds that they satisfy Federal criteria of feasibility and safety, and adopts the rule and a regulation.

It's like FDA legislation, protect the public against common law claims of this sort that could have such serious adverse effects on the public.

Justice Breyer: Well, you... you say that... that in the situation you... where you have the conflicting jury verdicts, which I agree is a problem, you go to the Coast Guard and tell them that, and they just say, oh, that's too bad.

We don't care.

They might not say that, of course.

But... but if they did say that, that's why Congress insisted that you have this identical requirement.

That's your view.

Mr. Shapiro: Yes.

Justice Breyer: But suppose they do just refuse to have any requirement.

I mean, that's equally absurd to me.

On the one hand, you point to one absurdity one way, but it seems equally absurd to have no law in the area where the Coast Guard just refuses to act.

Mr. Shapiro: The... there's a good reason for refusing to act in this instance, and that is, these devices are very hazardous.

You can't turn the boat safely.

There's a danger of blunt trauma injury that is worse than the propeller slices.

A surgeon can slice up propeller slices occasionally, but the blunt trauma injury from a propeller guard is lethal if it hits you in the chest or in the head.

And it... it... the steering is interfered with.

You have to double the horsepower of these engines once you put a big bird cage around or a big circle around the propeller guard.

There... there are thousands of pounds per square inch of pressure exerted on these propeller guards, and they create a serious navigation hazard.

And it... it isn't just the committee that in 1990 concluded that these were dangerous.

These were 30 experts on safety appointed by the Secretary of Transportation that assigned all these dangers and feasibility problems.

And this is exactly, by the way, what seven courts have held who've looked on... at propeller guards on the merits.

They've held that these devices are not feasible and that they're dangerous.

There's not a single court in the United States that has said that these have to be installed.

And so, this is the problem, the real world problem, of having individual juries listen to those who lost before the administrative forum on propeller guards.

Okay, we're going to start all over again in the court system, and now we're going to get juries to start commanding installation of propeller guards.

There's a real world hazard, a danger for the public, and Congress has wisely drafted this statute to protect us and our children against that risk.

Now, these devices clearly raise policy concerns of nationwide significance and that's why the Coast Guard had to consider these issues in proceedings around the country that lasted for 18 months.

Many sectors of society are affected by these devices, and Congress just did not intend that individual juries were going to make these decisions for the whole country.

This would be extraterritorial regulation with a vengeance, just what this Court said in Locke should not be done under State law.

Now, my friend also has argued in the brief that safety is the goal of the Boat Safety Act, and that uniformity is just a secondary concern.

But Congress did pursue its safety agenda through a particular method, and that was uniform standards for marine equipment.

Congress wanted the whole Nation to benefit from safe and efficient standards, and it wanted the whole Nation to be protected against standards and requirements that represent risky experiments.

And that's just what propeller guards are.

And that's why the Coast Guard said in 1991 that these standards have to meet stringent Federal criteria before they're imposed.

And that does bring us back to congressional intent because when Congress passed this preemption provision, the States were starting to adopt requirements for battery covers and for warning placards on boats and for lines and anchors.

And Congress said, that's fine, but we can't have 50 sets of these requirements.

We've got to be uniform set of these requirements.

And it is untenable to conclude that although the harbor master at Belmont Harbor cannot compel the installation of propeller guards, the Circuit Court of Cook County is perfectly free to do that with a big threat of damages.

Both of these are exercises of Illinois law and they're both preempted.

We accordingly urge this Court to affirm the decision of the Illinois Supreme Court.

Rebuttal of Leslie A. Brueckner

Chief Justice Rehnquist: Thank you, Mr. Shapiro.

Ms. Brueckner, you have 3 minutes remaining.

Mr. Brueckner: Your Honor, the... the maritime argument was waived.

The reason the United States never briefed it is that respondents didn't even raise it in their opposition brief to this Court.

It was never raised until they filed their brief on the merits.

This is not the time or place to decide the issue raised by respondent, particularly the Yamaha question that was specifically left reserved in Justice Ginsburg's opinion.

On the savings clause, their whole argument is that the savings clause must be read simply to preserve breach of warranty and negligent installation claims.

Not only is this not supported by the language of the clause, which is itself broad, but the legislative history of the Boat Safety Act in the Senate report... let's forget about the Commandant for the time being.

The Senate report states... and I'm quoting from the blue brief at 32... that the purpose of this section to assure that in a product liability suit mere compliance with the minimum standards promulgated under the act will not be a complete defense to liability.

This demonstrates that Congress had in mind product liability actions just like this one.

Respondent also claims that these boats are... are terribly... that propeller guards are terribly hazardous and the Coast Guard has found this.

Well, first of all, the Coast Guard letter doesn't say anything about the hazards of propeller guards.

And contrary to Mr. Shapiro's contention, in April 2001, the Coast Guard's advisory committee issued... stated in its minutes a recommendation that the Coast Guard actually require propeller guards as one of four permitted options on boats exactly like this one.

This is... the cite is on page 11, footnote 14 of the yellow brief.

So not only did the Coast Guard not find in 1990 that propeller guards are hazardous, but it's considering requiring them on boats just like this one.

On the conflicting judgments point, Mr. Shapiro raises the specter of conflicting jury verdicts in these cases and Congress cannot possibly have intended that result.

That's exactly the result that Congress permitted in the context of motor vehicles where, absent a Federal safety standard, the States are... juries are permitted to impose whatever liability they choose.

And even where there's a minimum standard, under Geier, jury verdicts may be permitted to go forward.

But if... and indeed there are conflicting jury verdicts that arise, the Coast Guard can step into the breach, and as Justice Ginsburg suggested, State legislatures could pass a rule saying that no liability could be imposed in cases like this one.

I would also point out on this conflicting jury verdict problem that we are not seeking punitive damages in this case.

Punitive damages are not available in Illinois in a wrongful death action.

Finally, I would note that the absence of a regulation is itself reason to find no preemption here.

This statute, as we read it, provides that common law claims may be permitted to go forward unless there's a conflict.

Here there's no regulation.

There's no formal statement of agency purposes.

There's no articulated reasons that our claim could possibly conflict with.

And finally, at the end of the day, we have a victim here who would be left without any compensation whatsoever if this Court holds that common law claims are preempted.

We would urge this Court to permit our claims to proceed.

Thank you.

Chief Justice Rehnquist: Thank you, Ms. Brueckner.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Norfolk Southern R. Co. v. Shanklin - Oral Argument

Fri, 09 Jan 2009 14:50:21 +0000

Case:

Norfolk Southern R. Co. v. Shanklin

Media File:

99-312_20000301-argument.mp3

Related Transcript:

1999_99_312_argument.xml

Transcript:

Argument of Carter G. Phillips

Chief Justice Rehnquist: We'll hear argument now in Number 99-312, Norfolk Southern Railway Company v. Dedra Shanklin.

Mr. Phillips.

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

7 years ago in CSX v. Easterwood this Court held that when the provisions of 23 C.F.R. 646.213(b)(3) and (b)(4), which from now on I am going to refer to as (b)(3) and (b)(4), because otherwise I won't get any of my argument out, quote, are applicable, State tort law is preempted.

Specifically, the Court identified the sine qua non of preemption as whether, quote, Federal funds participate in the installation of warning devices at the particular site.

Preemption, the Court held, was appropriate in that context because the determination of what type of warning device to be installed at a particular crossing is in those circumstances, quote, subject to the Secretary's approval.

The Court expressly recognized that under that particular regulatory scheme the Secretary has decided the means by which railroads are to participate in the selection of a particular device and thus, when applicable, the Secretary's regulations cover the subject matter of tort law regarding the adequacy of the particular devices within the meaning...

Justice O'Connor: Well, has the Secretary determined the devices to be installed here, or is it just some minimum program we're dealing with?

Mr. Phillips: This is not a minimum program, Justice O'Connor.

All of... the program is the program.

(b)(3) refers specifically to any project, which means that if Federal funds are involved it is subject to the approval of the Secretary on the same standards as any other project that happens to be submitted for the Secretary's approval, and on the same standards.

Justice O'Connor: I somehow had the impression that we were dealing here with a crossing that had crossbucks installed under the minimum program for a State.

Mr. Phillips: I think it's important...

Justice O'Connor: In this case, Tennessee.

Is that right?

Mr. Phillips: No.

Justice O'Connor: No, okay.

Mr. Phillips: That's absolutely wrong, Justice O'Connor, on two counts, one a matter of law, and one is a matter of fact.

The legal problem with the argument is, there is no such thing as a minimum protection program that is distinct under (b)(1) from the projects, from the any projects that are referenced in (b)(3).

(b)(3) specifically has the heading, adequate warning devices, and it is designed to ensure that all projects that receive Federal funds are in fact approved, and that the Secretary has at least available the option to say no, additional safety is required in a particular circumstance.

The fact that the Secretary doesn't do that routinely is simply a reflection of the respect that the Secretary has in the way the States operate...

Chief Justice Rehnquist: Mr. Phillips...

Mr. Phillips: the section 130 program.

I'm sorry, Chief Justice.

Chief Justice Rehnquist: Where do we find (b)(1) and (b)(3) set out in the... in your brief, or somewhere else?

Mr. Phillips: It's in the appendix to the petition, Mr. Chief Justice, at pages 46a and 47a.

Chief Justice Rehnquist: Thank you.

Justice Kennedy: Is it your position that preemption occurs when the devices are installed and the... pursuant to the Federal program, and the money's paid?

Mr. Phillips: Yes.

I think both of those are probably required in any given circumstance.

Justice Kennedy: That's the point at which preemption occurs?

Mr. Phillips: Right.

At that point, preemption occurs, and at that point as well, of course, that particular crossing we now know is part of this global 130 program that is designed to systematically, comprehensively collect data, analyze each of the crossings throughout the State, and make a determination on a regular basis as to whether or not those crossings are adequate on a going-forward basis.

Justice Ginsburg: Mr. Phillips, you started with discussion of the Easterwood case, and that was a case that held there was no preemption, yet you're using it to support your position that there is preemption.

Now, no doubt that case held Federal assistance is necessary to preemption, but it never homed in on the kind of crossing protection involved here, that is, simply the sign.

There was... the Court was looking at an upgraded... was it not?

It wasn't a simple sign, but it was some kind of a gate that was involved?

Mr. Phillips: No, Justice Ginsburg.

What was actually involved there, there was no evidence as to any protections at the Cartersville...

Justice Ginsburg: Yes, but...

Mr. Phillips: Crossing in CSX.

Justice Ginsburg: Yes, but the...

Mr. Phillips: There was...

Justice Ginsburg: It was originally a proposal not for a simple sign, but for gates.

Then that was transferred to some place else.

Mr. Phillips: No...

Justice Ginsburg: All... my only point is that the Court was not looking at what we have before us today.

That is, funding simply of a sign.

Mr. Phillips: Okay.

Again, there are two answers to that, Justice Ginsburg.

First of all, this is not funding of a sign.

What actually happened in Tennessee... Tennessee has a program, a quote, minimum program that is Tennessee-specific, that is different, that is unique to Tennessee.

Every other State basically has a project, but Tennessee decided to upgrade over what is required specifically under section 130.

Section 130 says, yeah, everybody should have a sign at a crossing.

Tennessee went beyond that and said, you have to have reflectorized crossbucks, and you have to have a warning sign at every crossing.

That is above and beyond the Federal minimum, and that is exactly what was placed on all of the projects that were involved in the 1987 Federal funding.

That's the scheme in place here.

Now, that's the factual distinction which says, this is not... even if you want to work off of a notion that there's a minimum sign program, which I don't think is incorporated into this regulatory scheme, it wouldn't apply here.

But the more... but over and above that, it's clear that this regulatory scheme envisions that the Secretary will pay money and then be responsible, along with the State on a prospective basis for ensuring the safety and the protection of the citizens who have to make... who have to go across those particular crossings, and the Court understood that when it set out the legal framework to be applied in this particular context.

To be sure, the Court held there was no Federal funding at that particular site.

Justice Ginsburg: It held there was no preemption, and I'm a little troubled at the idea of taking a case that held there was no preemption in that case to establish beyond question that there is preemption in a case that was not before the Court.

Mr. Phillips: Well, I wouldn't be so bold as to tell you that there's no basis for rethinking the wisdom of the basic analysis in Easterwood, but the reality of what happened in Easterwood is, the Solicitor General described this exact scheme and said that this is a... that this prospective approach will work perfectly well, it is exactly what Congress wanted, but the key is to make sure that each individual grade crossing is embraced by this scheme, and you can only be assured of that once you have Federal funding, or that Federal moneys participate in the installation of the devices for any project under (b)(3).

Justice Ginsburg: If the Secretary decided that it would be desirable to have every crossing meet at least a minimum standard, there would be no way to do that without affecting preemption, in your view?

Mr. Phillips: I think if the Secretary spends the money under the program that's set up today, under the (b)(3), (b)(4) program that exists today, then the Secretary would necessarily have to review the moneys that are being spent and ensure that those projects are being done in a safe fashion, and then rely on the States, subject to Federal approval as well, because it's all federally funded, to ensure the future safety of them.

Justice Ginsburg: But he couldn't... the Secretary couldn't say, in your view, we don't want to engage in that kind of detailed analysis, we just want to say universally every crossing will have at least the minimum sign?

Mr. Phillips: I think the answer to that problem would be that the Secretary ought to change the regulations so that they no longer define adequate warning devices at all projects for which Federal funds are involved.

Justice Ginsburg: Under these regulations the Secretary...

Mr. Phillips: I think if they want to get out of that they could do that.

Justice Ginsburg: could not do that.

Mr. Phillips: I'm sorry?

Justice Ginsburg: Under these regulations, the Secretary could say... couldn't say, without looking at any particular crossing, we are going to require every crossing to have at least the minimum.

Mr. Phillips: That's correct.

The way this is set up at this point, it specifically says any project, and I think that language necessarily means that if you're allowing Federal funds to participate, regardless of how you do it, you preempt State law.

I want to be clear about this, though, and it's the reason why Easterwood is a sensible approach to this problem, is, it doesn't mean that people are left unprotected.

That's the suggestion made by both the Solicitor General and the respondent in this case.

The point here is that the States have a continuous obligation, and the railroads have a continuous obligation to update information about each one of these grade crossings, the information that they have available.

How many trains are running?

What kinds of materials are running on those trains?

What kinds... and from the States.

What's running on that road?

Is there going to be a high school built next door, et cetera, all of which goes into a yearly report to determine whether or not each of those grade crossings is safe.

You...

Justice Scalia: Mr. Phillips, did the Solicitor General support the outcome that we reached in Easterwood?

Mr. Phillips: He did not support the... oh, he supported the outcome...

Justice Scalia: The outcome.

Mr. Phillips: that you reached in Easterwood, yes, Justice Scalia.

Justice Scalia: Did he support the rationale?

Mr. Phillips: He not only supported the rationale, he... I was going to say invented.

That's probably harsh.

He came up with the rationale, yes, Your Honor.

It was his analysis of this regulatory scheme that suggested that ultimately the linchpin to preemption ought to be Federal funding, because in that way you guarantee that each project has had an initial look, subject to the approval of the Secretary of Transportation, and then you get the benefit of the entire...

Justice Scalia: So you're saying that having persuaded us that that was correct, the Solicitor General now wants to persuade us that it's not correct?

Mr. Phillips: I think the Solicitor General could fairly be described as having come up the hill to ask you to come back down the hill...

Justice Stevens: Well, it's a different Solicitor General, too, isn't it?

Isn't it a different Solicitor General?

Mr. Phillips: My... yes, Your Honor, there is a different Solicitor General.

Justice Stevens: Representing a different philosophy on this whole area of the law, I would say.

Mr. Phillips: Well, I... no question about that, Justice Stevens.

Justice Stevens: Yes.

May I ask just sort of a basic question?

Normally when we have sort of a preemption here the railroads contribute something.

They pay a lot of money to do something, and in exchange they get the exemption from tort liability, but here it's rather odd, because as I understand from your brief the incentive to put in the safety devices for the railroads isn't... is not... tort liability doesn't provide a sufficient incentive, because the cost of installation exceeds their potential liability.

You say that in your brief.

And here it's rather unusual because the Government provides the money and with it provides total preemption and protection for the railroads, and the railroads get two benefits at no cost.

Mr. Phillips: But that... and the reason for that... I mean, it's not as though this is... I mean, the reason why there's no cost to the railroads is that there's no real benefit to the railroad because first of all, you know, having grade crossings does no benefit to the railroad.

If the railroad had its choice, it would close those roads so they don't go across the railroad, so that part of it, allowing them to keep going across doesn't provide any benefit.

The safety that you're trying to provide... and that's why the Federal Government doesn't require, and expressly limits the amount the railroads can be made to pay for these particular projects, because they recognize the beneficiary of this particular program are the people, are the users of the highway, not the users of the railroad.

But the reason why it ends up with the particular situation you've described, Justice Stevens, is the nature of the relatively unique statutory preemption under 201.06 in title 49.

There, Congress made it clear that when the Secretary has adopted a requirement, then that preempts State law, and all that the Solicitor General's position and the Court held in CSX was that in this particular context, with the funding that we've made, it was subject to the approval, that creates a requirement that triggers covering the subject matter under the preemption provision, which is how you end up there.

I think in that... I'm sorry.

Justice Breyer: Just on this, go back for a second to the regulation, (b)(4).

I take it that the problem has arisen because most of the time you're telling me everywhere but Tennessee.

Most of the time that the Secretary gives money, or at least a lot of the time, they'll use it to make signs, or they'll use it to make bells, or they use it to make gates or tunnels or something, and normally somebody in authority, whether it's Federal or State, considers that to be adequate.

But sometimes money is taken where we're just going to do this quickly, a quick sign, and we're not saying it's adequate, we're saying it's minimum, and here it's Tennessee that says that, and maybe they're the only ones ever to say it.

That's true, isn't it?

Have I got it right?

Mr. Phillips: Well, I mean, Tennessee said they wanted to have a minimum protection program...

Justice Breyer: Okay, so maybe nobody else ever does, but our problem is, it makes tremendous sense to preempt something, where somebody in authority has said this is adequate, so keep the private plaintiffs out of it.

It doesn't seem to make very much sense to do it when they're just saying it's minimum, but you're telling me that the regs say that, so that's what it is.

But as I look at the reg, the key reg would have to be (4)...

Mr. Phillips: (b)(4)...

Justice Breyer: (b)(4).

Mr. Phillips: Right.

Justice Breyer: (b)(3) doesn't apply.

Mr. Phillips: Right.

Justice Breyer: And it talks about whether the determination is made by State regulatory agencies, State highway, et cetera.

Well, why couldn't you say, the word determination there means the determination that this is adequate, as well as what it is, and so the reg, (b)(4), can... because you don't need that clause set off in commas, you know.

It can refer to giving the money, and obviously, if there's some determination that it's adequate, then you read it as preemptive, but if nobody's ever made a determination that it's adequate, it just doesn't preempt, or it doesn't apply.

It's talking about adequacy determinations.

It's talking about applying where there... could you read it that way?

Mr. Phillips: Well, Justice Breyer, the next line where you stop the quotation...

Justice Breyer: Yes.

Mr. Phillips: says, subject to the approval of the Federal Highway Administration.

Justice Breyer: Yes.

Mr. Phillips: So the initial determination of adequacy is made by those who are the closest to the situation, and they cover essentially the scope of individuals who would have information relevant to make the determination as to the adequacy of these particular devices, but all of that remains subject, ultimately, to the Secretary's approval, and if the Secretary's not convinced that these are adequate, and essentially that has to be...

Justice Breyer: This, I don't understand about how it works.

Suppose that Tennessee takes $ 43, $ 43,000, and it says, with this $ 43,000 we are going to make two signs at two crossings, and we tell you, this may not be enough, absolutely may not be enough, and they have to get the Secretary's approval.

Now, is the Secretary forbidden to approve it unless Tennessee says it's not adequate?

Tennessee said it's not.

We don't know if it is.

Mr. Phillips: Well, what is clear is that the Secretary is supposed to exercise discretion, particularly with respect to all 109, section 109...

Justice Breyer: Well, you have a 109 argument, but if I don't read 109 the way you read it, why don't I read the reg to say, where there's an adequacy determination by somebody in authority, you win?

Where there's no adequacy determination, 10... the (b)(4) does not bar anything.

Could I read it that way?

That's my...

Mr. Phillips: I don't think that would be... the scheme was designed to be comprehensive and, indeed, I don't read the... I don't read the...

Justice Souter: Wait, are you...

Justice Scalia: What is the word... doesn't it hinge on what the word determination means?

Mr. Phillips: Yes, that's right.

Justice Scalia: Well, how can you possibly read determination to refer to adequacy?

Where the requirement of 64... 646.214 be... are not applicable, the type of warning device to be installed...

Mr. Phillips: Right.

Justice Scalia: whether the determination is made by a State or regulatory agency is subject to the approval of...

Mr. Phillips: Right.

Justice Scalia: That word determination there obviously means the determination of the type of warning device to be installed.

Mr. Phillips: But Justice Scalia, the entire regulatory scheme is the (b)(3), (b)(4) scheme, and look at the beginning of (b)(3).

It says, adequate warning devices.

This is an entire effort... and the Court recognized this in CSX.

This is an entire effort to make sense out of a grade crossing situation that was a mish-mash of State and Federal law, and to provide a comprehensive solution to it which requires that the Secretary have ultimate control both in terms of making safety determinations, which comes out of 109, and this is an implementation of 109.

Justice Scalia: I don't deny that.

I am just focusing on whether the word determination in (4) refers to adequacy or refers to the type of device to be installed, and it seems to me it clearly refers to the type of device to be installed.

Mr. Phillips: Oh...

Justice Scalia: And if the State says, even though we think this device is not adequate, just between you and me, we're going to install it.

That has been the determination made by the State, and it would be subject to the approval of the Secretary.

Mr. Phillips: And that... to me that's the pivotal point, though, is the subject to the approval of the Secretary.

It means it's also subject to the disapproval of the Secretary on the basis that this is not adequate for the particular circumstance.

The fact that the States do an outstanding job and therefore don't implicate this problem doesn't mean that the Secretary doesn't necessarily have that authority and, frankly, the fact that Texas is here defending the State's job I think speaks volumes.

Justice O'Connor: And you say the Secretary has exercised it just by providing the funds, whether or not any particular review is made?

Mr. Phillips: Well, the Secretary receives whatever information the Secretary wants on a project-by-project basis if that's what he requires, and then has to sign... one of his delegees has to sign off on it, so yes, there has to be a determination under those circumstances.

I'd like to reserve the balance of my time.

Argument of Gregory S. Coleman

Chief Justice Rehnquist: Very well, Mr. Phillips.

Mr. Coleman, we'll hear from you.

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

Justice Breyer, I'd like to begin with your question.

The main concern here is, what are you doing?

Why should we allow a preemption if you're just putting in crossbucks without any independent determination of whether that's good enough?

And the reason that that should not be a concern to this Court is that the respondents and the United States are attempting to get the Court to look at this particular aspect of the crossings program, when you go through and make sure that all the crossings have at least crossbucks.

What they're forgetting about is the rest of the crossings program.

Part 924 requires the States to have a prioritization scheme which collects astounding amounts of data about each of these crossings.

Chief Justice Rehnquist: Where do we find 924?

Mr. Coleman: It's in the same... 23 C.F.C. 6... part 924 generally describes the process by which you create, or collect the data about the crossings and then crunch it through, and you have a prioritization scheme.

It's basically a mathematical formula that collects data about these.

The railroads are required to give the States data.

The States collect their own data.

They crunch the numbers and they come up with a priority score for each crossing.

The States then, every year, look at all of the crossings and find where the crossings have the highest hazard risk.

Let's go and do active device conversions of those crossings, and that's what we do.

Now, in Texas, for instance, we get approximately $ 22 million a year for this program.

In Texas, we could go to every passive device crossing in the State and put in new crossbucks and what-not every single year and only use about a third of our money.

So if we did a State-wide crossings program, which we're actually getting ready to do another one to upgrade a lot of the crossbucks, we still have about two-thirds of our money to go down the survey and determine which crossings have the highest relative risk, where do we want to spend the money that we have to upgrade from crossbucks to active devices, and in Texas that's almost always gates and flashers, the (b)(3) type devices.

That's why it should not be a concern.

Justice Scalia: You mean to upgrade even where it's not required?

Aren't you... you're required to have that?

Mr. Coleman: We upgrade even where it's not specifically required by (b)(3).

Justice Scalia: Okay.

Mr. Coleman: We have in Texas about 12,000 public crossings.

Justice Breyer: What about number 8,617 on the list?

You say, gee, that's a concern, because you know, if you really look at it, it's not a great crossing, and people have been hurt there, and somebody would like to sue the railroad because they think the railroad should have done a better job itself, and why should the fact that you happen to put a crossbucks up when the plaintiff is going to say, that's woefully inadequate, stop the plaintiff from suing just because maybe 15 years from now you're going to get around to number 8,617?

Mr. Coleman: Well, Justice Breyer, that's ultimately the question in this case, who gets to decide that.

Justice Breyer: Yes, right, but I mean, you haven't relieved the concern by saying that that is what's there.

I mean, I'd be worried about it, and that's my basic question.

Mr. Coleman: The concern, and the concern expressed in Shots and Shanklin is that the States aren't doing a good job in prioritizing crossings and putting in active devices where the...

Justice Breyer: They're doing a great job.

The concern is, there's a limited amount of money, and number 8,617 on the list, woefully inadequate though it is, could be the railroad's fault for its woeful inadequacy, and that's what this plaintiff claims.

Mr. Coleman: That simply not the case in Texas or in other States.

Justice Breyer: You mean, there's no bad crossing way down on that list that the railroad's never in fault?

How would we know?

Mr. Coleman: I'm not saying that there are no bad crossings, but this program is nearly 30 years old.

We have 12,000 crossings.

We have approximately 4,500 crossings in Texas with active devices.

Texas has thousands of rural crossings that have very low priority index scores, but the types of crossings we believe, and the people at our Department of Transportation believe the types of crossings that absolutely require active devices under (b)(3) were covered long, long ago.

What we're talking about now is relative risk relating to vehicle traffic, train traffic, speeds of trains, and we simply go down the list each year and choose those crossings that have the highest risk, and then we convert them to active devices, and even if we did a State-wide project, we still have two-thirds of our money for that year to do that, so if you think about it...

Justice Stevens: I'm puzzled about one thing.

How does the outcome of this case bear on your ability to carry out your own program?

Does it matter which way we decide it?

Mr. Coleman: We think it does.

First of all, we think that this is an excellent Federal-State cooperation program that has worked well...

Justice Stevens: Federal-State without requiring any contribution from the railroads.

Mr. Coleman: It has worked very well.

Justice Stevens: Yes.

Mr. Coleman: The safety statistics have dramatically improved over the past 30 years, and fatality rates have plummeted during the time this project... program...

Justice Stevens: But wouldn't that happen no matter which way we decided the case?

Mr. Coleman: If the Sixth Circuit determination in this case is correct, that there must be a separate Federal determination regarding the adequacy of all the devices, we think that that will divert resources.

We, the States, are already doing these determinations.

Justice Stevens: But it will divert the railroad's resources.

It won't divert your resources.

Mr. Coleman: We believe it will divert Federal resources, because it will be the Federal Government that will have to make independent determinations.

The Federal Government will start sending out, or having to send out duplicative diagnostic teams, what-not.

That is money...

Justice Breyer: Suppose we just said, where nobody has said it's adequate, under those circum... nobody in authority has said it's adequate.

Under those circumstances, no preemption.

Would that meet your problem?

Mr. Coleman: I don't believe you can say nobody has said it's adequate, because in any given year... for instance, if Texas does a State-wide crossings program, it still has two-thirds of that money.

It looks down the survey list regarding the relative priorities and it makes a determination as to which crossings will receive active devices and which crossings won't.

That determination...

Justice O'Connor: Mr. Coleman, you seem to be arguing something contrary to what Mr. Phillips argued.

He seemed to be saying the Federal Government does make these determinations, and you seem to be saying they just make a blanket determination and we don't want them to make individual determinations.

Mr. Coleman: No, I think my...

Justice O'Connor: So how does the scheme work?

Mr. Coleman: Justice O'Connor, I believe my argument is entirely consistent with Mr. Phillips.

The States make the determination as an initial matter.

They are submitted to the Federal Highway Administration for approval under (b)(3) and (b)(4).

We believe that all of these programs are submitted under (b)(3) and (b)(4) and are submitted for approval and, as he noted, the fact that the Secretary approves most of these programs suggests that the Secretary does have confidence in the State's ability to evaluate these crossings.

Justice Scalia: I assume he can look through the statistics that you've generated as to the traffic, as to the nearness of high schools and all of that.

Mr. Coleman: Yes, Justice Scalia.

Justice Scalia: And on the basis of that determine that this is not a place that in his view requires an automatic signal.

Mr. Coleman: The Secretary has discretion to do as little or as much background check or updating of the State's numbers as he or she wants.

Justice Scalia: But he has no discretion as to whether or not approval is required.

If he does nothing, he approves?

Is that right or not?

Mr. Coleman: I believe that the regulation...

Justice Scalia: If he accepts it and gives the funding, does that mean that he approves?

Mr. Coleman: Under the regulations, the Secretary may approve, disapprove, the Secretary may qualify approval, the Secretary may condition approval on changes being made.

I believe the Secretary...

Justice Scalia: May the Secretary do nothing and just say, I... you know, may be good, may be bad.

I neither approve nor disapprove.

I am neutral.

Mr. Coleman: I don't think that Federal funds can be used unless there's an approval.

Justice Kennedy: Well, is that 23 U.S.C. 109 that says that Federal... which is at 40a of the appendix to the petition at the top of the page.

It says, no funds shall be approved for expenditure unless proper safety devices complying with safety standards determined by the Secretary at the time as being adequate shall be installed.

Does the intersection that's involved in this case, the Oak Church intersection, come within the ambit of the highways covered by 23 U.S.C. 109?

Mr. Coleman: There's some question about whether the text of that provision applies.

We believe that the spirit does, because the programs were brought together in the seventies.

Importantly, the Federal Highway Administration has never made any distinction between on-system or off-system crossings.

The States, when they submit projects, include both on-system and off-system for approval.

Justice Kennedy: On-system meaning a Federal aid highway or a highway affected under chapter 2?

Mr. Coleman: Yes, Justice Kennedy.

We believe that when the States make these determinations the Secretary is expressing approval of the devices.

Chief Justice Rehnquist: Thank you, Mr. Coleman.

Mr. Coleman: Thank you.

Argument of Thomas C. Goldstein

Chief Justice Rehnquist: Mr. Goldstein, we'll hear from you.

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

Our position, as several of the questions have identified, is that the Government did not determine that minimum protection devices would be adequate to protect the Oakwood Church Road crossing and, to put that in the language of the preemption provision of the Federal Railroad Safety Act, no Federal regulation or order, quote-unquote, covers the subject matter of the State law duty here, which is to provide an adequate warning under the circumstances at the crossing of the approach of a train.

Now, we are joined in that view both by the Federal Government, whose regulations or orders are involved, and also the testimony of the Tennessee State official who ran the program in question.

Justice Scalia: Now, the position... your opponents claim that the position that you're asserting here was not the position that you took in the court of appeals, is that correct?

Mr. Goldstein: I'm...

Justice Scalia: I mean, as to the outcome of course it is.

Justice Breyer: You're not representing the Solicitor General.

Mr. Goldstein: That's correct, I...

Justice Scalia: No, I thought it...

Mr. Goldstein: But I think Justice Scalia is correct.

He understands that.

Justice Scalia: Yes, I understand who you are.

Mr. Goldstein: No...

[Laughter]

Justice Scalia: And... now, I may be wrong about what's asserted in the opposing briefs, but I thought they asserted that with respect to you it's a new position as well.

They assert that.

Mr. Goldstein: I don't understand there to be any tension between our position below and here whatsoever.

Our position is that you have to... the Government has to have decided what's adequate here if it's going to cover the subject matter of a State law duty to provide an adequate warning.

Justice Scalia: No, but you go along with the Government's division of (3) and (4) into minimums and then those areas where you need on-site inspections to go above the minimums.

That's not the position you took below.

Mr. Goldstein: What we explained below is that this is a crossing, if you look at it in terms of (b)(3) and (b)(4), just... let's go to the regulations which are the only ones they're alleged to preempt here...

Justice Scalia: Right.

Mr. Goldstein: Is that at the very least, even if these regulations were applicable, they weren't complied with, because the district court explained that the conditions set out, if we could just turn to the cert petition 47a in the appendix, there's a list of six or seven conditions there, and what the district court said, and we supported that view on appeal, is look, these conditions existed at this crossing.

The State never went out and considered what were... what was the situation at the crossing, and so there was never a determination by the State that what happened here, that the minimum protection devices they installed were, in fact, adequate, and we're saying the same thing here, except we have even a brighter line that's suggested both by the opinion below and by the Solicitor General, and that...

Justice Scalia: Well, I mean, that comes to whether the money could have... can be given.

I thought that the money can't be given unless there are adequate warning devices.

Mr. Goldstein: And that is not correct, and let me just get right to the nub of it.

The... (b)(3) and (b)(4), as the Solicitor General has explained, don't apply to this crossing at all, and let me explain why.

What (b)(3) and (b)(4) are, are provisions that guide determinations of individual crossings.

You go out, you study your crossing with an expert team, and you look at these conditions in (b)(3), and if these conditions exist, then you have to put up lights and gates unless the engineering team tells you otherwise, and if these conditions don't exist, under (b)(4) the Secretary gets to decide what it is you're going to put up.

Justice Scalia: Now, do you need on-site inspection to determine whether (a), (b), (c), (d), (e) and (f) exist?

Mr. Goldstein: Yes.

That's the only way you'll ever know.

Justice Breyer: Why?

Why?

They go into some length saying, of course we could even decide if (b)(3) exists.

We have loads of material.

Mr. Goldstein: But...

Justice Breyer: We have all the statistics.

What do you mean, you have to go out and look?

We have pictures of it in our office.

I mean, what's to look.

Mr. Goldstein: But (b)(4) is the negative.

You... I can tell you, based on a statistical analysis, whether or not there are high-speed trains, sure, and they were here.

The trains traveled at a maximum speed of 60 miles an hour.

What I can't do, without going to the crossing, is make the judgment about these conditions all not being there.

You have to go out and study the combinations that are evaluated here, and in addition the most critical conditions aren't available to anyone, and that... without going out to the crossing, and that is...

Justice Scalia: Excuse me.

I don't... I really don't understand.

You're saying you can tell, sitting in your office, from this mass of statistics, that (a), (b), (c), (d), (e), and (f) exists.

Mr. Goldstein: Some of them.

Some of them, that there is...

Justice Scalia: Ah, not all of them.

Mr. Goldstein: That there are multiple mainline railroad tracks.

There's a piece of data about that.

Justice Scalia: But you can't tell that they don't exist.

Mr. Goldstein: No.

You cannot tell that other of the conditions do not exist, and the most particular example is the sight distance.

You cannot tell, just sitting in your office, and the State's hazard index does not evaluate whether a driver who comes up to the crossing can see the train in time to stop.

And let me just point you to the testimony about this, and what it is that the State actually was doing here as the delegatee of the Federal Government.

Tennessee's official who ran this program explained that when they put these minimum protection devices up they were not evaluating the conditions of the crossing.

This is in the red brief at pages 31 to 35, and I will point you just to...

Chief Justice Rehnquist: Well, I don't know that we would want to decide this case just on the basis of what an official said about this particular crossing.

Mr. Goldstein: Mr. Chief Justice, I understand that.

This testimony is about the Tennessee program writ large, what it is that they were doing under their minimum protection program, and let me just detour briefly to explain that Mr. Phillips is not correct when he says that this is somehow just unique to Tennessee.

As the Federal Government's brief explains, every single State in the country tracks separately and had separate minimum protection programs and a separate program dealing with adequacy.

Justice Kennedy: Well now, this crossing in question was identified as one of I think 196 crossings for which Federal funds were sought, and are you saying that the Secretary approved funds for inadequate safety devices?

Mr. Goldstein: Let me say first that it is, of course, more than 196.

196 were done at once, but there were actually...

Justice Kennedy: The 196 list included this one.

Mr. Goldstein: Yes.

Justice Kennedy: Included Oak Church specifically.

Mr. Goldstein: Yes.

Justice Kennedy: And the Secretary approved Federal funds for the installation of those devices there.

Mr. Goldstein: Yes.

Justice Kennedy: Are you saying that the Federal Government approved funds for the installation of inadequate safety devices?

Mr. Goldstein: Yes, and here is why.

Justice Kennedy: Can it do that?

Justice Scalia: And it's authorized to do that.

Mr. Goldstein: Yes.

Justice Scalia: And that's the SG's position, too.

Mr. Goldstein: Yes.

Justice Scalia: And since he's authorized to do it, I assume they're entitled to those funds whether or not he approves it.

Mr. Goldstein: And in fact there's a congressional mandate.

Justice Kennedy: And you say he can do that consistently with (b)(4), or that (b)(4) is simply inapplicable?

Chief Justice Rehnquist: Or its section 109.

Mr. Goldstein: Let me deal with two separate statutes and a regulation.

109, the only provision in question is 109(e), and the clause that Mr. Coleman was referring to you, there's a provision that says on every Federal aid highway you can only install adequate warning devices.

This is not a Federal aid highway, and I will point you to the supplemental lodging of the petitioner.

The last document in there explains that this is an off-system crossing.

It is a local, rural road, and it was not required to comply with 109(e).

Chief Justice Rehnquist: But the section also says not just Federal aid highway, or highway affected under chapter 2 of this title.

Mr. Goldstein: And chapter 2 is in the main things like Indian lands.

It doesn't apply here, if the Court goes and reviews chapter 2.

There's no allegation by the petitioner.

To return to Justice Kennedy, whether or not there's a statutory and regulatory authority for the Federal Government to approve minimum protection devices that are not adequate, it is in 23 U.S.C. 130(d), which is reprinted in the red brief at page 4 at the top.

It's the first block quote.

This is the statute that set up the hazard program that Mr. Coleman refers to that's in the regulations at part 924, and if I could again, while you're looking this up, detour briefly to note that the Court unanimously held in Easterwood that the program under which Mr. Coleman is relying was not preemptive.

It was just a way to rationalize the spending of Federal funds.

To return back to the statute, there are two things in it, and let me just briefly put this in context.

The Secretary of Transportation went to Congress in 1971 and 1972 and said, look, we've got a real problem.

We've got thousands upon tens of thousands of crossings that aren't protected.

We've only got so much money.

We think that you need to set out funding on an annualized basis so that we can protect more crossings every year, but in the meantime, we have to have...

Chief Justice Rehnquist: As I understand it, you're saying the section you just referred to, the quoted section on page... is the one that authorizes the Federal Government to contribute funds even where the situation is inadequate.

I don't see that in the language that you refer to.

Mr. Goldstein: Mr. Chief Justice, below... the last sentence, at a minimum...

Justice Kennedy: Would you please give me the page number?

Mr. Goldstein: I apologize, Justice Kennedy.

Page 4 of the red brief.

The first block quote, the last sentence.

130(d) says, at a minimum, such a schedule, which is the schedule of improvements, shall provide signs for all railway highway crossings.

That is, Congress said, at the very least, everything has got to have standard signs without regard to the conditions.

The next block quote is the Secretary's implementation of that.

Remember, I did stop to answer the Chief Justice's question.

This is implementing the Secretary's recommendation that we need to install adequate warning devices as Federal funds become available, but in the meantime, because that's going to take so long, we need a finger in the dike.

We've at least got to get standard signs up at every crossings, at every crossing.

And what Mr. Coleman doesn't tell you is that Texas every year upgrades only 150 of its 12,000 crossings.

Justice Breyer, you don't have to get down to number 8,617 to figure out that the State has not stepped in and determined what's adequate.

You can get down to number 1,000 or 2,000.

Justice Breyer: What's bothering me about your side of this is I suspect Justice Scalia was right, and you seem to agree with that, too, that it's pretty hard to read the reg (b)(4) as talking about... the way I wanted to read it, I think that's not really possible, so you just say, well, look, (b)(4) doesn't apply at all.

Mr. Goldstein: That's right.

Justice Breyer: Nor does (b)(3).

And what they come back and say, this is really amazing, here's a new program of the Department of Transportation we've never even heard about, but we're in the railroad business.

There seems, according to the SG and you, to be a program of handing out money to do this provisional thing.

Well, that's fine.

Have such a program, but... and write some regs for it, and don't say they don't preempt, but we've never heard of it up till now, so don't just bring it up for this case.

I mean, I think that's roughly... perhaps a little unfairly, but I think roughly that's what their case is... what they're saying.

Mr. Goldstein: Well, the truth of the matter is that every single State has this program, and every single State has taken money under it.

Justice Breyer: Well, are there some regs on this other program, for example?

Where are they?

Mr. Goldstein: There is a directive from the Federal Highway Administration.

It is the next block quote on the same page, and the directive explains, as... and I'm starting... you can start wherever you like in it, but I'll start at the beginning.

Section 203(a) of the Highway Safety Act of 1973, which is 130(d), requires as a minimum that each State's schedule of improvements shall provide signs at all crossings.

As a first priority, each State, in cooperation with the involved railroad and any other agency having jurisdiction, shall identify those grade crossings at which they are either no signs, or nonstandard signs, and institute an improvement program to provide signing and pavement...

Justice Breyer: I get that point, but does it say somewhere that (b)(4) doesn't apply to that kind of a program?

Mr. Goldstein: No, because (b)(3) is... and (b)...

Justice Breyer: Not (b)(3).

(b)(3) we're not talking about.

Mr. Goldstein: Just Breyer, if I could just...

Justice Breyer: Does it say somewhere (b)(4)...

Mr. Goldstein: point out, as Easterwood twice explains, (b)(4) is just... is triggered only by (b)(3).

It says, when these conditions in (b)(3) don't exist, then you go to (b)(4).

Chief Justice Rehnquist: Mr. Goldstein, the section you just read, which in your brief you say the Federal Highway Administration explained in 1974, and then it's cited FHMP.

Was this a regulation issued by the Secretary?

What sort of a thing was it?

Mr. Goldstein: It's the Federal Highway Program Manual.

Chief Justice Rehnquist: Can you answer my question?

Mr. Goldstein: It is not a regulation.

It is a program manual that is given as guidance to every single State on administering the Federal...

Chief Justice Rehnquist: Well now, that certainly doesn't have nearly the status that a regulation issued by the Secretary would.

Mr. Goldstein: As a matter of deference to the Secretary that may well be true, Mr. Chief Justice, but let me just tell you what really is at issue.

It is not a question of whether you should defer to the Secretary's interpretation.

You are being asked to say what happened, because this is over.

This program was administered by the Secretary from 1973 to the early nineties, and it's now done.

They're not asking for permission to do this going forward.

They're explaining to you what did happen in the seventies, eighties, and early nineties, and what they were doing...

Chief Justice Rehnquist: Well, how could something that was issued in 1974 explain what happened in the eighties or nineties?

Mr. Goldstein: Because this was the guidance that they issued, and this is the guidance...

Chief Justice Rehnquist: Well...

Mr. Goldstein: The regulation, for example, Mr. Chief Justice...

Chief Justice Rehnquist: Well, just a minute, Mr. Goldstein.

You said, as I understood it, that this thing that you quoted here explained what happened in the eighties and nineties, and I said how could it, when it was issued in 1974.

Mr. Goldstein: Just as the regulation was issued in 1975, this is the guidance that the agency gave in response to the statute, and it hasn't been repealed in any sense, Mr. Chief Justice.

That's what the States were supposed to do, and as the testimony collected here explains, that's in fact what the State did.

Justice Stevens, if I could also return to your question about, well, what would happen to Texas and to the other States if the railroad were to prevail.

The real answer is the... that State regulation and State decisionmaking about what's necessary to protect crossings would be preempted.

Texas... remember that the statute preempts all State orders, laws, or regulations.

This is section 201.06, the preemption provision at issue, and it would tell Texas they cannot regulate this crossing any more because they, like Tennessee, like every other State, spent Federal money to put out minimum protection signs without any indication that those signs would be adequate to protect the crossing.

What Tennessee did not do, and it is unquestioned that they didn't...

Justice O'Connor: Well, it wouldn't prevent the State, would it, from coming back later and saying this crossing deserves a better mechanism and we're going to use some of the Federal money, or at least propose to use it, to upgrade?

Mr. Goldstein: That would be the only way.

They could only...

Justice O'Connor: But that could be done.

Mr. Goldstein: They could, but for example, Justice O'Connor, what they could not do would be to come in and say, we've determined that several thousand crossings actually need a fourth or a fifth warning sign.

They can only act from henceforth as the delegatee of the Federal Government.

Their own independent decisionmaking and regulatory authority is displaced.

Justice Kennedy: You were saying that what the State did not do here was?

Mr. Goldstein: What they did not do is send out anyone on their own or on behalf of the Federal Government as the delegatee under the...

Justice Kennedy: Well, isn't that disputed by some later lodging, the Cantrell deposition?

Mr. Goldstein: There is one letter that is not in the record, but it does not dispute my point.

What (b)(3) would require, and this hazard program would require, is at the time you go out...

Justice Kennedy: I thought Farris was an employee of the Tennessee Department of Transportation, and he wrote that after he visited the crossing no signs were needed.

Why are you telling me that they... there was no visit by a State employee?

Mr. Goldstein: Justice Kennedy, what (b)(3) and (b)(4) require is someone go out and determine what warning devices are necessary.

The letter simply doesn't say what it is that you're... what your adverting to.

It is set forth in the supplemental lodging of the petitioner at the end of tab C, and what it says is only... there's a letter from a Congressman that asks Tennessee, is this high enough up on your priority program to spend the limited Federal funds available to install lights and gates, and he answers, this crossing does not have sufficient train-vehicle exposure to qualify for active warning devices.

He does not say that minimum protection devices would be adequate, and he doesn't say that we actually looked and decided what was necessary to protect this crossing.

Justice Scalia: Mr. Goldstein, you know, normally when we interpret a statute it's interpreted.

We don't come back and reinterpret it.

We go on to the next mistake.

Mr. Phillips: [Laughter]

Justice Scalia: What you have... what we said in Easterwood was this, and how does it fit in with your theory?

In short, for projects in which Federal funds participate, not...

Chief Justice Rehnquist: What page are you reading?

Justice Scalia: I'm reading on page 11 from... what I have is from lawyer's edition.

I don't...

Mr. Goldstein: 671 of the U.S. Reports.

Justice Scalia: For projects in which Federal funds participate in the installation of warning devices, not just those which involve Federal highways, the Secretary has determined the devices to be installed and the... has determined devices to be installed and the means by which railroads are to participate in their selection.

The Secretary's regulations therefore cover the subject matter of State law.

Mr. Goldstein: Justice Scalia, that is a description of how (b)(3) and (b)(4) work when it is applied.

You have to look at the eight sentences, the entire paragraph that precedes it.

It explains that when (b)(3) and (b)(4) are applicable, then the Federal Government won't send out the money unless they've determined that the warning devices are adequate.

Justice Scalia: For projects in which Federal funds participate is what it said.

It did not draw a distinction between those projects that involve Federal highways and those that don't involve Federal highways.

Mr. Goldstein: What I'm saying, Justice Scalia, is, the sentence that you are reading describes (b)(3)(b)(4).

It is not setting forth a rule of law, and I will give you an example.

If the Federal Government gave the petitioner a loan of $ 50 million and therefore Federal funds would participate in the installation of warning devices, the Court was not saying that would be preemptive.

What the Court is saying is, when the decisionmaking process set out in (b)(3) and (b)(4) is followed, when we do look at the crossings, then we really have done what the common law does.

We have gone out and determined what warning devices will adequately warn the individuals of the approach of a train, but when all you do is go to tens of thousands of crossings, and without regard to the circumstances simply stick up signs which warns that a track is ahead, not that a train is ahead, and you don't care at all what the conditions were at the crossing, then you haven't done that.

To return...

Justice Breyer: What is it, then... if (b)(4) doesn't apply to this minimal program, what requires the Secretary's approval for the minimal program?

Mr. Goldstein: Section 924, and the other regulations that simply deal with issuing Federal funds.

There are...

Justice Breyer: Is there something in some other regulation that says, for the minimal program you have to get the Secretary's approval to it?

Mr. Goldstein: It says... I apologize.

It says simply that if the Federal Government is going to spend money, the Secretary has to authorize the spending of the money.

Justice Breyer: What says that?

Mr. Goldstein: The part 924 regulations.

Justice Breyer: What's the regulation that says it for this other... well, maybe we'll... I'll look it up.

Mr. Goldstein: There is no reference to the... the difficulty is only that there is... it doesn't say, minimum protection program, but the only thing that would trigger (b)(3) and (b)(4), just to look again at its text...

Justice Breyer: Well, I think what they're saying is for 45 years we thought it governed the whole thing.

Argument of Patricia A. Millett

Chief Justice Rehnquist: Thank you, Mr. Goldstein.

Ms. Millett, we'll hear from you.

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

For 25 years, the Secretary has administered the minimum warning sign requirement in section 130(d), a congressional mandate, as a distinct program separate and apart from its regulatory scheme under (b)(3) and (b)(4) that determines what level of protection is adequate at an individual crossing to make it safe.

Justice Scalia: Ms. Millett, would this have been relevant to our decision in Easterwood?

Ms Millett: Easterwood was so far beyond the minimum program... it was a situation where individual study had already been done...

Justice Scalia: Whether there are two programs, a minimum program and then some supplemental program, was certainly relevant to the preemption decision in Easterwood, wasn't it?

Ms Millett: Well, it wasn't remotely at issue in the case.

It hadn't come up.

No one had addressed...

Justice Scalia: Well, it was at issue... it was relevant to the general issue of preemption and when preemption occurs.

Ms Millett: There are an awful lot of highway programs that are covered and administered by the Secretary.

They weren't addressed.

Now, perhaps it would have been better for us to have spent some time discussing this in our brief in Easterwood.

We did, at the end of our discussion section, note that crossbucks have a special status, that crossbucks had a special status in the manual for purpose of preemption.

Justice Scalia: Did you...

Ms Millett: We did do that in our brief, but we did not go on at length about this program.

But the issue is that we now are sitting here in the year 2000 looking back at what happened for 25 years...

Justice Breyer: Well, they're saying for 25 years we thought (b)(3) and (b)(4) governed this minimal... we're not saying there wasn't some minimal thing.

Maybe there was a minimal program.

But we thought it was governed, just like the whole rest of the program, by (b)(3) and (b)(4), so was there anything that made... you know, that says that wasn't so?

Ms Millett: Absolutely, and the first thing is the practice of the State.

If, if they thought it was governed by (b)(3) and (b)(4), they would have to, as Texas' brief explains quite well, have sent out a diagnostic team to do an engineering study...

Justice Breyer: So they say sometimes you do, sometimes you don't.

Why do you have to send out a diagnostic team in Nevada to see if it's clear, for example, if there's 45 miles of track without a curve, and the same thing is true of the highway, and there's no mountain.

It's a desert.

I mean, why would you have to send out a team to show that there's nothing obstructing the view?

Ms Millett: For purposes of a (b)(3) and (b)(4) determin... because you're not going to get the money from the Secretary unless you submit an engineering study of that individual crossing.

23 C.F.R. 924.9(a)(3) requires the engineering study.

The manual on Uniform Traffic Code devices says engineering studies will be done.

The Railway-Highway Grade Crossing Handbook, which all the States have, says the engineering study will be done.

You do not get funds under (b)(3)(b)(4) without going out, looking at the individual crossing, and deciding what is needed, not for minimum protection, but to make that crossing safe.

That is not what happened under the minimum program.

That was the normal operating procedure of the Department of Transportation, but when Congress said in 130(d) at a... this is going to take a long time.

It's going to... Congress... Texas has 11,500 crossings, do about 150 crossings a year.

It would take them 100 years just to get to every crossing and just to put up the minimum if they studied it the way you do for (b)(3)(b)(4).

Justice Breyer: They need the Secretary's approval...

Ms Millett: That didn't happen.

Justice Breyer: for minimal program expenditure.

Ms Millett: They need the Secretary's approval for that...

Justice Breyer: And what says that?

Ms Millett: The... well, first of all, 23 C.F.R. part 630 addresses the general need for a Secretary's authorization for Federal funds.

Justice O'Connor: What...

Chief Justice Rehnquist: Where is that?

Justice O'Connor: Where do we find what you're talking about now?

Ms Millett: I don't believe it's reproduced in the briefs.

It's just the general regulations governing... this is a big highway contract program.

The general regulations saying that you need Federal aid project authorization are at... reproduced at... are at 23 C.F.R....

Justice Kennedy: You see, this is why I have some sympathy for the railroad.

You're arguing that there's a separate program, and we don't even have the regulations in front of us.

Ms Millett: It's not that it's a separate program.

That's the general requirement that to get money under a highway program out of the Secretary, it has to be authorized by the Secretary.

Justice Souter: Ms. Millett...

Justice Ginsburg: You're making a distinction between authorized and approval, then.

You say everything has to be authorized.

Ms Millett: Uh-huh.

Justice Ginsburg: But approval relates to a specific crossing.

That's what you seem to be saying.

Authorize, the Secretary must authorize any spending of Federal funds, but the word approval has a narrower meaning, and it relates to a specific crossing.

That's what you seem to be saying.

Ms Millett: Unfortunately I'm not even... that's... those aren't the words, either.

I don't mean to split on words.

Everything has to be authorized and has to be approved, but the question is, what was approved?

Did we approve under (b)(3)(b)(4) determination of what is adequate to protect an individual crossing...

Justice Ginsburg: But you authorized something.

You authorized...

Ms Millett: Right.

Right.

Justice Ginsburg: the spending of Federal funds.

Ms Millett: There's two things that we can approve.

We can approve an authorization under (b)(3)(b)(4) for funding to install the protective devices at a crossing that will make that individual crossing safe, based on individualized study.

We can also, pursuant to congressional mandate, authorize the installation of a fuller Federal protection...

Justice Souter: Okay.

Ms. Millett...

Ms Millett: but it doesn't make it adequate, and this is... I'm sorry.

Justice Souter: No, I... finish your sentence.

Ms Millett: I just want to say, this is... we have a directly different response to your question to Mr. Phillips, and that was does the Secretary have the ability to approve just a Federal minimum program that doesn't determine what is adequate, and that, yes we have the ability because Congress said so in 23 U.S.C. 130(d), so that is the exception to the normal rule.

The normal rule is, you want the money, you do an individualized study and show us what's going to make it safe.

The exception is the minimum protection program.

Justice Souter: All right.

Now, the problem that I have in drawing the distinction that you're drawing is this, and it's essentially the same problem that I have with your argument from 25 years of administrative experience.

In Easterwood, which was what, 7 or 8 years ago, this Court laid down... wisely or unwisely it laid down a preemption rule, and the preemption rule turned on the participation of Federal funds, and the formulation that the Court used, if I remember correctly, was just about exactly what the Solicitor General at the time said was the formulation we ought to use.

It seems to me that at that point the Federal Highway Administration had some kind of an obligation to say, if the Court means what it says in adopting the language which we told it to adopt, there's no longer a distinction between minimum programs under (d), whatever it is (d), and the subsection (3) and subsection (4) programs.

The Court has laid down a clear rule, and it turns on whether Federal money is involved.

Therefore, we better do one of several things.

We better revise our regs.

Maybe we better get statutory authority.

Maybe we better send more people out to look at the intersections.

But the truth is, there has been a simple rule, announced by this Court for 7 or 8 years ago, and I don't know why that does not trump the administrative experience that you refer to that preceded it.

Ms Millett: Two answers.

First is, we don't read Easterwood as making everything turn on Federal funding and, in fact, the Court didn't.

There was Federal funding of the crossing.

It said it wasn't protected.

The question is... the question in Easterwood that this Court adopted I think was a quite pragmatic and correct rule that was consistent with our position here, and that is, was money spent to make an individual crossing safe?

They tried to argue in Easterwood, well, there was a grouping here of crossings, and that was enough to make it safe, and this Court said the program cast doubt on that, that the individual crossing hadn't been made safe with the Federal funds.

The second part...

Justice Souter: But there's no question that when the minimal sawbuck signs are installed the purpose of installing them is to make the crossing safe.

Ms Millett: No...

Justice Souter: It may not succeed, but that's the purpose.

Ms Millett: NO, it is not to make that crossing safe in the same way that State tort law makes that crossing safe, or any State law...

Justice Souter: No...

Ms Millett: that makes a crossing safe.

It is to make it less unsafe.

Any interim...

Justice Souter: Okay.

That's what I meant.

It may not succeed in its objective, but its objective is clear, and that's why the money is being spent.

Justice Scalia: Ms. Millett...

Chief Justice Rehnquist: Do you distinguish between making a crossing safe and making it less unsafe?

Ms Millett: Well, what... for purposes of (b)(3) and (b)(4) what adequate warning devices are, are designed to address what makes an individual crossing safe in the same way that State law had for hundreds of years before.

The question is whether that has been displaced.

When... in Easterwood you set up a rule that said, when there's been Federal funding on a particular crossing that makes that crossing safe, we will not allow... we'll have preemption because you don't want a jury second-guessing that federalized decision.

Justice Scalia: That might have been the holding, but that was not our general language.

Our general language was Federal funding, it's covered.

Can I ask you about (4)?

If there is this two-level thing, minimum plus, one would have expected (4) not to say, for crossings where the requirements of (3) are not applicable the type of warning device to be installed, whether the determination is made by a State, blah, blah, blah, blah, is subject to the... it makes it sound as though the determination of what warning device to be installed is up to the State, or you know, so long as it gets the approval of HW... FHWA.

You would think it would have said somewhere in (4), the type of warning device to be installed, so long as it meets the minimum requirements of 130 whatever it is, but it doesn't make any reference to the minimum at all.

It says, the type to be installed, as though it's entirely up to the State agency.

Why isn't there some reference to the minimum in (4)?

Ms Millett: May I answer?

Chief Justice Rehnquist: Yes, you may.

Ms Millett: Because (b)(3) and (b)(4)... (b)(4) is a direct outgrowth of (b)(3).

It is only focused on determining what is adequate to make a particular crossing safe under the circumstances and conditions of that crossing.

It has no application to the uniform floor of safety accomplished by the minimum program.

Rebuttal of Carter G. Phillips

Chief Justice Rehnquist: Thank you, Ms. Millett.

Mr. Phillips, you have 2 minutes remaining.

Mr. Phillips: Thank you, Mr. Chief Justice.

Obviously concerned that the Court may actually conclude that what it said is what it meant in Easterwood, the Government and the respondents have asked you to create an entirely different regulatory scheme, and that is a scheme that no one has ever seen or identified.

There is no regulatory footprints.

There are no regulatory fingerprints that even remotely suggest that there is a distinction between a minimum safety program and the (b)(3)(b)(4) adequate warning program which is the basis on which this Court decided preemption would turn in Easterwood.

And I would ask the Court to look at 130(d), which is the basis for the minimum safety program the Government identifies, and recognize that the language of 130(d), which is at 42a of the appendix to the petition, at a minimum such a schedule... it doesn't say anything about sites or anything.

The schedule has to provide for that, and the reason for that is, this is not a provision that creates an entirely new regulatory scheme.

If the Secretary had wanted to do so, it certainly would have been within the Secretary's discretion.

That's not the regulatory scheme that the Secretary adopted.

The one the Secretary adopted is the one the Court identified in Easterwood, and if it simply applies the language of Easterwood to this case, the outcome of this case seems to me to be foreordained.

Justice Ginsburg: that the floor is in the regulations, that there's no lack of statutory authority for the Secretary to do what Mr. Goldstein contends the Secretary did do?

Mr. Phillips: I think there's clearly statutory authority, and I think it's important to recognize that (b)(3) and (b)(4) are designed to implement 109, which is what's going to preserve the Government's ability to decide what safe, and what it's going to fund, and if the Secretary chooses to apply that in a different way, that's fine, but that's not the system that the Secretary employed in this particular case, and it's not the system the Court identified in Easterwood.

Justice Scalia: What do you do with the argument that 109 only applies to Federal aid highways?

Mr. Phillips: 109... well, first of all, there's a serious question about whether they intend that, but the bottom line about 109 is, the regulation still implements 109.

Adequate is adequate for both of those, otherwise you make a mish-mash, and they can spend money on things that the Government would regard as unsafe.

No basis for that.

Chief Justice Rehnquist: Thank you, Mr. Phillips.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Medtronic Inc. v. Lohr - Oral Argument

Fri, 09 Jan 2009 14:49:45 +0000

Case:

Medtronic Inc. v. Lohr

Media File:

95-754_19960423-argument.mp3

Related Transcript:

1995_95_754_argument.xml

Transcript:

Argument of Arthur R. Miller

Chief Justice Rehnquist: We'll hear argument now in Number 95-754, Medtronic, Inc. v. Lora Lohr and the cross-petition, Lora Lohr v. Medtronic.

Mr. Miller.

Mr. Miller: Mr. Chief Justice and may it please the Court:

This case brings before you the question of defining the scope of the express preemption provision in the Medical Device Amendments of 1976.

Medical devices are a heavily regulated industry.

That has been true since 1976, when the Congress enacted these Medical Device Amendments and brought them under the jurisdiction of the FDA and made it perfectly clear that it was designing a scheme by which the FDA had basic and complete jurisdiction to deal with medical devices.

Indeed, the legislative history said that this preemption provision which is before you this morning acted as a general prohibition on non-Federal regulation.

The provision, which is set out on page 4 of the initial brief, is very, very broad one, almost uniquely broad.

Reduced to what we think are its simplest terms, it basically says that any Federal requirement under the Medical Device Amendments preempts any State requirement which is different from or in addition to the Federal requirement, and which relates to the safety or effectiveness of the device or to any other matter included as a requirement applicable to the device.

Unknown Speaker: Mr. Miller, is there evidence that you have found that Congress thought it was eliminating all State common law claims and would the action of Congress just last year in proposing, at least, caps on punitive damages but not compensatory damages relating to these devices indicate that at a least Congress thought some claims were preserved?

Mr. Miller: In all honesty, Justice O'Connor, there really is almost nothing in the legislative history.

One can divine from the scope of this provision, its words, its very words, where it uses any requirement, a word that is like all which this court has construed in Norfolk and Western as being very, very broad.

The language of this provision, coupled with the legislative purpose of establishing a unitary, uniform, national regulatory authority under the guidance of statutorily mandated expert advisory committees I think can lead only to the conclusion that the intent of Congress, although not expressed as such in the legislative history, is to preclude anything done by a State within the ambit of a Federal requirement--

Unknown Speaker: But the term requirement is by no means self-explanatory.

I mean, I don't think it's self-evidence that requirement means State common law provisions.

Mr. Miller: --That is true, and we have, on the issue of requirement, the fact that 10 courts of appeals have looked at that word.

All except the Ninth Circuit has concluded that the word requirement is broad and, for example, embraces common law claims, a major point made by the plaintiffs in this case.

This Court has construed requirement in Cipollone, it has construed it in Morales, it has construed it in Easterwood.

It has never been construed as a word of restriction.

Also--

Unknown Speaker: Mr. Miller--

Mr. Miller: --the statute itself, almost as a leitmotif, continues to use the word requirement not simply in the preemption provision, it uses it in the remedies provision, it uses it in the 510(k) provision, it uses it in the manufacturing design provision--

Unknown Speaker: --Well--

--Mr. Miller, your position, as I understand it, is that the preemption provision not only excludes common law actions which seek to impose liability for a mater that is not unlawful under the Federal scheme, but even precludes a State cause of action for a violation of the Federal scheme for an identical requirement.

Mr. Miller: --That is our position.

Unknown Speaker: I know it is.

Why, then, would you even write this provision?

If that's the case, why wouldn't you just say, there shall be no State common... you know, lawsuits involving these issues, period?

Mr. Miller: We believe that it was necessary to write the provision in this fashion in order to establish the fact that as a precursor to the preemption you had to have a Federal requirement.

Only when you had a Federal requirement, then a State requirement that fell within the subject matter of the Federal requirement would be preempted if it added to or differed from Federal requirements.

It seems to me it's a rational... maybe not the best, but a rational way of writing it to achieve Congress' goal of establishing primary jurisdiction in the FDA.

Unknown Speaker: What if I bring a lawsuit saying that the device, although it was marketed under, what is it, 310(k) as being substantially identical to a preexisting device was, in fact, not, and that the application claiming that substantial equivalence was intentionally fraudulent, and therefore for violation of that 310(k) provision I want damages.

What additional requirement has that added?

What different or additional requirement has the State added when it allows that suit?

Mr. Miller: Two preliminary points, Justice Scalia.

Number 1, there is no such claim in this case.

Number 2, several courts of appeals have struggled with questions like that and have agreed unanimously that the preemption provision embraces identical State claims or claims of noncompliance with the FDA requirements or even claims of fraud on the FDA, the most notable being a First Circuit--

Unknown Speaker: So there's no possible action in State court against the manufacturers of these devices?

Mr. Miller: --There could be actions if they do not fall within the ambit of a Federal requirement.

Unknown Speaker: But so far as the Federal requirement, the State can't impose its own common law and it can't permit suit on the Federal requirement.

That's an extraordinary sweep.

Mr. Miller: Well, Mr. Chief Justice, the reason that I think it's a perfectly appropriate conclusion is, number 1, the act itself provides for no Federal private right of action, so the notion--

Unknown Speaker: Do you think that helps you?

I say, even worse.

Not only do you not allow a State cause of action, you allow it in a situation where there's no Federal cause of action.

Mr. Miller: --That does not leave the situation remediless.

The bargain, or--

Unknown Speaker: Mr. Miller, before you proceed with your answer to that, I'd like to know what is within the coverage.

I understand that you're arguing about these devices that are substantially equivalent.

Does your argument go as well to the grandparented devices?

Are they, too, immune from tort liability if there is a Federal requirement?

Mr. Miller: --Justice Ginsburg, if a matter being asserted in a State-based action falls within a Federal requirement, it seems to us the text of this statute precludes it.

Unknown Speaker: So your answer is, this covers devices that have not been preapproved... indeed, the grandparented devices have never been... gone through the 510(k) procedure, never been through any procedure.

Mr. Miller: Let me clarify something.

There is an image that the pre-'76 devices are unregulated.

Counsel for the plaintiffs and the Solicitor General have indicated that there's never been a safety and effectiveness determination with regard to the 510(k) products.

Two points.

If you look at the appendix we have put in the back of our reply brief, you will see that basically every medical device on the marketplace is regulated.

It is simply wrong to assume that there are devices out there that are unregulated, that are... to use the pejorative word, that have been grandfathered, or grandpersoned.

The truth is, even a pre-'76 device, Justice Ginsburg, when it comes onto the market, must comply with the good manufacturing practices.

It must comply with the labeling requirements.

It is subject to misbranding, adulteration, banning, notification, recall, refund, replacement.

Unknown Speaker: But it hasn't been found safe and effective, and that's in the boilerplate language that goes out with the substantially equivalent approvals that this is not a determination by the FDA that this is safe and--

Mr. Miller: That is correct, but if you look at the language of the preemption provision, it does not say preemption for safe and effective devices, it does not say preemption for premarket approval devices, it says that if there is an applicable Federal requirement... preemption turns on requirement.

It does not turn on approval or--

Unknown Speaker: --Mr. Miller, can I bring you back to Justice Scalia's question for a moment that you didn't get a chance to answer?

Supposing Florida passed a statute and said it shall be unlawful to market any devices that do not comply with the Federal standard, good manufacturing practice, and so forth, and one who distributes such a device shall be liable if it harms anybody, and so there would be no difference between the State requirement and the Federal requirement.

Preemption or no preemption?

Mr. Miller: --Preemption, because the scheme of the statute is to allow the FDA through its expert advisory committees and all the talent it brings to bear on these devices--

Unknown Speaker: But you can't support that from the text of the statute.

Mr. Miller: --I think you can.

If--

Unknown Speaker: Because my hypothesis is there's no difference between the State requirement and the Federal requirement.

Mr. Miller: --One can argue notice that there's much broader preemption if the State matter deals with safety or effectiveness.

That's completely preempted, completely preempted.

Unknown Speaker: You're using addition to as simply meaning a State requirement.

In other words, the fact that it exists, regardless of its terms, means that it is in addition to, isn't that correct?

Mr. Miller: Yes, Justice Souter.

Unknown Speaker: Then that renders the different from totally useless verbiage.

Mr. Miller: No.

The different from... I admit there is an overlap in those two provisions, there's no doubt about it.

Different from might be, instead of using insulation that's a 1/4-of-an-inch thick, you use an insulation 1/8th of-an-inch thick.

Something that is addition to may be the fact... take Justice Scalia's hypothetical... that the State is providing a damage remedy--

Unknown Speaker: Right, yes.

Mr. Miller: --which is totally unavailable--

Unknown Speaker: And I--

--It's not a requirement, though.

A damage remedy is not a requirement.

Mr. Miller: --That is argued by the Solicitor General.

It is a position that we think does not hold water.

It is not a position the FDA has taken with any degree of consistent... consistency.

This Court has recognized on many occasions that damage remedies regulate and they require.

Unknown Speaker: I'm not arguing the Cipollone point.

What I'm saying is, requirement covers any substantive provision imposed by means of the common law, but how is the mere availability of a common law lawsuit a requirement, which is what you're arguing in order to exclude lawsuits entirely.

Mr. Miller: Number 1, two of the provisions of this statute refer to the remedies in this State as requirements.

You'll find that at 352t and 331q(1).

If you're looking for textual consistency in this statute, this statute calls the Federal remedies requirements.

Unknown Speaker: Where is that?

Is it somewhere in the briefs, the sections you're referring to?

Mr. Miller: We make that point--

Unknown Speaker: Not the point, I want to look at the texts.

Are the texts set forth anywhere?

Mr. Miller: --No, I'm sorry, they're not, Justice Scalia.

Unknown Speaker: Mr. Miller, the FDA itself appears possibly to have tried to narrow the meaning of requirement by using the words specific requirement in its regulation, indicating that perhaps the Federal requirement the statute refers to must be device-specific as opposed to general requirements of the FDA dealing with manufacturing or labeling that apply across the board to all devices.

Now, how do you deal with that apparent attempt to narrow the meaning of requirement?

Mr. Miller: The first level is, there is no modifier on the word, requirement, in the statute.

The statute does not say, big requirement, small requirement, specific requirement, or general requirement.

Unknown Speaker: Is it in any way open to interpretation by the agency, do you think?

Mr. Miller: I think it is open to some degree to the agency consistent with the purpose of the statute.

The difficulty I'm having with the hypothetical that Justice Scalia is pushing, the identical, take this simple situation.

Let's assume that a company like Medtronic gets a warning letter that says, you have violated the FDA.

The warning letter carries no sanction... no sanction.

It's a warning letter.

It says, clean up your act, manufacture this better.

The FDA has that authority, and in many instances that's what it will do, because even though there's a defect, the product is basically sound.

The public needs that product.

Availability and innovation, two basic objectives of the statute.

Now, along comes the District of Columbia.

It's got a financial crisis.

Its city council decides to enact a statute.

It says, anyone who has been found in violation of the FDA is to pay a fine to the city of $1 million.

Now, surely... surely this Court in many of its opinions has said the preemption is logical when it interferes with the Federal regime.

This Federal regime was designed to let the FDA determine what the qualifications of a product should be, when those qualifications are up to snuff, not up to snuff, 518 of the statute lays out a series of remedies, and to permit any State or municipality to come along and impose in the name of identity an additional sanction seems to me completely destructive.

Unknown Speaker: It begs the question, though.

I mean, because that's exactly the question, whether an additional sanction is an additional requirement.

That's exactly the point we're arguing, and simply to say it violates the scheme is to beg the question.

And I take it from your answer, Mr. Miller, that you're saying that there is a universe of preemption that is broader than the language itself.

Mr. Miller: Oh, there would be a universe of preemption broader than this.

This is a broad preemption, but I do not think it is the broadest conceivable.

Unknown Speaker: So we're not--

--Well, Justice Scalia--

--So we're not confined to the language of the statute in determining the scope of preemption?

Mr. Miller: I think you have to interpret these words in light of what Congress was trying to achieve in 1976.

Unknown Speaker: Was it in 1976, on the effective date of the act, that all State suits were prohibited as to the pacemaker?

What was the chronological point at which the State's actions in this case were preempted?

Mr. Miller: Presumably they applied only prospectively, not to devices implanted prior to 1976.

For example, that is why much of the Dalkon Shield litigation never came under this statute at all.

It preceded the effective date of this statute.

But I think Congress did make it clear that the effect of this provision was to be immediate, with the FDA filling in the gaps of regulation, and that's what that Appendix A is all about.

Unknown Speaker: But before those gaps were filled in, there was still preemption.

As of the effective date of this act, a pacemaker suit could not be maintained?

Mr. Miller: Presumably, it would only apply to a device that fell within a requirement.

For example, if you had a device that had been subjected to the good manufacturing practices provisions, to the labeling provisions--

Unknown Speaker: Well, those weren't even promulgated as of the time of the act.

I need to know the chronological date at which you think these claims were preempted.

Mr. Miller: --I think the design claim would have been preempted immediately, because design we believe is embedded in substantial equivalents.

I know it's not a safety and effectiveness determination, but what is the requirement of substantial equivalents?

The requirement is that you must manufacture your device, your design of device, your technological characteristics of your device, must be equivalent to that pre-'76 device.

That is a requirement.

Unknown Speaker: But with--

Mr. Miller: 510(k) is characterized as a requirement elsewhere in the statute.

Unknown Speaker: --Going to manufacturing for a second, I take it at that same moment that you refer to, there were no manufacturing standards at all with respect to devices.

They came later, I assume.

Mr. Miller: They came later, and--

Unknown Speaker: Now, do you say... you said there would have to be a requirement for preemption, so would there be preemption with respect to a faulty negligent manufacturing claim at that point?

Mr. Miller: --Analytically, Justice Souter, if there was no Federal requirement as of the relevant moment in time, there was no preemption.

Unknown Speaker: What about the addition-to argument, because there... the State cause of action would still be in addition to anything which existed under the Federal act on your analysis.

Mr. Miller: That would be the widest possible preemption.

Unknown Speaker: Well, wasn't that the preemption that you were arguing for earlier?

Mr. Miller: No, we are arguing that there should be, as a limitation on the ambit of preemption, some subject matter congruence.

If you have a design requirement, it preempts State design claims.

If you have a labeling requirement, it will preclude State labeling.

Unknown Speaker: But most of those requirements were not in force on the effective date of the act.

They were subject to the regulatory process.

Mr. Miller: To the development of regulations, that is right, Justice--

Unknown Speaker: So it's not clear when there was preemption in this case.

Mr. Miller: --Oh, in this case, those requirements were in place.

Those requirements were in place as--

Unknown Speaker: On the effective date of the act?

Mr. Miller: --On the effective date of pre... of the substantial equivalent approval for market.

Unknown Speaker: But Mr. Miller--

--The States--

Mr. Miller: That came in '83, not '76.

Unknown Speaker: --The States can impose shipping requirements, according to what you've just told us now.

If there are no Federal requirements governing manner of shipping, the States can impose those.

I really thought that was not your view.

I thought your view was that any requirement, even in a different category, is an additional requirement, and therefore no good.

Mr. Miller: This act could be read that way.

It could be read to say, any time there is any Federal requirement--

Unknown Speaker: Right.

Mr. Miller: --any State requirement is precluded.

Unknown Speaker: Right.

I thought you were reading it that way.

Mr. Miller: No, we are reading it to have some subject matter congruence.

Unknown Speaker: Okay.

Mr. Miller: Because--

Unknown Speaker: They could impose a shipping--

--A shipping--

Mr. Miller: --That is the intention of subdivision 2.

Unknown Speaker: --And Mr. Miller, the agency has said it has to be device-specific.

I don't think you've addressed that yet.

Mr. Miller: The agency has said it's device-specific.

We think that is an absolutely untenable reading of this provision.

It is untenable because there is no such limitation on the word requirement.

We have noted that the Solicitor General has conceded that the manufacturing practices--

Unknown Speaker: Why isn't there in subparagraph... Mr. Miller, why isn't subparagraph 1... it says, any requirement applicable under this chapter to the device.

Mr. Miller: --It does not say device-specific.

Unknown Speaker: It says, applicable to the device.

Mr. Miller: Yes, applicable to the device.

Unknown Speaker: That doesn't mean applicable to some other device--

Mr. Miller: It... yes, but--

Unknown Speaker: --Why isn't that language--

Mr. Miller: --manufacturing is applicable to the device.

It doesn't have to be device-specific to be applicable.

Unknown Speaker: --No, but you can read it either way.

You can say, the device means the specific device, or you can say, it is nondevice-specific but it applies to this one.

It can be read either way, and since it can be read either way, why isn't the agency regulation an appropriate choice?

Mr. Miller: Simply because it is impracticable to wait until you have a device-by-device requirement.

That will never happen.

Unknown Speaker: Okay, but I take it--

Mr. Miller: It has not happened.

Unknown Speaker: --you are assuming in your answer that it is consistent with the text, that the agency regulation could, consistently with the text, be as it was promulgated.

Mr. Miller: The difficulty with the position, I believe, is, if you treat that word requirement the same across the spine of the statute, you see that the word requirement is not used in a device-specific manner.

The best illustration of that relates to the section that gives authority to create good manufacturing practices regulation.

It's perfectly clear that the word requirement as used in that connection is not device-specific.

The Solicitor General has acceded to the view that the good manufacturing practices regulations are requirements.

Unknown Speaker: All right.

Let me assume--

Mr. Miller: They are not device-specific.

Unknown Speaker: --Let me assume that that is correct.

It is still, I take it, consistent with the text of the preemption provision, is it not?

And if it is consistent with that text, then the most your argument shows, it seems to me, is that there is ambiguity in the use of the word requirement, and that would seem to me to open the door to exactly the regulation that the agency has promulgated.

Mr. Miller: We do not believe it is consistent with that statute when viewed in the light of the objectives of Congress in enacting this provision.

Unknown Speaker: Why can't you read the statute as simply giving to the agency the power to say, within every broad reason, which requirements do what in respect to preemption?

That would make the statute work, and we know at least here one thing is true.

The agency has said... I think it's ambiguous.

What they said is, it doesn't preempt anything unless there's a specific requirement.

I don't know if that has to be... I mean, something specific, which I don't see here anything specific, so I mean, why wouldn't that make sense in the statute?

We are going to preempt things.

Which things?

Well, the agency has the power to tell us which.

That would seem a sensible thing to do, wouldn't it, and isn't that consistent with the language, normal practice?

We give lots of powers to agencies.

Mr. Miller: I believe it was in footnote 4 of your Chevron decision that it was pointed out that this Court is the ultimate arbiter of statutory construction, and that an administrative interpretation that did not do justice to the legislative purpose was not entitled to deference.

Unknown Speaker: Well, wouldn't it be a sensible legislative purpose... I mean, you've given, I've written down six different... within the ambit of, subject of, subject matter congruence, which are perfectly sensible, but you've created them.

Rather than taking what you created, why not take what the agency's created?

Mr. Miller: Except that the agency has consistently taken the position, for whatever reason, that the scope of preemption under this provision should be basically nonexistent, a device-specific requirement, eviscerates preemption that clearly was not the intention of Congress in enacting a preemption provision which is very, very, very broad.

Unknown Speaker: Mr. Miller, do you know of any case in which we've given Chevron deference to an agency determination regarding preemption?

I thought we gave deference to those determinations that the agency has to make in the course of the agency's implementation of a statute.

Preemption has nothing to do with the agency's implementation of a statute.

We have not given Chevron deference to an agency's determination that there is or is not judicial review of a particular provision under a statute.

Why should--

Mr. Miller: That is obviously an argument I find great sympathy with.

Unknown Speaker: --I thought you might.

You wouldn't give deference to the agency's interpretation of the word "requirement" in the statute, which happens here to fall within a preemption section?

Mr. Miller: Not... not--

Unknown Speaker: Is there something different about that word, depending on what--

Mr. Miller: --Not when the agency's interpretation would completely eviscerate the provision, and I think that is why the Solicitor General's... has backed away from--

Unknown Speaker: --All they've said here is that the kinds of requirements that bring into play the preemption are specific requirements.

I mean, that... if you just pass a general thing... hey, manufacturers, do your best.

Suppose they wrote that.

I mean, do you think then, therefore, no State, no tort actions... all they said was, do your best.

You're saying, that's not the kind of requirement.

14-inch-thick plastic is.

All right.

Mr. Miller: --That is not what either the labeling or the good manufacturing practice is, or this matrix we have put together suggests in terms of the plethora of requirements that have, in fact, been imposed on every device manufacturer pre, post, 510(k), PMA--

Unknown Speaker: Mr. Miller, this act uses the word requirements dozens of times.

Is it your argument that every time that word is used in this statute it means the same thing?

Mr. Miller: --It is our argument that when the use of the requirements work, as in 510(k), as in remedies, as in good manufacturing practices, make sense in terms of this preemption provision, it should be given a consistent reading: What is the best evidence of what Congress was trying to do?

Then this provision, and the use of the operative word, requirement, in the critical portions of the statute.

Unknown Speaker: Isn't it odd, don't you think, that with an agency that is charged with regulating food, drugs, medical devices, that Congress would create this regime that ousts State tort remedies for medical devices but not for drugs, not for food, not for cosmetics?

Why would Congress do that?

Mr. Miller: That, of course, is a decision for Congress to make, and it did make it.

It is quite conceivable that the sociology of the device industry and the critical character of the device industry as perceived in the seventies, the need for innovation, the need for availability, motivated that Congress to do this.

Keep in mind, device technology in 1957, Mrs. Lohr would be dead.

In 1977, her pacing would simply be metronome pacing.

In--

Unknown Speaker: I think you've answered the question, Mr. Miller.

Mr. Miller: --Thank you, Mr. Chief Justice.

Unknown Speaker: Your time has expired.

Mr. Wolfman, we'll hear from you.

Argument of Brian Wolfman

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

Listening to the argument, and reading Medtronic's briefs, the most remarkable feature of Medtronic's arguments is what the company does not say.

If the company is correct, every case claiming personal injuries caused by a medical device, whether based on defective manufacture, grossly negligent manufacturing practices, or a knowing failure to disclose defects in the product, all were swept away on the day that the law was enacted in 1976.

To appreciate why the company is wrong, I want to step back for a minute and explain the section 510(k) process, the substantial equivalent process, which is the key element of Medtronic's preemption defense, and then move on to some of the other FDA rules which the company claims totally immunize it from tort liability.

The 4011 pacemaker lead implanted in Lora Lohr was marketed solely on the basis of Medtronic's 1982 claim of substantial equivalence to a device marketed prior to the enactment of the MDA, a device which the FDA never reviewed at all for safety and effectiveness.

The 510(k) process does not establish an device design requirements that could possibly preempt Ms. Lohr's design-defect claim.

Indeed, the FDA itself has repeatedly ruled to require that States are free to require full premarket approval for Class III, like pacemaker leads, Class III 510(k) devices--

Unknown Speaker: Full premarket approval from the FDA?

Mr. Wolfman: --The States would be free, in that circumstance, because the device was only subject to the 510(k) process, that until such time the DA had required the PMA, that the States would be free to require their own PMA's for that device, and there is a reason for that.

Unknown Speaker: You say the FDA has ruled that.

You think the FDA has authority to rule as to when the States are preempted or not?

Mr. Wolfman: Well, Justice Scalia, that goes--

Unknown Speaker: I mean, they are by the statute or they aren't, unless the statute says they'll be preempted when the FDA says so.

Mr. Wolfman: --Well--

Unknown Speaker: I find it extraordinary to give deference to the agency on an issue like this.

Mr. Wolfman: --Well, the Court has done it on two occasions that we find.

Unknown Speaker: We have?

Mr. Wolfman: Yes.

In the Hillsborough County case, which is cited at different points in our brief, Hillsborough County gave Chevron-style deference to one, just one sentence in regulatory commentary concerning the issue in that case which was whether States could regulate in the area of plasmapheresis even though the FDA had already done so, and the Court deferred.

Here, there is even more reason for deference, Your Honor, because under 360k(B), the exemption from preemption provision, it really is necessary for the FDA to say both what the scope of preemption is and whether there... an exemption ought to be granted.

Unknown Speaker: What's the other case?

You said there were two.

Mr. Wolfman: There's the Lee--

Unknown Speaker: One is Hillsborough County.

Mr. Wolfman: --Excuse me.

The Lee Deadwood case, and I can get you that cite.

That would be at 469 U.S. 256 at page 261 and 262, and as I say, there as well they gave deference to the agency's interpretation of the preemption provision, and for the reasons I stated, Justice Scalia, there's more reason to do it here because more instrumentation is necessary.

Getting back to the 510(k) process, as I say, the States have ruled that that could be done, and there is a reason for that, Mr. Chief Justice.

Unknown Speaker: You mean the FDA has ruled, not the States have ruled.

Mr. Wolfman: Yes, that's right, the FDA has ruled, and there is a reason for that, Mr. Chief Justice, which is this, that for Class III devices the relevant requirement as to safety and effectiveness is clearly the premarket approval.

The statute defines Class III devices as devices that ought to go through premarket approval.

The fact is, that has not happened yet for pacemaker leads because the implementation of the statute has been delayed.

Now, there is--

Unknown Speaker: Mr. Wolfman, once there has been... once, one fine day when the FDA does have a premarket approval setup of its own, and a device does get that premarket approval, would there will be State tort remedies?

Mr. Wolfman: --Well, I think there would be State tort remedies.

It's clearly a closer question, but there are still going to tort remedies for two reasons.

One, as we address in our brief extensively, we do not believe this Congress in 1976 was referring to State damages actions when it was using term requirement, for the many reasons stated in our brief.

Secondly, even with respect to a PMA, there is no device design requirement.

It is true that the agency allows the device to be marketed under the standards for premarket approval, but it never says to the manufacturer that your device has to be designed in a specific manner, and that's really the point here.

A jury's finding--

Unknown Speaker: I'm not sure of that.

Doesn't it have to be designed substantially, to be substantially equivalent to what was on the market before, and--

Mr. Wolfman: --Well, now we're moving back to the 510(k) process.

Unknown Speaker: --Yes.

Yes.

Mr. Wolfman: That is--

Unknown Speaker: Oh, I'm sorry, you're--

--I was talking about when the FDA reaches the... it gets free market approval.

Mr. Wolfman: --To answer your question, Justice Ginsburg, we think it a closer question.

Once we get by the question whether damages actions are covered by the statute, we think it a closer question as to whether the FDA's permission to market the device under the PMA processes would preempt, but still there, there was no device design requirement specifically.

But here, and I think this is responsive to Justice Scalia's question, here all there was is a finding of equivalence, and the clear purpose of that in the statute was to ensure that the grandparented devices, the pre-1976 devices, the manufacturers of those devices did not obtain a competitive advantage over the subsequent--

Unknown Speaker: Mr. Wolfman, you're going so rapidly, you're losing me a little bit, and I think you may be losing some of my colleagues.

Mr. Wolfman: --I'd be glad to slow down.

Thank you, Your Honor.

The purpose of it was not to gain a competitive advantage over the manufacturers of devices who came later, and that was the sole purpose of it.

To be sure, it is true, as your question indicates, that there has been delays in the implementation of these processes, but that doesn't suggest that there was a design requirement on 510(k) devices.

There is one other regulation that the... Medtronic relies upon to say that there's some device requirement here with respect to this substantial equivalent device, and that is a regulation at 807.81, which instructs manufacturers to submit new 510(k) applications for new devices when it decides to alter a preexisting device.

But that doesn't preempt the Lohrs' device design claim either, because that regulation doesn't require to use the terms of the statute, doesn't require Medtronic to do anything here, let alone anything bearing on the Lohrs' claims.

The Lohrs'--

Unknown Speaker: I'm not sure I follow you there.

Why doesn't that indicate that the statute requires the device being currently manufactured and marketed be like the one that was previously manufactured--

Mr. Wolfman: --Well--

Unknown Speaker: --and why isn't that a requirement?

Mr. Wolfman: --Your Honor, I want to be clear on this.

That is a requirement in the literal sense of thee word and in the terms of the statute, but it's not a requirement that has any bearing on device design, and as Medtronic has conceded--

Unknown Speaker: Well, it has to be of the same design as the previous device.

Mr. Wolfman: --It does--

Unknown Speaker: So why doesn't that relate to device design?

I don't quite--

Mr. Wolfman: --It only relates to its substantial equivalence.

It doesn't have to do with what the Lohrs would be claiming in the suit, which is that the design is faulty.

It was only to show that the device was equivalent--

Unknown Speaker: --But isn't there a claim--

Mr. Wolfman: --to what was on the market--

Unknown Speaker: --Isn't there a claim that the device should have been designed differently?

Mr. Wolfman: --That is correct.

Unknown Speaker: And therefore, wouldn't it be in... would it not violate the requirement that it be the same?

Mr. Wolfman: Well, but again, the requirement, here, is simply that it be the same not for any reason--

Unknown Speaker: Right.

Mr. Wolfman: --Not for any purpose of its design, and as Medtronic has conceded, there needs to be some subject-matter congruence.

Even if they... Medtronic doesn't go as far as the FDA regulation, which we claim is entitled to deference, the device specificity regulation, even if they don't go that far, there needs to be some subject matter congruence.

The subject matter of the 510(k) process was only to show equivalence, that it be the same device.

Unknown Speaker: Right, to show that it was the same, and she says it ought to be difference.

I don't quite... really, I'm not quite catching your argument.

Mr. Wolfman: But her claim is as to the design.

The purpose of the substantial equivalence process was not to clear anything about the design.

The premise of Medtronic's argument, starting from its question presented in its opening brief, is that this design was authorized by the agency.

That is simply not correct.

All the agency found was that there were devices that were on the market in 1976 that are similar to the device that was marketed.

Unknown Speaker: But the statute doesn't talk in terms of three universes of design, manufacture, labor... and it may talk about labor, but so far as design and manufacture, the statute does not make those distinctions.

The statute allows a certain device to be marketed, period.

Mr. Wolfman: That is--

Unknown Speaker: Or doesn't.

Mr. Wolfman: --That is precisely right, and that's our point, although many things under the act... for instance, the requirement that manufacturers register with the agency, they're all requirements, but to make any sense out of the statute you have to at the very least concede some subject matter congruence between the State law requirement and the Federal law requirement, and what we're saying is that to be sure, on the State law side Mrs. Lohr's claims would concern the safety of the design of that device, but it does not do so on the Federal law side.

Let me turn for a moment to the manufacturing defect.

The FDA... the MDA imposes no requirements regarding the manufacture of pacemaker leads, nor is the Lohrs' claim, even if you assume that it doesn't have to apply manufacturing requirements to pacemaker leads, nor is the Lohrs' manufacturing-defect claim different from or in addition to the FDA's good manufacturing practices or GMP regulations, which is the basis for their claim of preemption with respect to manufacture.

Let me use a few examples to show that.

Assume that the plaintiff claimed under State law that a device failed because it was constructed by untrained personnel.

The most relevant GMP simply states, and it is at 820.25(a), and it states, and I quote, all personnel shall have the necessary training to perform their assigned responsibilities adequately.

Now, getting back to some of the questions posed by Justice Scalia, it's very clear that her claim would not be different from or in addition to that.

It would be simply a claim that the training in that case was not adequate.

It's... in other words, the GMP's just set out very basic guidelines for the proper manufacture of any consumer product, certainly not the level of specificity necessary to preempt, and that's really the problem with all the arguments the company's making.

They're at a level of generality that is so high that it essentially wipes out not all State tort law but all State law.

Unknown Speaker: But from what you say, if the FDA chose to be much more specific simply by issuing different and more specific regulations, it could then wipe out State tort law.

Mr. Wolfman: Well, again, we say that requirement doesn't encompass State damages actions, but that is correct, Your Honor, and let me use an example.

For instance, in the area of tampon labeling, the agency has acted specifically.

It says the tampon box must contain this warning.

To be sure, if the State said, we not only want this tampon label but we want three more paragraphs, that would be in addition to that.

But to appreciate the breadth of Medtronic's argument, Medtronic would claim that no State could enforce and no plaintiff could sue for injuries based on a tampon injury even if the claim was that the Federal warning had just been omitted.

Unknown Speaker: I don't know, Mr. Wolfman... I don't know if you know this, know the answer to this, but I wasn't certain when I read the FDA regs where they say the FDA has to have established specific requirements applicable to a particular device, suppose what they had in their building section was, every building used to manufacture an implant must have a smoke detector every 3 feet in the ceiling.

That's highly specific, but it applies to all devices.

I would have thought that was specific within the meaning of the reg, but I've heard it argued no, no, you have to have a special section called, buildings used to make tampons, building used to make hearing aids--

[Laughter]

--buildings used... that would seem to be a ridiculous interpretation of this, but have you any light to shed on that?

Mr. Wolfman: Yes, I do, and I think that is the... what you posit I think is a correct interpretation of the statute.

By and large, when the agency--

Unknown Speaker: The regs.

The regs.

Mr. Wolfman: --Yes.

Your interpretation saying that that might be ridiculous if they had focused very specifically on the need for smoke detectors at particular intervals, that might be sufficiently specific even though it applied to devices generally.

Unknown Speaker: So--

Mr. Wolfman: However, what the agency has done as a general matter is focus specifically with respect to devices as in tampons and then otherwise just step back and generally regulate it.

Unknown Speaker: --Mr. Wolfman, I... what I don't understand is, if you say that requirement means specific requirement at one point in the preemption provision, why doesn't it mean specific requirement throughout the preemption provision, never mind elsewhere in the act?

The preemption provision reads, except as provided in subsection (b), it may establish or continue in effect with respect to a device intended for human use any requirement... okay, no State can impose any requirement.

Does that means specific requirement?

Mr. Wolfman: I'm... yes.

Unknown Speaker: General requirements are not eliminated, only specific requirements.

Mr. Wolfman: Yes, and in this case--

Unknown Speaker: And then further down, which is different from or in addition to any requirement applicable under this chapter.

That also means specific requirement.

If it's different from a general requirement under this chapter, it's okay.

Mr. Wolfman: --Well--

Unknown Speaker: You can have a State... a State provision so long as its specific, which contradicts a general Federal requirement, or imposes--

Mr. Wolfman: --That's right, and it makes sense.

Let me use an example, if I might.

Unknown Speaker: --So, requirement you're willing to accept as meaning specific requirement wherever it is used in that preemption provision.

Mr. Wolfman: Well, that's right, but let me use an example of how that played out in the regulatory process.

For instance, there are labeling requirements that simply say, the applicable ones here say that the device ought to have a label, should have a label that lists all warnings, contraindications, and such forth, very broad.

Now--

Unknown Speaker: What requirement is that?

That's the Federal requirement.

Mr. Wolfman: --That's the Federal requirement.

Unknown Speaker: Does it require... does it apply only to tampons, or does it apply to a lot of other devices?

Mr. Wolfman: It applies to that particular one.

801.109(c) applies to all prescription devices.

Unknown Speaker: Well then, it's not covered by this anyway so we don't have to talk about it, because you said that any requirement which is different from a requirement applicable under this chapter.

Mr. Wolfman: Well, the--

Unknown Speaker: That requirement is not a specific requirement--

Mr. Wolfman: --But let me--

Unknown Speaker: --so it doesn't even come within in it.

Mr. Wolfman: --Let me explain further.

That is correct, but let me explain how that is worked out.

Unknown Speaker: You really think it's correct?

Mr. Wolfman: Well--

Unknown Speaker: I can't imagine that you want to read it that way.

Mr. Wolfman: --Let me explain how it is worked out in terms of its application.

That pre... that... those regulations essentially preexisted the MDA, because they applied both to drugs and devices.

Then the FDA later ruled a couple of years after the MDA was enacted that on the date the FDA issued regulations specifically with respect to the labeling of hearing aids, then and only then state law with respect to hearing aid labeling that was different from or in addition to Federal hearing aid requirements would be preempted.

Let me say this, that if, indeed, both sides of the equation are acting at the general level, which is what your question is getting at, whether there might be preemption doesn't need to be answered here, but at the very least they need to be acting at the same level.

Unknown Speaker: Why do they have to?

Why can't Congress say to the agency, agency, we passed a general statute that makes sense for you to administer, and we delegate to you the authority to interpret these words in a reasonable way, and if you have to interpret them differently when they apply to the State than the Federal Government, so be it.

Mr. Wolfman: Well, let me tell you--

Unknown Speaker: It's common, isn't it, in State--

Mr. Wolfman: --That is correct, Justice Breyer, and I suppose I should amend my answer.

If, in fact, the FDA had issued preemption regulations which had that interpretation this would be a different case, and I'm not suggesting that that might not be entitled to deference under Chevron.

What I am suggesting is, certainly the FDA's determination at the very least that the State and Federal sides of the equation ought to be acting on the same level of generality is certainly permissible construction of this statute, and it makes sense in light of why you want preemption.

I mean, right now the labeling regulation simply says you should have the adequate warnings and contraindications.

That says very little about whether it's important to regulate specifically warning labels on hearing aids because of particular problems with respect to hearing aids.

Unknown Speaker: --I don't want to waste your time, but just for the record, unless you have a third case, Hillsborough County, which you cited as an example where we've deferred to the agency's interpretation of whether a statute preempts the State, Hillsborough County related to an agency regulation as to whether the agency regulation was intended to preempt, assuming the agency had preemption power, and Lawrence County, the other case you gave me, is not a preemption case.

It's an agency saying what funds distributed by the agency can be used for.

It's really not preemption.

Do you know of another--

Mr. Wolfman: Those are the cases--

Unknown Speaker: --because I really don't know of a case in which we've deferred to the agency as to preemption of State law.

Mr. Wolfman: --Well, I don't have... those are the two cases I have.

I think Hillsborough County is very strong in our favor.

It basically says--

Unknown Speaker: An agency reg, the issue was whether the agency reg was intended by the agency to preempt, as it could be.

Mr. Wolfman: --Those are the cases I have, Your Honor.

Unknown Speaker: Okay.

Mr. Wolfman: In sum, as we've gone through the three claims at issue here, there simply is no tension between the lower State law claims and any Federal requirements applicable to the model 4011 lead.

No preemption here is not only demanded by the text of 360k(a), but it's consistent with the act's purposes.

On the heels of a series of public health tragedies, and against a backdrop in which tort claims such as the Lohrs' were commonplace, the MDA was enacted to provide protections that only a few States had provided previously.

To abrogate State law in areas where there are no specific applicable Federal requirements, as Medtronic seeks here, does, as the FDA has said, to make consumers worse off than if the MDA had never been enacted in the first place.

Section 360k(a) does not permit that result.

We ask the Court to reverse in part, to affirm in part, and to hold that none of the Lohrs' claims are preempted.

Unknown Speaker: Thank you, Mr. Wolfman.

Mr. Kneedler, we'll hear from you.

Argument of Edwin S. Kneedler

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

The United States agrees with the Respondents Lohr that summary judgment should not have been granted for Medtronic, but our position differs somewhat from both petitioner and respondents in this case.

First, we do not agree with respondents' broad submission that the act's preemption provision does not speak at all to common law tort claims.

In our view, the word requirement in section 521(a) of the act encompasses duties imposed by State common law, as well as duties imposed by State statutory or regulatory law.

Conversely--

Unknown Speaker: Is your argument there that, assuming a consistent usage within the section, the Federal requirement is described as being a requirement imposed under this chapter?

Mr. Kneedler: --Right, applicable under the act, and the Federal act does not impose... this point does not derive from the word requirement the fact that the Federal act only addresses statutory regulatory requirements.

The Federal act only gives the FDA that authority.

But that... so it's the applicable under this chapter rather than the word requirement that gives rise to--

Unknown Speaker: But there's also the reference in there, in referring to the requirement at the State level as being imposed by a State or political subdivision, and particularly the reference to political subdivision doesn't sound like something that would cover a common law rule, even a recovery rule, does it?

Mr. Kneedler: --Well, perhaps not, but it's State or political subdivision in common law.

Unknown Speaker: That's true.

That's true.

Mr. Kneedler: And common law derived from State courts, the State supreme court or whatever--

Unknown Speaker: But that would at least leave a question, and since preemption gives the presumption against preemption, I would suppose anything that was no clearer than that would not have a preemptive effect.

Mr. Kneedler: --Well--

Unknown Speaker: So we would construe it in a way that would not result in preemption, isn't that fair?

Mr. Kneedler: --That may be one possible construction, but we believe, particularly read against Cipollone and the use of the requirement there, and just the nature of State law, State law we believe would also encompass duties imposed by the--

Unknown Speaker: Why would that be a permissible construction?

I mean, you would need... your argument is not that it only includes the common law, is it?

Mr. Kneedler: --Right.

Unknown Speaker: Your argument is that it includes both the common law--

Mr. Kneedler: Right.

Unknown Speaker: --and statutory law.

Mr. Kneedler: Right, law from whatever source.

Unknown Speaker: And to cover the statutory thing you would have to include or any subdivision.

Mr. Kneedler: Political subdivision, that's correct.

Conversely, we do not agree with Medtronic's broad submissions that the mere fact that its pacemaker lead received 510... went through the 510(k) process and was found to be substantially equivalent altogether preempts respondents' State law claims.

The Federal act preempts a State requirement only if it's different from or in addition to a Federal requirement applicable under the act.

The basic requirement for Class III, indeed, its defining characteristic under the act's definition, is that it goes through the extensive premarket approval process with one exception.

In this case, the finding of substantial equivalence as part of the 510(k) process served to exempt the Medtronic lead in this case from the PMA requirement.

In other words, the only purpose of the substantial equivalence determination in this case was to render inapplicable to the device under the Food & Drug Act the premarket approval characteristic.

The substantial equivalence determination is not itself a requirement under the act for purposes of preemption.

It is rather... it has the opposite effect.

A finding of substantial equivalence to a preamendments device has the effect of taking a Class III device outside of the PMA process and putting it in the same category as a preamendments device.

Unknown Speaker: Temporarily, if this statute works eventually the way Congress intended.

Mr. Kneedler: Right, until a premarket approval application is called for under the regulations.

But what Congress did with respect to devices that were on the market before 1976 and those that came along after but were essentially like those was not to require a premarket application even if they're in Class III until the FDA called for such an application, and the FDA has not done so, so I think it's beyond question that devices marketed before 1976 were, and continue to be, the subject of State law tort suits for defective design.

We think it follows under the scheme of the act that devices found substantially equivalent and therefore removed from the premarket approval process fall into the same category and can also be subject, properly subject to State law defective design--

Unknown Speaker: To establish that, it seems to me you have to say that there's no requirement as to the design of those products.

Mr. Kneedler: --That's correct, and we believe that's true.

Unknown Speaker: But there is one, isn't there?

Mr. Kneedler: No, and if I may, there are several points there.

The design does not come from the act.

It is not a requirement imposed by the FDA.

It's not a requirement under this chapter.

The design originates with Medtronics, and the FDA doesn't approve it.

It's--

Unknown Speaker: The obligation to follow that design originates from the statute.

Yes, the design originally was made by somebody else, it wasn't designed by the Government, but the Government says you have to follow the design that was used pre-'76.

Mr. Kneedler: --But Justice Scalia, the same is also true for a pre-'76 device.

A pre-'76 device could not be design... could not be altered in its design in a major way without also going through the 510(k) process, and yet again, it's clear that despite that fact, that limitation on changing the design, that a preamendments device can be subject to a State law tort suit, so the requirement--

Unknown Speaker: Why is that clear?

How do we know that?

Mr. Kneedler: --There's nothing... there's no requirement at all with respect to design imposed on the... on a preamendments device.

Unknown Speaker: Yes, there is.

It has... it cannot change its design.

If it changed its design, it would be in violation of Federal law, would it not, without approval?

Mr. Kneedler: Well, yes.

If I could get to the second point, then... the first point is that it's not... the design is not a requirement that stems from the FDA, it stems from the manufacturer, but the second point is, the requirement that you're referring to, if it is a requirement, is only a requirement with respect to substantial equivalence, it is not a requirement with respect to actual safety and effectiveness.

That--

Unknown Speaker: Why doesn't it work to say that the requirement that's Federal which arguably displaces the State doesn't do it at all unless it's a relevant requirement?

A requirement about doors doesn't displace requirements about hearing aids, does it?

Mr. Kneedler: --No.

Unknown Speaker: It has to be relevant.

Mr. Kneedler: Just so, or--

Unknown Speaker: All right.

If it has to be relevant, how do we decide the meaning of that word, relevant?

Mr. Kneedler: --Well, I--

Unknown Speaker: Do we then turn to see what this agency says?

That's what I--

Mr. Kneedler: --We believe you... one does, and the... and I think that is the message of the agency's use of the word specific requirement.

What the agency means then is, by use of the word specific is that there has to be a subject matter congruence as it's been referred to here.

Unknown Speaker: --You say relevant means, it has to be relevant to safety?

Mr. Kneedler: No, it has to be... the relevance... there has to be subject matter congruence between the State requirement and the Federal requirements.

The only--

Unknown Speaker: What they say is, the relevant requirements, those requirements that are relevant in relation to a particular claim, State reg or rule, is a reg that is specific.

Mr. Kneedler: --Right, exactly.

Unknown Speaker: Specific in other specific requirements applicable to a particular device.

Mr. Kneedler: Right, and--

Unknown Speaker: So it must be a specific--

--Well, but you don't mean to suggest, do you, that a manufacturing requirement that is very clear and it applies across the board to all medical device manufacturing is not specific?

Mr. Kneedler: --No.

No, that is covered.

That is a specific regulation applicable to the device.

The point is, the specificity comes with whether a particular requirement is applicable to the device, and what's essential to defer to FDA on something like this is, is there a requirement applicable to that device?

If in the good manufacturing practices the FDA had regulated only, let's say, hours of service of quality assurance persons, that wouldn't preempt all manufacturing claims against the agency.

One has to look at exactly what the agency has required, whether it has required anything, and whether the Federal... the State requirements ought to be imposed in the tort action--

Unknown Speaker: Well, but that--

Mr. Kneedler: --covers the same subject matter.

Unknown Speaker: --It seems to me that sweeps way too broadly.

Suppose the labeling requirement says for thousands of devices, do not use without consulting a physician.

That's all it requires.

Can there be a failure-to-warn suit?

Mr. Kneedler: The Federal requirement?

Unknown Speaker: Yes.

Mr. Kneedler: Yes.

Well--

Unknown Speaker: Can there be a failure-to-warn suit in a State court?

Mr. Kneedler: --I think it would--

Unknown Speaker: That's a specific requirement.

Mr. Kneedler: --I think, again, it would depend on whether the agency had intended to... whether that intended to exhaust the agency's requirement with respect to labeling.

It's possible, for example, that the agency could focus on a particular problem in labeling and address that with a particular warning, but not intend to occupy the entire field of labeling in that circumstance.

In other words, not to impose anything bedsides the more general, for example, requirements for prescription--

Unknown Speaker: Well, Mr. Kneedler, there are claims here relating to negligent manufacturing and to failure to warn, and there are FDA requirements in both these areas, so what's left of those claims?

Mr. Kneedler: --Well, as to the... we agree that those are requirements within the meaning of the preemption provision, but they're not... but the State law claim is not preempted unless its shown by the defendant claiming preemption to be different from or in addition to the State law claims, and at this summary judgment stage of the case, we don't believe that this Court can confidently conclude that whatever law the case would be presented to the jury on would be different from or in addition to the general State requirements.

That would require further proceedings and looking at jury instructions down the road.

Chief Justice Rehnquist: Thank you, Mr. Kneedler.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Hawaiian Airlines, Inc. v. Norris - Oral Argument

Fri, 09 Jan 2009 14:49:51 +0000

Case:

Hawaiian Airlines, Inc. v. Norris

Media File:

92-2058_19940428-argument.mp3

Related Transcript:

1993_92_2058_argument.xml

Transcript:

Argument of Kenneth B. Hipp

Chief Justice Rehnquist: We'll hear argument next in Number 92-2058, Hawaiian Airlines v. Grant Norris.

Mr. Hipp.

Mr. Hipp: Mr. Chief Justice and may it please the Court:

This case is about the scope of the minor dispute resolution procedure of the Railway Labor Act, and whether an airline employee can abandon that procedure and go to State court with a State tort claim of wrongful discharge.

This Court has repeatedly recognized that Congress, in establishing the Railway Labor Act, set up a comprehensive, indeed, pioneering alternative dispute resolution procedure for adjusting minor disputes between employees and employers without lawsuits and without strikes.

Furthermore, as all the parties in this case accept, the minor dispute resolution procedure within the Railway Labor Act, section 204, must go through the mandatory arbitration procedures of the adjustment board in the absence of concurrent jurisdiction pursuant to congressional act.

Where we part company with the Hawaii court, with the respondent, and with the Solicitor General is in defining the scope of the jurisdictional language of section 204.

In our view, and as we have argued at length in our brief, our opponent's positions concerning the scope of section 204 are flawed because they attempt to rewrite the plain language of section 204 and other provisions of the Railway Labor Act, and they misconstrue the Railway Labor Act's legislative history and this Court's decisions interpreting the RLA.

If this Court were to accept our opponent's views, the result would greatly undermine Congress' scheme for resolving employment disputes, and it would do that by undercutting the historic legislative tradeoff that took place in 1934, whereby unions and employees achieved the mandatory arbitration procedures of the Railway Labor Act in return for giving up their right to go to court and their right to strike.

As this Court recognized in the Chicago River and Indiana Railroad case, that tradeoff was fundamental to the 1934 amendments to the RLA prior to the enactment in 1936 of section 204.

Unknown Speaker: Mr. Hipp, you seem to be arguing for a different standard under the RLA than that under Lingle and under the National Labor Relations Act.

I'm not sure... how do you justify application of such a different standard?

Mr. Hipp: Your Honor, the touchstone for preemption, as in fact the Court recognized in Lingle, is not to apply some procrustean approach, but instead to look at the purposes of Congress in each scheme.

What was the purpose of Congress in section 301?

The purpose of Congress was to assure common interpretation of collective bargaining agreements pursuant to Federal common law.

There's no mention of alternative dispute resolution there.

There's no mention of any arbitral forum there.

What is the purpose of the Railway Labor Act?

The purpose of the Railway Labor Act is to provide a method, a comprehensive method for resolving disputes between employers and employees.

If you look at section 2 First of the Railway Labor act, Congress has made the determination that it is these kinds of disputes between employers and employees that leads to disruption of interstate commerce, therefore Congress set up, in section 3 First (i) for the railroad industry and in section 204 for the airline industry, a method for resolving those disputes.

The method is an arbitral or adjustment board method, and a scope of jurisdiction is stated there.

It is a congressional scope of jurisdiction.

Therefore, unlike Lingle, which addresses Congress' concerns related to interpretation of the collective bargaining agreements, Congress had a different agenda in 204 and 3 First (i).

Unknown Speaker: But I suppose Congress didn't intend to entirely preempt ordinary State laws, even in the transportation industry, having... I guess we've upheld State requirements that the train have a caboose, and one thing and another, and so obviously we have said there is room for application of State law--

Mr. Hipp: That's correct.

Unknown Speaker: --even under the RLA.

Mr. Hipp: That's correct, Your Honor, and that is because you must address the congressional purposes of the RLA.

The RLA was designed to deal with disputes between employees and employers.

It was not designed to deal with whether or not a State established a minimum substantive standard such as a caboose.

If you have a regulatory agency in a State that says... and the State makes the determination through its legislative process that State may have a caboose law, it doesn't have anything to do with the Railway Labor Act.

Unknown Speaker: Well, the State perhaps could arguably have made a conscious decision, by the passage of whistleblower statutes, that this is a means of assuring public safety.

Mr. Hipp: They can make that determination, but what they cannot do, Your Honor... and this is what the Andrews case in essence holds... is that they cannot take a dispute between an employee and an employer in the airline or railroad industry and convert that dispute into a State law claim, taking it out of the adjustment board process.

Why not?

Why can't they do that?

Because Congress recognized--

Unknown Speaker: Well, they haven't taken it out.

They've added, perhaps.

Mr. Hipp: --Well, this raises the specter, again, of what happened when this Court in the Moore case years ago established this concurrent jurisdiction concept, whereby you could go both to State court, and you could go to the adjustment board procedure.

Unknown Speaker: Mr. Buell, as I understand your argument, you're not arguing that the RLA preempts State law at all.

It's not a preemption claim you're making at all.

It's an exclusive jurisdiction claim.

You're saying State law applies, but it has to be applied through the arbitration procedure of the RLA, isn't that correct?

Mr. Hipp: No, Your Honor, that's not correct.

Unknown Speaker: That's not correct.

You're saying State law is preempted, so the State law does not exist.

Mr. Hipp: The State law does not exist in the situation where there's a dispute between the employer and the employee covered by these mandatory adjustment board--

Unknown Speaker: Where the dispute concerns an issue of State law, there no longer is a dispute, so you don't have to go to arbitration, then.

You say the State law is ineffective, is that what you're saying?

Mr. Hipp: --No, I'm not saying that, Your Honor.

Unknown Speaker: It is effective.

Mr. Hipp: It is effective, correct.

Unknown Speaker: Then it's not preempted.

Mr. Hipp: No, I'm sorry, Your Honor.

It is preempted.

If your question, Your Honor, is directed at the question of what the adjustment board looks at, the substance--

Unknown Speaker: Does State law apply?

Is the State law applicable--

Mr. Hipp: --The State law--

Unknown Speaker: --to the employment relationship?

Can the State law govern it?

Mr. Hipp: --Yes, Your Honor, it can, depending upon whether or not it is regulating a dispute between the employer and the employee, on the one hand, or if it is establishing substantive minimum standards.

Perhaps I can give you an example that would clear this up.

Unknown Speaker: I'm really confused.

I had thought you were making an exclusive jurisdiction claim, that you apply the State law but it's to be applied by the board through the arbitration.

Now you're telling me no, that the State law is preempted.

That's a quite different--

Mr. Hipp: Well, Your Honor, let's make this clear, because it is--

Unknown Speaker: --Maybe you can make your example specific to this case, and this would be my question: suppose the board finds that Norris was indeed improperly discharged.

At that point, what remedy could the board give?

Would there be any room for the State whistleblower's statute in the remedy that the board could give?

Mr. Hipp: --The board would be free to fashion a remedy to deal with the finding that it made.

Unknown Speaker: The finding is that a discharge was improper.

This person did just what an employee should do, detecting a condition that might make flights unsafe for passengers, so it's a complete exoneration of what he did.

Indeed, the board concludes, instead of being disciplined, he should have gotten a medal.

Therefore, the remedy is... and what could the remedy be, and how would it differ from a State law remedy under the whistleblower act?

Mr. Hipp: The remedy would be left open to the adjustment board to establish, and that remedy would take into account the State public policies in establishing whatever remedy the adjustment board wanted.

Unknown Speaker: But as a practical matter, could the... in the absence of a State law, couldn't the board do exactly the same thing?

It would simply not look to State law for the source of its public policy, but it could come up with basically the same standard, couldn't it?

Mr. Hipp: That's exactly correct, Your Honor, and in fact that is a--

Unknown Speaker: Why, then, did Congress add... if I'm correct, why did Congress add a whistleblower provision to the substantive law governing rail employees but not airline employees?

Mr. Hipp: --Well, it was only addressing the railroad side of the equation in the--

Unknown Speaker: On your theory, wasn't it equally redundant, equally unnecessary with respect to the rail employees?

Mr. Hipp: --Yes, Your Honor, except for one thing.

What is clear under the Federal Rail Safety Act is a specific punitive damage remedy is included under that of $20,000.

Therefore, there is a direction by Congress as to how you should be formulating your remedy, and it's important that you understand, particularly in dealing with the arguments by my opponents here, that under the Federal Rail Safety Act, nonunion employees are committed to adjustment board jurisdiction.

So that even in the absence of a collective bargaining agreement, those employees go through the adjustment board procedure for resolution of their claim, and this is why I need to address, if you don't mind, Justice Scalia's point, because I think it's a fundamental point here, and that is, what is the source of the law, the substantive law that an adjustment board looks at?

What did Congress intend about that, because it deals with the complex questions, including the Seventh Amendment question that is presented here.

If all Congress had said was, you take State law claims, and you move them over to an adjustment board process, then you would have a problem with regard to a right to jury trial, but that is not what Congress said.

Congress said, we want disputes, grievances, if you will, which are identified to include discharges, to be resolved by an adjustment board, and the adjustment board... and this Court recognized this in Burley, by the way, and I will refer to footnote 36 of Burley, for exactly the problem that you presented, Justice Scalia, and that is--

Unknown Speaker: There's no grievance, it seems to me, unless State law applies.

Let's assume that there's no Federal whistleblower statute.

There is a State whistleblower statute.

The employee is dismissed, claims it's in violation of the State statute, so he brings a grievance.

Why is there a grievance, if State law does not govern?

What does he have to grieve about?

You're telling me State law does not apply.

Mr. Hipp: --Okay, in that particular grievance he has been disciplined in some way, as you've just described.

Unknown Speaker: Yes, and he says, this disciplining is in violation of State law, isn't he saying?

Mr. Hipp: Correct, and now--

Unknown Speaker: If it's not in violation of State law, it's okay.

Mr. Hipp: --So now the question is that there's a dispute between the employee and the employer.

That's covered by the Railway Labor Act, and the question is, what is the substantive law that is going to be applied by the adjustment board in that--

Unknown Speaker: There is no dispute, unless you posit the applicability of State law.

There is no dispute.

The only basis for his claim is that State law governs.

If you tell me State law doesn't govern, there's no dispute.

Mr. Hipp: --State law--

Unknown Speaker: He's not claiming that he has a Federal right to whistleblower relief.

Mr. Hipp: --Well, State law provides the floor upon which the adjustment board has to function.

There's a difference, of course, between taking into account State law policy and requirements and not rejecting those.

That's in essence what you've looked at in the Misco case.

Unknown Speaker: That's a really gossamer distinction, it seems to me.

Are you saying that... supposing this case... we have this case coming up in Hawaii, which has a whistleblower protection statute.

Supposing you have an identical facts case coming up from, let's say, Nevada, which doesn't have a State whistleblower protection statute.

Now, must the adjustment board handle these two cases differently?

Mr. Hipp: No, Your Honor, and in fact this is exactly... this is my point, and that is, the adjustment board was established by Congress, and you'll see this in Representative Crosser's statements at the time of the passage of the act: to act like a court, to make the kinds of judgments based upon a range of policy considerations.

Unknown Speaker: Well, and I take it from what you've just said that among those policy considerations is not the State law.

Mr. Hipp: The State law may be taken into account.

Unknown Speaker: Is it just totally arbitrary, then, on the part of the adjustment board?

It may, it may not, it could do lots of different things, but it doesn't have to do any?

Mr. Hipp: It is not arbitrary, Your Honor.

Unknown Speaker: Well then... but... it seems to me every time you've been asked you've said, well, it could be, but it doesn't have to.

Mr. Hipp: Well, and the--

Unknown Speaker: How... why would the Nevada and Hawaii cases be treated either (a) differently, or (b) the same?

Mr. Hipp: --Well, certainly it would be treated to provide under our contract, because it states that an employee cannot be disciplined for refusal to perform work in violation of Federal or State safety laws, to provide a floor at whatever the State safety law mandated, but it would be up to... and there could be inconsistencies.

Let's give you an example.

This was one of the things Congress addressed when it was looking at the right to work laws.

What if you have a State law that said, you have to sign off... you have to become a union member, and then you have another State law that says, no, you have a right to work here, and you cannot require somebody to become a union member.

There's a conflict there.

Well, Congress dealt with that in an explicit fashion by saying we're not going to apply these particular kinds of laws across State lines, but when you look, and in particular you look at Burley, when it talks about what the nature of the substantive considerations are at the adjustment board level, here's what they say in Burley: depending upon the substantive character of the claim, its foundation in the collective bargaining agreement or otherwise, and other factors, that that will determine how the adjustment board comes out.

Unknown Speaker: But that frankly seems to me to be almost so vague that you can't put your finger on anything.

Do the cases from Nevada and Hawaii come out differently before the adjustment board, or do they come out the same?

Mr. Hipp: They would no doubt come out the same.

Unknown Speaker: So it doesn't make any difference if Hawaii has a statute and Nevada doesn't.

Mr. Hipp: That's correct.

Unknown Speaker: So then, the State law must be virtually nonexistent.

It must be entirely preemptive.

Mr. Hipp: Well, in the context of a dispute between an employer and an employee, that is absolutely correct.

Unknown Speaker: Then you're withdrawing what you said earlier about... you said State law provides a floor, State law policy would be taken into account by the board, now your response to the Chief Justice is State law is irrelevant.

Indeed, not to be... positively not to be considered.

Mr. Hipp: No, I'm sorry, Justice Ginsburg, if that's what I suggested.

I believe the Chief Justice asked me if those cases would come out the same.

I believe that the cases would come out the same, and Congress believed these cases would come out the same, because it recognized specifically with regard to the whistleblowing situation the background in the adjustment boards of dealing with these whistleblower claims.

Therefore, since Congress has already recognized that the adjustment boards deal with these whistleblower claims, I am assuming that the employee will get the benefit of the whistleblower protection, and where the--

Unknown Speaker: Well, what is the whistleblower protection, and where does it come from... case law, if it comes from statute or... you're rejecting the Hawaii whistleblower act as the source of law.

What is the source of the whistleblower protection that the employee would get before the board?

Mr. Hipp: --The source comes from four different locations.

One source is the collective bargaining agreement.

Another source is the practice and procedures of the parties with regard to the collective bargaining agreement.

A third source--

Unknown Speaker: What does... well, can you be specific about what the collecting bargaining statute... agreement says about whistleblowers?

Mr. Hipp: --I'm sorry, what the collective bargaining--

Unknown Speaker: You said a source is the collective bargaining agreement.

Okay, what in the collective bargaining agreement governs whistleblower protection?

Mr. Hipp: --In particular, there's a just cause provision in the contract that prohibits employees from being terminated for just cause.

It also protects employees from refusing to sign off on work performed in violation of State or Federal laws, safety laws.

That's--

Unknown Speaker: Counsel, let me try this one more time, a different way.

Suppose that before this employee were discharged the employer came to you, as the employer's counsel, and said, in determining whether or not I may discharge this employee, must I consult and be guided by the Hawaii whistleblower statute?

What would be your answer?

Mr. Hipp: --My answer would be that you may not do anything in your adjustment board process that would reject the policies in the Hawaii whistleblower protection statute.

Unknown Speaker: I'm not talking about the adjustment board process, I'm asking whether or not I may... I must take account of that statute in determining whether or not I will discharge the employee.

Mr. Hipp: My answer would be that you should take into account the policies under that statute and... in deciding whether--

Unknown Speaker: I should under a matter of law.

Must I, as a matter of law?

Mr. Hipp: --That you must.

Unknown Speaker: Then why do the Nevada and Hawaii cases come out the same?

Mr. Hipp: Because in one you have provided a floor.

In the other, you have not... if the Nevada case had stated, Your Honor, that you are permitted, in fact mandated to terminate people for whistleblowing, then there would be a conflict.

If the Nevada case as you posited it says nothing, then the Hawaii case provides the floor.

Unknown Speaker: So there are other sources for whistleblower protection other than State law.

Mr. Hipp: That is correct, Your Honor.

Unknown Speaker: And what are they?

Mr. Hipp: The sources arise in the contract, in the practice and procedures of the party, in the Federal Rail Safety Act... it is also... is a source.

Unknown Speaker: The board would... even though the Federal Rail Safety Act applies only to railroads and not to airlines, the board would simply carry it over?

Mr. Hipp: Well, certainly the policies involved would be carried over.

Unknown Speaker: Well, why?

Why?

That just doesn't make any sense.

Congress passes a law saying, here's a... we want this law to apply to railroads, and the board says well, we'll apply it not only to railroads, we'll apply it to airlines, too.

Mr. Hipp: My response is that the policies would carry over because Congress, in the legislative history which we cited for you, states very specifically that it understands that this same protection is provided through the adjustment board process.

Unknown Speaker: May I ask... you started to respond to an earlier question by identifying four sources of law.

You've got the agreement, the practices, and the Railway Act.

What's the fourth?

Mr. Hipp: And... the agreement, the practices, the State... the policies under State and Federal substantive laws, the policies involved, and that's through a Misco analysis--

Unknown Speaker: And how do you--

Mr. Hipp: --and finally--

Unknown Speaker: --Oh, go ahead.

I'm--

Mr. Hipp: --That was the third one.

Unknown Speaker: --That's the third.

Mr. Hipp: And then the finally is the Federal Rail Safety Act provides explicit jurisdiction, even for nonunion employees in the rail line... railroad industry.

Unknown Speaker: Focusing on the third for a moment, how does that reconcile the Chief Justice's hypothetical, if the two States have different policies?

Mr. Hipp: As long as they don't have conflicting policies, then whatever the adjustment board decides upon, it would take into account the policies involved and establish a floor for the employees.

This, of course, is nothing new.

Unknown Speaker: But it wouldn't follow from that that they would come out the same.

They might come out the same, but I don't see how you can answer the Chief's question by saying they would.

Mr. Hipp: Well, certainly with regard to the specific whistleblowing question I think we can, by reference to what Congress has said it understands to be done in the adjustment boards already.

Unknown Speaker: Where did Congress say that?

Well, but that's--

--Where did Congress say that?

Mr. Hipp: In... in the legislative history of the Federal Rail Safety Act.

Unknown Speaker: Of a congressional... of a congressional act applying only to the railroads.

Mr. Hipp: Yes, that's correct, Your Honor, but it was speaking about adjustment board process, and what they took into account, and the adjustment board scope of jurisdiction in the airline and railroad industries are coextensive.

Unknown Speaker: May I give you a hypothetical that does not have a Federal policy counterpart?

Supposing in Hawaii you said they had a statute that said, nobody has to work on King Kamehameha's birthday, and it's just Hawaii has such a statute.

Could the employer... and the employer made the man work on that birthday and fired him... or fired him if he didn't, something like that.

What result in that case?

Mr. Hipp: In that case--

Unknown Speaker: And you assume the collective bargaining agreement is silent on this particular holiday.

Mr. Hipp: --All right.

In this case, Your Honor, the employee would have to be reinstated.

Why... and let me tell you... explain why, because that's a good hypothetical.

The reason that that would work that way is that you have a State minimum standard that is established, correct, namely, every employee will be off on King Kamehameha day.

The employer is, as we know pursuant to the Terminal case, has to abide by the State substantive standards.

Now, as to... after you have that substantive standard, if you terminate an employee in violation of that substantive standard, you will have violated a policy pursuant to State law.

That policy is incorporated in the complex that the adjustment board must evaluate in deciding the discharge case.

Let's... your... let's carry your hypothetical out, because if you go to the adjust--

Unknown Speaker: Let me change it just a little.

Instead of saying... instead of discharging him, they just didn't pay him for the day.

They docked him for a day's pay, and there's no remedy under the collective bargaining agreement for missing a day's pay.

Could he sue in State court and get the day's pay?

Mr. Hipp: --No, he could not, Your Honor.

Your assumption here is that... you assumed the answer in your question, namely that there would be no remedy under the collective bargaining agreement.

But Congress dictated that there would be a remedy for that under the collective bargaining agreement, because Congress said there has to be an adjustment board, and Congress said that that adjustment board has to consider grievances, and if you would look at how the development of the Railway Labor Act was in the first 10 years, and you look in particular--

Unknown Speaker: The term "grievances" is really the heart of the dispute, I suppose, whether grievances include noncontractual disputes as well as contractual disputes.

Mr. Hipp: --That's correct, Your Honor, and I would really ask--

Unknown Speaker: You say they must provide relief in that case--

Mr. Hipp: --That they--

Unknown Speaker: --They must.

The adjustment board must provide relief.

Mr. Hipp: --and if by that case, it was the wage payment situation--

Unknown Speaker: The holiday case, right, but they need not provide it in the whistleblower case.

Just, they may.

They may take it into account, right?

Mr. Hipp: --No, Your Honor--

Unknown Speaker: They must provide it in the whistleblower case, too, right?

Mr. Hipp: --That's correct, Your Honor--

Unknown Speaker: The same relief that the State requires.

Mr. Hipp: --They... not the same remedy.

This was the debate between the majority in Andrews and Justice Douglas, because Justice Douglas kept saying, under State law you get this additional remedy.

You get all of these good remedies under State law that you're not going to get under the adjustment board, and the answer to that is, that is not what preemption is all about.

That preemption allows the adjustment board to fashion the remedy.

I would ask the Court to look at Professor Garrison's article, and particularly... it's cited many times by this Court, because it was written in 1937, after 10 years of experience under the Railway Labor Act.

At pages 583 and 586 of that article, the... Dean Garrison describes... he describes how the adjustment boards had been dealing with grievances.

He identified grievances as a narrow class of cases that he identified as being discharges or refusals to promote.

If you look at the analytical framework that was being used by the adjustment board, he distinguishes how the adjustment board addressed those cases and how it addressed contract interpretation cases.

He said that in those cases, the adjustment board looked at the equities.

The adjust--

Unknown Speaker: Norris, in his State lawsuit, did he ask for punitive damages?

Mr. Hipp: --Yes, he did, Your Honor.

Unknown Speaker: Could he get those under the grievance board proceeding, assuming every fact was found in his favor?

Mr. Hipp: The Hawaii court found that he could not.

The arbitrator, who is the only arbitrator who has testified in this case, said that under certain limited circumstances punitive damages would be available.

However, I would also hasten to note, Justice Ginsburg, that this again lies at the heart of the debate between Justice Douglas and the rest of the Court in the Andrews case, because he was focusing on the remedy provided by State law, and he was saying, look, you can't get the same remedy over here in this Railway Labor Act proceeding, and that was not a basis for not finding preemption.

You have to understand--

Unknown Speaker: Review for me your answer of... assuming everything was found in his favor, what could the remedy be from the board and how would it differ from the State law remedy?

Mr. Hipp: --Your Honor, that is addressed at length by the arbitrator in the Joint Appendix.

The arbitrator takes one position.

The Hawaii courts found that there would not be anything other than back pay and the traditional status quo ante remedy.

The Hawaii Whistleblower Protection Act itself provides for the payment of back pay plus actual damages.

That's the terminology that's used there.

The Hawaii Whistleblower Protection Act, according to the State court judge, does not provide for punitive damages.

However, the plaintiff has sued for... in common law and asked for punitive damages.

I would like to make two final points here, and I think they are key, and that is that what in essence is being asked of the opponents in this case is for you to do away with the tradeoff that took place in 1934, whereby employees got their mandatory arbitration procedures and they gave up strikes, and going to court.

Unknown Speaker: Aren't you doing away with it too, because you are telling us that even in the instances in which there is a preemption, the preemption is somehow softened by this obligation to borrow standards, or to borrow principles?

You're interfering with the tradeoff too, aren't you?

Mr. Hipp: No, Your Honor.

I believe this is exactly what was entailed, that--

Unknown Speaker: What is the source of--

Mr. Hipp: --if you look at the adjustment--

Unknown Speaker: --I still don't understand the source of the obligation to borrow these standards.

Mr. Hipp: --The source of the obligation is for the court to... I mean, for the adjustment board to function in the nature of a court, to look at and draw upon the policies--

Unknown Speaker: Then why isn't... why wouldn't it be functioning in the nature of the court for the board to say, we think whistleblower legislation is very unwise, and we are not going to recognize any grievance whatsoever that has as its source a whistleblower claim.

Is that open to the board?

Mr. Hipp: --If the board... the board might well say that.

That would be subject to review in the courts under this Court's Misco standard.

Unknown Speaker: Well, but I want to know how the review turns out.

Can the board say that in a grievance arising in Hawaii?

Mr. Hipp: I would say that it could not say that.

Unknown Speaker: Why?

Mr. Hipp: And the reason I would say that, Your Honor, is that Congress has recognized already that this has to be dealt with through the adjustment board process.

Unknown Speaker: Thank you, Mr. Hipp.

Ms. Mollway, we'll hear from you.

Argument of Susan Oki Mollway

Mr. Mollway: Mr. Chief Justice and may it please the Court:

Petitioners have lost sight of what the RLA is.

The RLA provides for airlines and railroads to enter into agreements, and provides procedures for enforcing those agreements.

The world of the RLA is nothing more.

Nothing in the RLA sets terms and conditions of employment.

Nothing in the RLA prevents any Government from setting those terms and conditions of employment by providing minimum protections for all workers, including workers covered by the RLA.

Only by ignoring decades of law can petitioners argue that the RLA wipes out or forces into an RLA forum these minimum protections.

Beginning more than 60 years ago, this Court has had opportunities in which it could have held that the RLA governs such independent laws.

This Court has never so held.

It did not so hold in 1931 in the Norwood case.

It did not so hold 12 years later in Terminal Railroad, which, although petitioners have characterized it as a State-based case, in reality began with a union filing a complaint against a railroad in a State administrative agency.

Unknown Speaker: Well, if you were to prevail in this case, Ms. Mollway, we would have to cut back some on the Burley opinion, would we not?

Mr. Mollway: I believe, Your Honor, that that cutback... if Your Honor is referring to construction of the omitted case language--

Unknown Speaker: Yes.

Mr. Mollway: --Insofar as the omitted case language might have been earlier construed to include independent claims, I believe that cutback has already come.

I believe it came in Buell in 1987.

That case specifically involved a personal injury brought under the FELA.

Personal injuries were the only specific example of omitted case in the Burley decision, and to the extent that that decision was referring to a personal injury covered by the FELA, I believe that omitted case did come, has now been either eliminated or at least rejected insofar as it might earlier have been interpreted in that way.

A lot of the problem here I believe has been recognized by the panel in that petitioners are unclear as to what they are really asking for.

Are they asking for substantive preemption... that is, that all of these minimum protections disappear totally... or are they asking for forum preemption?

That is, that these kinds of independent claims are funneled into the RLA forum.

They say, in their briefs, that they are arguing for forum preemption, but they shift continually back and forth, as in fact has just occurred in the oral argument, and even in their briefs, in their reply brief in footnote 5, they refer to what is in essence substantive preemption, wiping out these rights.

Obviously, the analysis that will be applied to petitioner's case will differ depending on which kind of preemption they are seeking, but in either case, we submit, preemption is inappropriate, and that is because these independent laws were never intended by Congress to be wiped out either in terms of--

Unknown Speaker: --something else between the two, for exclusive jurisdiction but applying both State and Federal law and substantive preemption... that is, to the extent that there would be questions and comments in a wrongful discharge before the board, that the question whether Norris was wrongfully discharged has to be determined by the board, and then the State forum can take over, so it's kind of a deference until the board decides the preliminary question.

How about that?

Would that be a way of harmonizing State and Federal law?

Mr. Mollway: --It would not, Your Honor, because Federal law only refers to contract disputes, and in the case of Mr. Norris' common law dispute, that is not based on the contract.

We are looking at the distinction as being the source of the right that Mr. Norris is pursuing, so insofar as Mr. Norris is pursuing a right independent of the collective bargaining agreement, even if there were some question that were to arise under a contract because the source of the right is independent of the contract, that particular right remains adjudicable in a court and need not go through the RLA procedure.

Unknown Speaker: Well if a State is willing to take the trouble to do it, can a State enact, therefore, an extremely detailed code of labor management relations basically covering everything that is normally covered in CBA's and therefore, in each case, simply be enforcing a substantive State... the employee who might sue under it would in each case simply be enforcing a substantive State law right and therefore ignore the CBA entirely?

Mr. Mollway: Well, the State obviously could not come into conflict with direct Federal law, but the RLA does not--

Unknown Speaker: Let's assume it basically enacts what as a practical matter is a parallel regime to the most salient provisions of most collective bargaining agreements and one that is entirely in harmony, can it therefore, in effect, provide on each really serious issue an alternate forum if it has a sufficiently detailed law to address each issue?

Mr. Mollway: --I believe, Your Honor, that it could, but it would at that point have to also refer to the collective bargaining agreement if there was one that applied to that particular provision.

Unknown Speaker: Why?

Mr. Mollway: Well, for example, if there were a seniority provision in the collective bargaining agreement, I don't believe that the State could somehow override the agreement that the parties had come into, but if--

Unknown Speaker: Well, let's assume that the State statute was simply in harmony with it.

Could the employee begin, and if he does not like the way the arbitration is going, basically drop it and then simply walk into a State court?

Mr. Mollway: --Yes.

If he is in State court not asserting his rights under the contract but instead asserting his rights under the State law, yes, he could then go into State court and proceed in that way, and that's exactly what Ms. Lingle did in the Lingle case.

She went under her contract and she pursued her remedies there and in fact won reinstatement and back pay.

She went into court and pursued her wrongful termination claim there, and there was no conflict according to this Court, even though she was proceeding in both the RLA forum and in court, and we would submit that there is no reason that any different approach should be applied under the RLA.

In fact, in terms of preemption procedures the cases about preemption have developed in parallel lines under the LMRA context applicable to Lingle and under the RLA context applicable here, and specifically in the Andrews case, which held that for contract disputes only, the exclusive forum was an RLA forum.

In that case, this Court referred to LMRA developments in preemption law, such as Republic Steel and Lucas Flour, and that has been the case throughout the history of preemption under both laws.

I would like to address some of the matters that came up in my opponent's discussion.

There was a great deal of discussion about the Federal Railway Safety Act, and I would like to point out that he has completely overlooked the inclusion by Congress of an election of remedies provision there, so that even though it applies to railroad workers and not to airline workers, there is in fact retained a railroad worker's right to go to court, if in fact he has an independent State right.

There is some confusion, the reason being that one of the legislative reports that has been cited says there is an exclusive remedy under the RLA, but that is because the legislative report apparently was from a bill different from the statute that was actually enacted.

Unknown Speaker: You've mentioned the prospect of someone pursuing relief in both forums.

Mr. Mollway: Yes.

Unknown Speaker: Suppose in the... before the board, the board determines that there was no wrongful discharge, would that have preclusive effect on the State court action under the whistleblower's protective act?

Mr. Mollway: No, it would not, Your Honor, because then, in the separate State court action brought under an independent law, an independent determination would be made whether, under State law, there had been a wrongful discharge or not, and different considerations would come into play irrespective of whatever the collective bargaining agreement might have provided.

Unknown Speaker: Well, what if there's a Federal whistleblower law that's applicable to railroad workers?

would that be applied by the board?

Mr. Mollway: It... I don't believe so, Your Honor, but in case after case what the NRAB has done is said, we are confining our consideration to matters of contract, and they refer to law outside of a collective bargaining agreement only if that law is expressly incorporated into the agreement, or if it serves as a guide, but to my knowledge you have--

Unknown Speaker: But suppose the grievance before the board is... there's a dispute over whether he was fired at all.

Mr. Mollway: --Yes.

Unknown Speaker: The employer says, I didn't fire you.

You were welcome to come back to work, and he said, oh, no you fired me... that's the dispute... and it goes to arbitration before the board, and the board says, he was not fired.

You're saying that that is not binding on the State court, when he brings a whistleblower suit in State court?

Mr. Mollway: Yes, that's correct, because--

Unknown Speaker: That's extraordinary, to have no collateral estoppel effect at all.

Mr. Mollway: --There is no effect, we submit, and the reason is because the determination of whether in fact he was discharged that was made by an adjustment board would turn on provisions in the collective bargaining agreement, whereas when he came into court--

Unknown Speaker: It's the same fact.

The fact is whether he was free to come back to work or not.

That very same fact is going to be at issue in the State proceeding.

Mr. Mollway: --Yes.

Unknown Speaker: And you're saying, even though it's already been adjudicated in a proceeding between these two, it will be readjudicated by the State differently.

Mr. Mollway: Yes, because under State law there may be--

Unknown Speaker: Do you have any precedent for that in any other area?

Do you know any other area where we allow that to happen?

Mr. Mollway: --I am not aware of any case directly like that, where in fact, exactly contrary results were found by an adjustment board and by a court, but the reasoning behind it is that the RLA is confined to that world that we have discussed, which is the world--

Unknown Speaker: Yes, but the determination of fact is that he wasn't fired, and if he wasn't fired, a fortiori he wasn't fired for whistleblowing.

Mr. Mollway: --But it would be a determination made under the terms of the collective bargaining agreement based on the collective bargaining agreement's determination of a discharge.

Unknown Speaker: You mean fired or discharge might mean something different under State law?

Mr. Mollway: Yes.

Unknown Speaker: If it didn't mean something different under State law, there would be preclusion.

Mr. Mollway: Presumably the same result would be reached.

Not necessarily preclusion, but the same result would be reached if the two--

Unknown Speaker: But I thought you said there wasn't preclusion because the standards might be different.

If we determine the standards are the same, why wouldn't there be preclusion?

Mr. Mollway: --If this Court were to rule that the standards are exactly the same... yes, then I believe, if in fact there were that determination, there would be a preclusion.

In this case, however--

Unknown Speaker: How could this Court ever make that determination with respect to the law of the State of Hawaii?

Mr. Mollway: --I agree with you, Justice Ginsburg, I don't believe that this Court could make that kind of determination.

Unknown Speaker: But the supreme court of Hawaii could.

The supreme court of Hawaii could say we... the Supreme Court of the United States has told us what discharge means for Federal purposes and our definition is the same, and if they did that, there would be an obligation to recognize an estoppel, wouldn't there?

Mr. Mollway: Perhaps there would be, Your Honor, but in this case we don't have that.

We don't have a specific whistleblower protection address... or even on the discharge issue addressing the facts of this particular case, and so we are left with the record as it stands, and on the record as it stands, Mr. Norris has evidentiary differences with the petitioners as to whether or not he was discharged at all, whether or not that discharge was proper, and we submit that the RLA does not require those evidentiary differences to be resolved in an RLA forum, so that he remains free to come into court.

I'd like to go back to the procedural that the forum preemption issue is in fact that is what petitioners are arguing for.

If they are arguing--

Unknown Speaker: I like that one better.

I think that's a good forum.

Mr. Mollway: --Thank you.

If in fact they are arguing for forum preemption, that Mr. Norris' claim is required to go to an RLA forum, then they run smack up against decisions by this Court.

In particular, they run up against Terminal Railroad, which was a case brought by a union against a railroad in a State administrative agency, and if in fact there were forum preemption, then at the outset in the State administrative agency there should have been preemption, and that case should have been funneled to an RLA forum.

That didn't happen, the case came to this Court, and the Court did not say that the case should have gone to an RLA forum.

Similarly--

Unknown Speaker: Was the argument made in Terminal Railroad that it should have, and the Court expressly rejected it?

Mr. Mollway: --Not that I am aware of, Your Honor, but if in fact there were forum preemption at stake, presumably this Court would have recognized what the intent of Con--

Unknown Speaker: Well, that gives it the benefit of the doubt.

Mr. Mollway: --Yes, Your Honor.

Yes, and also he runs smack up against Buell, which was an independent claim, independent of a collective bargaining agreement that was permitted to go through the judicial procedure.

As you know, petitioners have tried to distinguish Buell on the ground that it is a Federal law-based claim, but there is no reason that State and Federal laws for preemption purposes should be treated differently.

Unknown Speaker: You would say a fortiori, wouldn't you?

If they should be treated differently, you would give more deference to the States.

Mr. Mollway: Yes.

Yes, and in fact this Court has said that they should be treated alike.

In Metropolitan LIfe this Court said that, and again in Lingle this Court said that, and in Lingle, in saying that, this Court cited to Buell, an RLA case, even though Lingle was an LMRA case.

In addition, petitioners run smack up against, at the very least, a constitutional consideration as to whether or not Congress may constitutionally take away Mr. Norris' right to a jury trial.

We will concede that clearly, had he brought a claim under the contract, there would be a public right in having the RLA forum handle contract claims in a uniform manner, so that claim clearly would go, without a jury trial, to the RLA forum, but there is no indication of an equivalent public right that would force an independent State law claim to go into that kind of forum, so at the very least--

Unknown Speaker: But--

Mr. Mollway: --Yes, Mr. Chief Justice.

Unknown Speaker: --What is the constitutional argument you're making?

Mr. Mollway: A Seventh Amendment argument, Your Honor.

I'm not asking this Court to decide that issue, but simply to take into consideration that petitioner's argument, if accepted, would implicate that issue--

Unknown Speaker: Seventh Amendment requires jury trials and certain civil actions in the Federal courts.

I thought your client was suing in a Hawaii court.

Mr. Mollway: --He was, Your Honor.

Unknown Speaker: The Seventh Amendment has never been held applicable to State courts.

Mr. Mollway: Our position is that in the way that this is working what is happening is, if you take away the jury trial you are funneling all claims, including State and Federal claims, into a Federal forum.

That is a nonjury forum into an RLA Federal forum, so to that extent we are talking about creating a nonjury Federal forum that is not a jury forum, when--

Unknown Speaker: Well, what constitutional... it violates the Seventh Amendment to do that--

Mr. Mollway: --Yes--

Unknown Speaker: --because--

Mr. Mollway: --It violates the Seventh Amendment because it takes away the right to jury trial, and that right has been construed as--

Unknown Speaker: --The right to jury trial, but it certainly doesn't take away the right to jury trial of any Federal courts.

Mr. Mollway: --Our submission is that by channeling his case into a Federal forum you are also implicating Article III, and this Court has construed Seventh Amendment concerns as being on the same standard as Article III concerns.

Unknown Speaker: How is one implicating Article III by doing that?

Mr. Mollway: You are channeling into a non-Article III forum these kinds of claims that traditionally have been deemed to be entitled to be triable in court.

If, for example, this were a diversity case, so that it was brought in Federal court, surely Mr. Norris would have been entitled to a jury--

Unknown Speaker: But you can make that same argument about a great deal of our National Labor Relations Act preemption cases.

Mr. Mollway: --Our position is that in those cases, if the court is taking about contract rights, then there is an overriding public right that permits the channeling of such cases into an RLA forum, but there is no such overriding public right with respect to State based rights, differing State by State, and certainly not in the congressional intent.

All that petitioners are laying their weighty argument on is in essence the word RLA, and we submit that that is too heavy a weight to place.

In fact, just 2 days ago, Justice Stevens read the decision in Landgraf, in which this Court said extraordinary weight should not be placed on narrow terms in a long and complicated statute, and we submit that the placement of such weight on the word "or" in the terms arising out of grievances, or out of the interpretation or application of contracts is much too great a weight--

Unknown Speaker: Thank you, Ms. Mollway.

Mr. Mollway: --Thank you, Your Honor.

Unknown Speaker: Mr. Seamon, we'll hear from you.

Argument of Richard H. Seamon

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

I would like to begin by addressing some of the issues that came up earlier in the argument.

First, we would part company with our colleagues on the issue of preclusion.

We would say that when a factual issue is arbitrated and goes through to an award, that under Utah Mining and similar precedent the normal rules of administrative res judicata would apply.

The second point I would like to make is related to that, which is, we believe that what an arbitrator, or what the National Railroad Adjustment Board can decide under the RLA are grievances, and we believe that the term grievances, by and large, includes claims based on the collective bargaining agreement.

Now, to the extent the collective bargaining agreement actually incorporates State law, then it may well be that the arbitrator can look to State law, but his or her authority to do so is solely bounded by the terms of the contract, and that is because, again, the term grievances really embraces claims based on the employment contract.

The third point I would like to make has to do with the hypothetical that arose with respect to whether a State could effectively enact a comprehensive labor code that would address virtually all of the subjects that would be covered under a collective bargaining agreement.

We think the answer to that to a large extent depends on whether the State was attempting to regulate the collective bargaining process on the one hand, in which case we think that it would severely limited by doing so, because that is what the RLA deals with.

That's on the one hand.

The other hand is that a State still remains free to govern... to regulate about substantive matters of employee safety, to set minimal standards of protection.

Again, one of the points that Ms. Mollway made, and this Court has made, is that the RLA governs the process for arriving at an agreement rather than the substantive terms that end up in the agreement that's--

Unknown Speaker: Why just safety?

Why not wages?

Mr. Seamon: --It can cover wages as well.

Unknown Speaker: Well, all terms of employment.

You're saying that States can control the mandatory terms of an employment agreement under the RLA.

Mr. Seamon: There may be other Federal statutes and Supremacy Clause problems at the margins, but as far as the RLA is concerned, the answer is yes, substantive matters such as wages.

The next point is also related to the question about what a State can regulate without running afoul of the RLA and the process for arbitrating minor grievances, and that is that our opponents try to make a distinction between disputes that arise in the employment setting and safety issues, but in fact the two are often related.

In the caboose case, for example, the whole dispute began when employees of a railroad sought to have cabooses added to trains, even though the collective bargaining agreement in that case didn't provide for the cabooses that the State law provided for.

In other words, that was a dispute, but it was also a safety issue.

In that case, the State had determined that there were a minimal number of cabooses that had to be added to trains even though the collective bargaining agreement in that case provided for a fewer number, so in reality the distinction that our opponents try to draw between safety matters on the one hand and employment disputes on the other hand doesn't really exist.

And the last point I'd like to make with respect to issues that arose prior in the argument has to do with the Seventh Amendment, and we would say that ultimately we don't know the answer to the question of whether the Seventh Amendment applies.

We think the difficulty of making a Seventh Amendment argument with respect to our colleagues is that this Court has never held that the Seventh Amendment applies to actions in the State court.

It only applies to Federal court actions, and for that reason we doubt that a serious Seventh Amendment problem was raised here.

Unknown Speaker: Some of these, if you had diversity, you could be in a Federal court.

Mr. Seamon: That's right, but a diversity action would go forward in Federal court, and to the extent that the proceeding was in a court of the United States then the Seventh Amendment would clearly apply.

Unknown Speaker: Well, that's true, but her point is that by excluding that course, by requiring you to go through the arbitration mechanism, you deprive the plaintiff of that option of getting a jury.

Mr. Seamon: That's right, and... and--

Unknown Speaker: So it's a possible argument.

You're just not going along with it.

Mr. Seamon: --I think the more important point, and it is important in interpreting Congress' intent, is that even if a person doesn't have a constitutional right to a jury trial in a State court, it's nonetheless an important and valuable right, and so in interpreting the RLA, the Court should consider whether Congress intended to extinguish this valuable right either by totally extinguishing the State's substantive right, or extinguishing the right to a State forum.

Unknown Speaker: Do you recognize any kind of deference, or which one goes first?

You've answered the preclusion question differently.

If the board goes first, it would bind the State court.

But here, it was a person proceeding in both forums at the same time.

Does the State have any obligation to defer, to hold its case in abeyance while the board answers the question, was there a wrongful discharge?

Mr. Seamon: We don't believe that it has an obligation to do so, although we would certainly think that in certain cases it would be prudent, and that the State court could, without running afoul of either the plaintiff's rights or the RLA, defer to arbitration.

In other words--

Unknown Speaker: Could the State court be bound by factual findings in the arbitration?

Mr. Seamon: --Yes.

Unknown Speaker: And would the arbitration panel be bound by factual findings in the State proceeding if that terminated first?

Mr. Seamon: I believe that's so, and there... and that is where the problem of deferral becomes important, and we think that... but we don't believe that the RLA itself, of its own force, would require a State court to basically defer or stay proceedings pending the outcome of arbitration, at least as long as the plaintiff's claim does not depend on an interpretation of the collective bargaining agreement.

We're basically positing an either-or situation.

Either the claim can be brought in State court, and we think that respondent's claim here can be brought in State court because it doesn't depend on an interpretation of the collective bargaining agreement, or it has to be brought in arbitration, and that would be because the claim requires some interpretation of the collective bargaining agreement.

That isn't so here.

Unknown Speaker: What if the collective bargaining agreement contained a definition of discharge that was not complied with.

I mean, so that under an agreement there was no discharge.

What do you do in the State court action?

Mr. Seamon: Well, in this case that issue doesn't arise because the respondent was very clearly discharged after the step 1 hearing, but in general the question of whether a discharge occurs under... for Hawaii whistleblower protection purposes is a question of State law.

If it's independent--

Unknown Speaker: So that would mean that if an arbitrator determined there was a discharge within the meaning of the collective bargaining agreement, that would not necessarily preclude a different holding in the State court on the same issue decided under a different standard.

Mr. Seamon: --That's correct.

The only... the preclusion would attach only to factual findings, historical matters for example, and I should actually qualify my point about preclusion by saying that certainly, in deciding whether a finding about a historical fact of an arbitrator was entitled to preclusive effect, a court should take into account the procedures that the arbitrator followed.

I mean, obviously, again, in accordance with Utah Mining Construction Company principles, the extent to which the arbitral proceeding resembled judicial sorts of proceedings would be important in deciding--

Unknown Speaker: Mr. Seamon, are you representing simply the Solicitor General here, or the views of the National... NRAB?

Mr. Seamon: --We are representing the views of the United States, not one specific agency such as the NRAB, or the NMB.

If there are no further questions, that concludes my presentation.

Unknown Speaker: Very well.

Thank you, Mr. Seamon.

Mr. Seamon: I thank the Court.

Chief Justice Rehnquist: The case is submitted.

Unknown Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

Attribution:

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Featured:

American Dredging v. Miller - Oral Argument

Fri, 09 Jan 2009 14:49:55 +0000

Case:

American Dredging v. Miller

Media File:

91-1950_19931109-argument.mp3

Related Transcript:

1993_91_1950_argument.xml

Transcript:

Argument of Thomas J. Wagner

Chief Justice Rehnquist: We'll hear argument next in Number 91-1950, American Dredging Company v. William Robert Miller.

Spectators are admonished not to talk until you leave the courtroom.

The Court remains in session.

Mr. Wagner.

Mr. Wagner: Mr. Chief Justice, may it please the Court:

The question presented in this case is whether or not the doctrine of forum non conveniens, as that doctrine has been articulated in the admiralty courts, is applicable to maritime claims when filed in State court pursuant to the 28 U.S.C. section 1333.

American Dredging, the petitioner, asks that you answer that question in the affirmative for two strong reasons.

First, we respectfully submit that this doctrine is a fundamental and an important feature of the admiralty law which should be respected and applied uniformly by all courts in all situations, regardless of whether filed in State or Federal court, regardless of the citizenship, nationality, or residence of the parties.

Unknown Speaker: Wasn't the first time that this Court enunciated that doctrine and recognized it was not in admiralty, it was in a diversity case... Gulf Oil?

Mr. Wagner: Your Honor, I would suggest that the first time this Court officially recognized that doctrine was in the Belgenland case in 1885, where it recognized that the Court could dismiss a claim in dicta for the same reasons as forum non conveniens, although they did not articulate the Latin phrase, forum non conveniens.

Unknown Speaker: My concern is that you're constantly associating this with admiralty, and yet as far as I know it was part of equity, and it was also... in Gulf Oil it was a straight law case for damages, so forum non conveniens seems to me across-the-board doctrine that applies in cases at law, equity, and in admiralty.

Mr. Wagner: Your Honor, the first articulation of the doctrine using the term, forum non conveniens, did appear in a nonadmiralty case, but that case draws its roots, or has its roots exclusively in the admiralty.

In the older cases of 1804, where Chief Justice Story referred to the convenience of the parties as being able to be considered, and whether a court would retain jurisdiction in an admiralty salvage case.

In 1885, in a collision case, an admiralty collision case, the court recognized the discretion of the trial court in weighing the various factors of convenience, of nationality of citizenship in determining whether to retain jurisdiction.

Unknown Speaker: What about in England--

--Mr. Wagner... Mr. Wagner, the fact that the doctrine may have come up and been applied in some admiralty cases I don't think negates the suggestion from Justice Ginsburg that it was applied across the board.

Mr. Wagner: Right.

Unknown Speaker: It was applied in admiralty cases and in other kinds of cases.

Mr. Wagner: Your Honor, I... Mr. Chief Justice, we agree that... with that principle, that is now a doctrine, whose efficacy, whose utility has been recognized in many other areas of law.

Unknown Speaker: Mr. Wagner, even if you're correct that it was first enunciated in dictum in admiralty cases in this country, was it first enunciated in the common law in admiralty cases?

My impression was that in the English cases it first came up not in admiralty cases at all.

Mr. Wagner: I think, Justice Scalia, that the first consideration of it that I'm aware of was in cases in Scotland which were not--

Unknown Speaker: Scottish trust cases, right.

Mr. Wagner: --maritime cases, that's correct, but my argument, or our principle here is that the admiralty law has a respected position by virtue of the Constitution, and that this particular doctrine, albeit with some roots in nonadmiralty, is a fundamental part of admiralty jurisdiction.

Unknown Speaker: May I ask you what you meant when you said earlier that it's important that this doctrine be applied uniformly?

Does that mean that you would say that a State court could not be neither more restrictive nor less restrictive in its doctrine of forum non conveniens?

Mr. Wagner: My--

Unknown Speaker: Neither way.

Mr. Wagner: --My reference is that the rule should be uniform, but the interpretation of the rule is always subject to this discretionary input of the trial judge.

I do not think--

Unknown Speaker: Well, of course, but I'm... you would say that a State, even if it wants to exclude on the basis of forum non conveniens more cases than the Federal courts would exclude, it cannot do that.

Mr. Wagner: --Your Honor, that's our position.

That's our position.

Unknown Speaker: But then you're saying that this doctrine must mean something different in admiralty than it does in other areas, because what do you do with Mayfield, where the Court made it clear that a State doesn't have to copy the Federal position on forum non conveniens?

It can keep the case if it wants it, and it can dismiss if it wants it.

Mr. Wagner: Justice Ginsburg, my response with reference to the Mayfield decision, which was the 1950 decision of this Court, was that it did not involve any of the constitutional or supremacy issues associated with the general maritime law, which has--

Unknown Speaker: But you just said that the doctrine is the same, the forum non conveniens doctrine is a doctrine that cuts across the law.

Now you seem to be saying that it's different in admiralty than it is in other areas.

Mr. Wagner: --Your Honor I may be misstating myself.

I may not be making myself clear.

What I'm saying is, the admiralty doctrine has been adopted by several other areas of law, and those other areas of law are free, because they are not constricted, by the uniformity of the general maritime law, to change and apply that doctrine in different fashions, but in admiralty, the Federal courts, and this Court in particular, is the ultimate arbiter of what the uniform rule should be.

Unknown Speaker: I'm not following your argument.

You've already recognized, in response to Justice Scalia's question, that forum non conveniens does not emerge in the common law world for the first time in the context of admiralty, and it is a doctrine that is now applied across the board to cases that were once in equity at law in admiralty, but now you seem to be saying that this doctrine has some special character in admiralty cases that differs it from its shape in other cases.

Mr. Wagner: I believe that it does, and it has that in two fashions, 1) because it is a part of the uniform admiralty law, which has a precedence, it has a supremacy that common law doesn't necessarily have, and secondly, the admiralty jurisdiction is by its nature extremely broad, extremely vast.

It touches all sorts of areas of law.

Unknown Speaker: Why should it have a different application in admiralty than, say, under the FELA, which is a Federal statute?

Mr. Wagner: Well, I would argue that the first reason is because of Article 3, section 2, clause 1 of the Constitution, which vests this Court, and vests the national courts with jurisdiction over all admiralty and maritime cases, and the cases that are interpreted that have all recognized that it is the function of this Court and the function of all courts to apply a uniform general maritime law, and that has a standing that the FELA does not have.

Unknown Speaker: The FELA's a Federal statute--

Mr. Wagner: That's correct.

Unknown Speaker: --and it has to be interpreted uniformly by the Federal and State courts that apply it, is that not so?

Mr. Wagner: But forum non conveniens is not part of the FELA, whereas forum non conveniens is an integral part of the general maritime law, and I might assert one other thing.

I think it's very important to focus on the language of the Jones Act in adopting... in adopting the standard of the FELA.

I'm referring to the... just quoting from the Jones Act as quoted in the appendix of the Solicitor's brief.

It says,

"Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law with a right of trial by jury, and in such action, all statutes of the United States modifying, or extending, the common law right or remedy in cases of personal injury to railway employees shall apply. "

One of those statutes which extends and modifies the right of railway workers is section 1404 of the Judicial Code, which is a Federal transfer statute, which was passed explicitly by Congress to provide that FELA cases would be transferable under the same standards that had been judicially established under forum non conveniens.

Missouri v. Mayfield did not address that issue, it did not need to address that issue, because it was not a Jones Act case.

The Jones Act is a part of the admiralty law, and forum non conveniens as a part of the admiralty law are fused and form part of the uniform law.

It should be applicable--

Unknown Speaker: I don't understand the point you're making about 1404(a).

If this case were brought in... let's say it were brought in the Federal district court in Louisiana, it's admiralty but the transfer mechanism would be 1404(a), right?

Mr. Wagner: --Unless it was to be transferred internationally, Your Honor, in which event forum non conveniens--

Unknown Speaker: In that respect it's not different from the FELA.

Mr. Wagner: --Well, it... what I'm trying to express is that there is a dual basis for the uniform application of this doctrine.

One is as a part of the general maritime law, and the second is through the express... express text of Congress in the Jones Act in applying all statutes that modify FELA remedies, and indeed, that is exactly--

Unknown Speaker: To that extent, it's the same as the FELA, and it doesn't take you any further than Mayfield.

Mr. Wagner: --Except that Mayfield did not concern itself 1) with the Jones Act, and 2) with the general maritime law of the United States.

That--

Unknown Speaker: As I understand one part of what the Jones Act takes from the FELA, if a plaintiff brings a Jones Act case in the State court, Congress has declared that nonremovable, right?

You can't remove it to Federal court.

Mr. Wagner: --The interpretation of this Court in the Romero decision is that such a claim is nonremovable.

Unknown Speaker: All right, so doesn't that cut against your argument that the Congress wanted to say,

"Plaintiff, you have a right to stay in the State court, but State court, we're going to make you conform your forum non conveniens doctrine to ours? "

It's something that seems to me an inconsistency with a claim that's not removable from the State court, Congress has made the judgment that the suitor should be able to choose the forum, and then say to the forum, State forum, but you have to make yourself over to look more like what a Federal court would--

Mr. Wagner: Yes, Your Honor, we think that's a very important distinction, is that the nonremovability of the Jones Act is something that is recognized, but this is not affected by the ability to transfer this action from one jurisdiction to another, and in fact Romero makes very explicit that while causes of action in State court may be maintained under the "savings to suitors" clause, there is an overriding obligation of the State court to do the work of admiralty, to be in admiralty court, to apply the uniform general maritime law even though the defendant cannot remove that... cannot otherwise remove the action that is otherwise removable.

Unknown Speaker: --But isn't that--

--The Louisiana courts can't transfer this case to Pennsylvania, can they?

Wouldn't they simply have to dismiss it and let the plaintiff start anew in Pennsylvania?

Mr. Wagner: They would dismiss it, Mr. Chief Justice, subject to certain guarantees protecting the plaintiff's right to proceed, and that's in fact what the district court did do after finding that Louisiana was a patently inconvenient forum, and was forum-shopping of the worst sort.

Unknown Speaker: So really, your procedures in State court, you say the forum non conveniens doctrine has to be applied uniformly, but whereas a Federal district court can transfer it to another Federal district, a State trial court can't transfer it to a court in another State.

It has to go by a quite different procedure.

Mr. Wagner: Well, Your Honor, by analogy, and that's all I can answer, Mr. Chief Justice, is by analogy, is that between the jurisdictions within the State of Louisiana, the State court could transfer.

Unknown Speaker: That's not what we have here.

Mr. Wagner: That's correct.

Unknown Speaker: No one is suggesting that it belonged in Western Louisiana rather than Eastern Louisiana.

The argument is it belonged in Pennsylvania, as I understand it.

Mr. Wagner: That's right, Mr. Chief--

Unknown Speaker: Mr. Wagner, do you acknowledge that there were sufficient minimum contacts here to meet the due process clause requirements to sue in Louisiana?

Mr. Wagner: --Your Honor, I do at this juncture.

We disputed that at the trial court and lost it.

I have personal views about that, but we have conceded that point, and in fact, as a matter of general maritime law, forum non conveniens does not arise unless there is the existence of personal jurisdiction, the very minimum contacts Justice O'Connor referred to, and proper venue.

We concede those points for the sake of this argument.

Unknown Speaker: You're converting discretionary doctrine... you just said that in order to get to the forum non conveniens point, you must have personal jurisdiction, there must be a place of proper venue, so the Court is vested with authority to proceed, and I thought that the whole idea of forum non conveniens was, but there are... but it isn't a compulsory doctrine.

That is, although we have authority to proceed, we ought not, because there's some place better where this can go forward, but the whole doctrine seems to be just infused with discretion rather than compulsion, which is what you seem to be making of it.

Mr. Wagner: Your Honor, I... I want its application.

We request that its application be compulsory, but the doctrine itself, the heart and soul of the doctrine, the issue, the aspect of the doctrine that makes it so valuable, is its discretionary function in the trial judge.

The trial judge is able to weigh the various factors articulated by this Court and determine what is a fair forum for these litigants to try the cases, and the aspect of its discretionary function is why it serves the admiralty, and by that I mean, plaintiffs and defendants.

Unknown Speaker: But Justice Ginsburg's point is that when you have discretion that broad, different trial judges are going to come to different results, widely different results on the basis of the same facts, exactly what discretion is all about.

You can't pretend that you're going to get uniformity of result.

Once you... it's just contradictory to argue that in the interest of uniformity we must have everybody adopt this discretionary doctrine.

You're not going to get uniformity.

Mr. Wagner: Justice Scalia, I agree with your point, and I think it demonstrates I'm not being clear.

I'm not... we are not requesting uniformity of result.

That can't be done.

What--

Unknown Speaker: Then it isn't worth anything to the general maritime law, if you can't be sure you're going to get the same results anyway.

Mr. Wagner: --You can never be sure you get the same results in any trial.

What we're asking is uniformity of the rule.

We're asking for the uniform application of the doctrine, just like we take a set of facts and we give them to one trier of fact and ask, is there fault, is there causation?

I cannot be sure what the answer will be, but what I can be sure of is the doctrine that defines what fault is, and that's what we're asking.

Unknown Speaker: The uniform rule which says that a court can do anything it wants is a uniform rule, but it's not very helpful.

Well, as I understand you, you're not saying that the court can do anything it wants, you're saying that if the facts are so extreme, as perhaps they are in this case, that it would always be an abuse of discretion to deny the motion, you ought to be entitled to it in those extreme cases.

Mr. Wagner: That's right.

Unknown Speaker: And to that extent, it's a uniform rule.

Mr. Wagner: That's right.

We're asking for a rule that is subject to the discretion of the trial court, overturnable by abuse of discretion.

Unknown Speaker: And that'll be very rare.

Let me ask you why you think uniformity is helpful, or needful in this area.

As I understand it, maritime law proceeds from the assumption that international commerce has to have stable rules and uniform rules, but I thought that was so that people could rely upon those rules in formulating their conduct, but this has nothing to do with conduct.

It's not something that one relies on.

Mr. Wagner: Your Honor, I--

Unknown Speaker: You know, how you keep your ship, how you execute your contracts, all of those things are not affected by the doctrine of forum non conveniens.

Presumably the same law is going to apply no matter where the suit is brought.

Mr. Wagner: --I respectfully disagree that it doesn't shape the conduct of the parties.

Once you have infused the admiralty law with this type of disunity, this type of dissonance, then you invite litigants to race to the favorable courthouse, which may or may not have this rule, which may or may not have other State rules, which may be friendly or may not be friendly, without regard to what is a fair forum, and so what... and I've cited it in our petition asking for cert--

Unknown Speaker: Well, it's fair in the sense that there's a basis for personal jurisdiction over your client that meets the due process requirement, so you can't say that there's something fundamentally unfair about being subject to suit in Louisiana when you have in effect consented to suit by filing in that State by registering.

Mr. Wagner: --We agree that it satisfies due process requirements for the sake of personal jurisdiction.

Our point here is that if you don't have uniform rule in admiralty that invites the court, that directs the court to consider what is a fair forum, while one plaintiff is resorting to filing in Louisiana, one insurer is filing a direct action statute in Pennsylvania, one employer is filing a direct... I'm sorry, a declaratory judgment in Pennsylvania and the employer is filing an action here.

You're asking for the parties to race for the courthouse which will give it the best deal because you have not instilled in the trier of fact the ability to say, the fair forum for the case is, in this instance, Pennsylvania, without regard to who's got the best law, without regard to whether it's an American or non-American who has filed the claim.

It's a fundamental rule of fairness that where should these maritime litigants... I think that the point made by Justice Jackson in the Lauritsen case speaks well to this.

If we let every jurisdiction which has any contact, or sufficient constitutional contact with a maritime litigant to exercise its full breadth of authority, the overlapping, duplicative burdens that will exist upon maritime actors will totally, totally surround and disrupt the ability to have effective maritime commerce.

It is for this reason, I... we respectfully submit, that the admiralty law, admiralty and maritime jurisdiction, is the one substantive area of jurisdiction recognized in Article III of the Constitution.

Unknown Speaker: Mr. Wagner, let me take you off in a different direction.

You've been speaking of uniformity all along.

This case is between domestic parties, isn't it?

Mr. Wagner: That's correct.

Unknown Speaker: Suppose there were some foreign persons involved here.

Would you have different considerations that enter into your calculus?

Mr. Wagner: I think different considerations enter into the trial judge's weighing of its discretion depending upon the nationality of the parties, their residence, but I think the formula's the same.

In fact, the Louisiana rule is not restricted in its focus on American or non-American claimants, and it's not restricted to personal injury claimants.

Forum non conveniens has been a part of the admiralty law in every area... salvage, collision, personal injury, product liability, marine insurance, maritime leads.

The Louisiana rule would discard all of that.

Get jurisdiction, and let the State exercise its jurisdiction to the full breadth of its authority without regard to its impact on maritime commerce.

We respectfully submit that that is detrimental to the constitutional underpinnings of a system--

Unknown Speaker: Not all of maritime law.

I think in Louisiana now under their statute it's only Jones Act claims that are--

Mr. Wagner: --No, Your Honor, it applies to--

Unknown Speaker: --Jones Act and maritime.

Mr. Wagner: --Jones Act and maritime law.

Texas has recently amended its statute, but it's unclear whether it's affecting maritime law or not.

Our ultimate position is, the unfettered extension of jurisdiction without this discretionary authority on the part of the trial court, expressed I think most ably by Judge Federoff, by the trial judge, this forum is totally inconvenient, and represents forum shopping of the worst sort.

It was only through his ability to decide the case, an admiralty case, that he could direct this case into a fair forum.

Unknown Speaker: Well, it's inconvenient for the defendant, not for the plaintiff.

Mr. Wagner: Ah, but the plaintiff took the position... the plaintiff took the position that I could have filed in the Fourth Circuit Court of Appeals.

I could have filed in Mississippi, but I have an unfettered right to go where I want to go.

The plaintiff, the Mississippi resident, files in Louisiana.

So it's hard to argue that this is a decision based upon convenience, and the plaintiff never challenged in the trial court, never challenged at that level at least, the fact that this was patently inconvenient.

Unknown Speaker: But the plaintiff is totally disabled, do you concede that?

Mr. Wagner: No, Your Honor, we do not concede that.

The plaintiff has said that in a footnote in his brief.

That was not raised at the trial court level, and--

Unknown Speaker: Well, in Mississippi, true, but he's not very far from New Orleans, is he?

Mr. Wagner: --That's correct, Your Honor.

That's correct.

If I might, I'd like to reserve the balance of my time for rebuttal.

Unknown Speaker: Very well, Mr. Wagner.

Mr. Falcon, we'll hear from you.

Argument of Timothy J. Falcon

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

The policy of the State of Louisiana, which is articulated in Article 123 C of our Code of Civil Procedure, is not barred by, nor is it inconsistent with, congressional policies that underlie the Jones Act.

In fact, this law furthers those policies by ensuring that State courts of Louisiana will effectuate the Jones Act's broad liberal venue provisions.

American Dredging Company has not come before this Court and demonstrated that Article 123 C, as it applies in this case, is unconstitutional, and that is really the--

Unknown Speaker: Mr. Falcon, one puzzling piece of this is that Louisiana now has a general forum non conveniens provision, and it exempts Jones Act and maritime.

You would think if the concern was the one that you just mentioned they'd put the FELA in the same category, because that, too, is a nonremovable Federal claim.

What is the explanation for exempting Jones Act and maritime law claims from the general forum non conveniens statute?

Mr. Falcon: --If I can clarify, the Louisiana statute is not now a broad forum non conveniens application.

It only actually was enacted to allow a transfer between one district court in the State of Louisiana to another one.

There was a problem that was recognized in the Trahan case in Louisiana, that because of our civilian tradition which the forum non conveniens doctrine is foreign to, not a part of, Louisiana passed this article to allow a transfer on the forum non conveniens grounds from one district court to another, and at the same time they did allow a transfer out of State--

Unknown Speaker: Not a transfer--

Mr. Falcon: --I'm sorry, a dismissal on forum non conveniens to an out-of-State court if it was premised on a Federal statute only, and at the same time, they decided to exempt the Jones Act from that type of dismissal.

Unknown Speaker: --But not the FELA.

Mr. Falcon: Well, in fact, as the statute operates, the FELA claim can be transferred... I'm sorry, dismissed on forum non conveniens.

Unknown Speaker: So what was the reason for distinguishing these two claims that are so close in substance, FELA and Jones Act?

Mr. Falcon: Yes, ma'am.

I believe that the real reason is, if you dismiss a FELA case on forum non conveniens, the case will be transferred most likely to another American jurisdiction.

The railroads only run across our land.

If you get dismissed from Louisiana, more than likely you'll be in Missouri, or you'll go to Montana, or you'll go to some other State.

A dismissal under the Jones Act on forum non conveniens, especially today with the multinational corporations and the broad reach of where these people are being sent to, especially Louisiana and other people that work on these ships, they're sent all around the world.

What happens when you go around the world, if your cause of action arises in Singapore and you come back to Louisiana and you get dismissed on forum non conveniens, you've got to go back to Singapore.

Unknown Speaker: Well, what about the situation of a case where one of the parties is foreign and the operative events occur beyond the borders of the United States?

Do you think Louisiana's rule should be upheld in that situation?

Mr. Falcon: The first thing you'd have to look at in that situation is whether or not the Jones Act applies.

You do the Lauritzen-Rhoditis analysis.

After you do that analysis, if the Jones Act applies, the Jones Act as a congressional announcement says the plaintiff has the right to file suit where the defendant is doing business.

So in that case, Louisiana, if they're doing business in Louisiana, we meet the constitutional minimum requirements of substantial justice and fair play, then they can be sued there in furtherance of the congressional policy.

If it's foreign litigants and the Jones Act does not apply, the traditions of admiralty have actually been that the Admiralty Court of the United States will hear those cases.

The... it's talked about--

Unknown Speaker: Well, the Louisiana statute doesn't require that it be... that the corporation... the defendant be doing business there, does it?

It's just minimum contacts.

Mr. Falcon: --The Louisiana statute is the same requirements as this Court's constitutional requirements.

Unknown Speaker: All right, but that's minimum contacts, not doing business.

Mr. Falcon: Right.

The doing business that I'm referring to is the section 6 of the FELA Act itself, which says the employer can be sued wherever he's doing business, and that's incorporated into the Jones Act.

Congress gives the worker--

Unknown Speaker: But that's not... is that a limitation on the jurisdictions in which the defendant may be sued?

Mr. Falcon: --No.

That's a venue provision.

That's allowed venue provision.

It's not a limitation.

The only limitations on the jurisdiction are this Court's pronouncements in International Shoe and the other jurisdiction cases.

Unknown Speaker: But you have to meet a venue requirement in order to bring a Jones Act case.

Mr. Falcon: Yes, but if this case... if we did not meet the jurisdiction requirements, American Dredging could have got out.

If we did not meet the venue requirements of FELA as enacted through Jones Act, they would also have gotten out.

Unknown Speaker: Was American Dredging doing business in Louisiana?

Mr. Falcon: Yes, ma'am, they were doing business.

They had an agent for service of process.

In fact, they were using Louisiana courts themselves at the time as a plaintiff.

Unknown Speaker: Anything other than having an agent?

Mr. Falcon: They were soliciting business through the American... I'm sorry, through the Corps of Engineers in order to get more work.

To answer... American Dredging Company puts major emphasis that the doctrine of forum non conveniens is a uniform and characteristic feature of the admiralty law.

If we look at the history of the admiralty law, in footnote 5 of the Moran case, which was decided by this Court, it's actually... the admiralty law itself is traced to civilian doctrine.

The admiralty law rose through civilian law such as France and Louisiana, and as the supreme court of Louisiana said in the Miller case, the doctrine of forum non conveniens is actually foreign to our traditions, so it's not fair to say that forum non conveniens came from admiralty, because the doctrine itself was foreign to the actual origin of admiralty, and to trace... and as Justice Ginsburg has pointed out, it was first recognized in a nonmaritime case.

American Dredging Company has also tried to state that section 1404(a), which allows the transfer of a FELA case, is applicable to this case and is the reason why we should... why the supreme court should be overruled.

The case they're referring to is In Re Coal Air, which is a railroad case, that distinguished between section 6 of the FELA action dealing with the broad venue provision and 1404(a), which allowed only a Federal court to transfer a case.

That case was further clarified in Pope v. Atlantic Coast Railroads, where the court said that the FELA claim that's filed in State court still cannot be dismissed under forum non conveniens if the State decided not to.

Unless the Court has any further questions--

Unknown Speaker: Thank you, Mr. Falcon.

Mr. Manning, we'll hear from you.

Argument of John F. Manning

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

I just wish to emphasize three points very briefly.

First, as this Court recognized in Miles v. Apex Marine, maritime tort law is now a field dominated by Federal statute, and this Court has looked repeatedly to the Jones Act in defining the tort remedies available to a maritime employee like respondent.

The Jones Act, in turn, incorporates by reference the rights and remedies given to railway workers under the FELA, and this Court has repeatedly looked to FELA precedents in defining the scope of remedies available under the Jones Act.

Thus, the Mayfield case is highly relevant in this context, because there the Court held that under the FELA State courts are free to apply their own doctrine of forum non conveniens in FELA cases.

That... the Court said that the State courts are free to accept or reject the doctrine of forum non conveniens in those cases.

Thus, Mayfield is highly relevant here, and we believe that it disposes of the case both as to the Jones act claim and as to the unseaworthiness and maintenance and cure claims.

Unknown Speaker: Mr. Manning, would you address the forum party situation, please?

Mr. Manning: Yes, Your Honor.

The United States does not take a position on whether the doctrine of forum non conveniens would be available... would be a preemptive doctrine of Federal law in State courts, where foreign parties and events are involved.

I would note, however, that the United States urges this Court to leave that question open.

We believe that the considerations in such cases may well be different, for two reasons.

First, where foreign parties and events are involved, there may be, in addition to the considerations relied on by petitioner, considerations involving comity and reciprocity that implicate greater Federal interests.

Secondly, in the admiralty cases that have defined the doctrine of forum non conveniens going back to Willendson v. Forsoket in 1801 and the Ship Lerow in 1804, the doctrine was traditionally articulated in terms of its effect on foreign parties.

The Court would typically say, we have jurisdiction over this case.

However, we have... the trial court has discretion to decline to hear the case because foreign parties are involved.

Unknown Speaker: So there are two different doctrines?

The source of the forum non conveniens argument being presented in this case has a different source than the forum non conveniens doctrine as applied to foreigners?

Mr. Manning: Well, Justice Kennedy, the question is whether... is the Federal interest in the case, and we believe that there is a difference in the Federal interest that's implicated when foreign parties are involved.

Unknown Speaker: Is it fair to say... you're saying that there are two different forum non conveniens doctrines, one for foreign parties and the other for domestic parties?

Mr. Manning: Your Honor, we're saying that there might be, and that the Court should reserve the question in this case.

Unknown Speaker: You're talking about admiralty peculiarly?

You can have foreign parties in a diversity case, too.

Mr. Manning: That's true, Justice Ginsburg, but in the admiralty cases traditionally the doctrine was applied most strongly wherein foreign parties are involved.

But again, I would like to emphasize that the United States is not taking a position on the foreign party situation, but simply urging the Court to reserve that question.

Unknown Speaker: You reserve two questions, one is whether, when you're in a State court but the defendants are from abroad, that forum non conveniens might have a Federal flavor?

Mr. Manning: That's correct.

Unknown Speaker: For... no matter what the character of the case, equity law, or admiralty?

Mr. Manning: Well, Your Honor, it might be different in admiralty cases, because there is a tradition of admiralty preemption that emanates from Article III.

That tradition might not be available when you deal with other forms of civil litigation.

There's a tradition, Jensen v. Southern Pacific and so forth, of this Court's finding preemptive force of admiralty law and admiralty cases in State court, so it may be a different answer for admiralty cases.

Again, we're simply asking the Court to leave that--

Unknown Speaker: What do you make of the nonremovability of these claims, because if the Federal... if Congress wanted to give effect to the Federal policy, it could do that very easily simply by making these cases removable and then the Federal court could apply Federal forum non conveniens.

Mr. Manning: --We do find that highly significant, and in the domestic context we would note that the Jones Act has a venue provision that applies, as this Court has held, only in Federal court.

In fact, this Court has said that under the Jones Act the presumption that State courts are entitled to control... that States are entitled to control the dockets of their own courts was left undisturbed by Congress, and we think that is also highly relevant in addressing the forum non conveniens question, because it shows that Congress believed that matters of State court forum selection were matters for the court... were matters for the States when it enacted the Jones Act.

If there are no further questions--

Unknown Speaker: I have a question on what you meant by reciprocity.

You said considerations of reciprocity, comity.

Those are not always clear words that would figure when we're dealing with a foreign party.

Mr. Manning: --Your Honor, traditionally in the doctrine... in the application of the doctrine of forum non conveniens in Federal admiralty cases, this Court has considered whether there was an interest on the part of a foreign party in whether this dispute should be resolved.

For example, if there was a dispute between a foreign seaman and the ship, and a foreign ship over wages, there was typically a question whether that was the kind of dispute that a foreign... that the foreign country would want resolved by the question... by the courts of this Nation.

Sometimes what would happen is the court would consult the consul of that foreign country and get in a sense approval before it would proceed with the case, and so questions of comity and reciprocity of treatment--

Unknown Speaker: But if it's a Jones Act case, then we're talking about U.S. substantive law applying.

Mr. Manning: --That's right, Your Honor, and that goes to the question of choice of law, which as counsel for respondent indicated depends in part on the flag of the vessel, the nationality of the seaman, the nationality of the shipowner--

Unknown Speaker: If it weren't in the U.S. interest, if this were a totally foreign situation, the Jones Act wouldn't apply.

Mr. Manning: --It's very likely that the Jones Act would not apply, and the cases which would suggest that are Romero and Lauritsen v. Larson, which are cited in our brief.

If there are no further questions--

Unknown Speaker: Thank you, Mr. Manning.

Mr. Wagner, you have 6 minutes remaining.

Rebuttal of Thomas J. Wagner

Mr. Wagner: Thank you, Mr. Chief Justice.

I'd like to address a number of the points that were raised, but I don't think any one is more important than the question whether or not there should be a different rule for one set of litigants as for another set.

I think the whole concept of a uniform general maritime law grows out of the recognition that in order to promote maritime commerce a single, expected system should be identified.

To take this rule of forum non conveniens that the lower courts have consistently applied to both national claimants and local claimants and international claimants and fragment it, and say, well, Mr. Plaintiff from Bermuda, you can have a forum non conveniens doctrine, or Mr. Defendant from America, you can or you cannot, is to harken back to the very kind of dichotomy, the very kind of local protectionism, that I submit was the reason the admiralty law was recognized--

Unknown Speaker: Mr. Wagner, you would have no case, would you, if this plaintiff came from Mississippi instead of Louisiana?

Mr. Wagner: --If he came from Louisiana instead of Mississippi?

Yes, Your Honor.

Unknown Speaker: Louisiana... I'm sorry.

Mr. Wagner: Yes, Your Honor, I would have no case whatsoever, and that's exactly my point.

Unknown Speaker: This is all about the distance that this man lives, and he lives inside Mississippi instead of Louisiana.

If he lived across the border you would have no case.

Mr. Wagner: I would have no case, but I respectfully disagree that it's just about that.

It's about what's a fundamentally fair way to try a dispute between the parties without inviting the parties to have--

Unknown Speaker: All that changes if he moved... how many miles would he have to move to be inside the Louisiana borders?

Mr. Wagner: --Maybe 60 miles, Your Honor, but the whole point... what changes, Your Honor, is we have taken away the power of the trial judge to decide what's fair and what's not fair.

In this very same court, the Civil District Court for the Parish of Orleans, in Markozannes v. Bermuda Starline, applying this very same statute, the Louisiana supreme court held that the trial court must hear a case, a Jones Act case, by a Greek seaman sailing a Panamanian vessel between Bermuda and Boston.

So it's not merely the distance, Your Honor.

I respectfully submit it is the power of the trial judge to decide what's fair, what's proper.

Once you take away that power, you create all sorts of possibilities of extensive forum shopping and vexatious litigation.

Unknown Speaker: The Government suggests that the last situation you describe could be handled by leaving open the possibility of a separate rule for cases where you have foreign defendants or plaintiffs.

What do you think?

Would you like half a loaf rather than none?

Is there something wrong with that proposal?

Mr. Wagner: There's something terribly wrong in principle with that, and that is, it's the anathema of the general maritime law, and how do we divide that?

Does the American defendant get the nod over the foreign plaintiff?

Does the American plaintiff get the nod over the foreign defendant, and how foreign?

Do we then dissect this?

The whole beauty... beauty, the mastery of forum non conveniens is, is that it is discretionary.

It puts in the power of the trial judge, the person who will have to decide what's convenient.

In Markozannes we had doctors testifying from Greece by phone.

The whole point of this is, that trial judge who faces these very critical issues of what's fair and is not fair is able to say, this case is in a patently inconvenient forum, and like the Federal system I will dismiss this conditioned upon, Mr. Defendant, you not raising procedural or limitation objections and going forward in the proper forum of Pennsylvania.

That's the mastery, that is the effectiveness of this tool.

It complements this broad, broad breadth of admiralty jurisdiction, whether it be obtained in rem, whether it be by writ of foreign attachment, whether it's salvage or personal injury, it puts in the hands of the trial judge the ability, discretionary, to say, this is a fair forum.

It accords the plaintiff an appropriate deference to his or her original selection.

That is entitled to great weight, and it ensures... it ensures that the alternate forum will have a suitable remedy, and then it weighs the questions of what's a convenient way to try this case, the convenience of the parties, the witnesses.

In fact, I need to make this fundamental point clear.

In admiralty, this has never been a question of what the Solicitor General has called judicial housekeeping, or docket control.

That's handy in a nonmarine setting, but in admiralty, it services the broad breadth of that jurisdiction, makes it effective, and makes it fair, and I respectfully submit that on that basis the decision of the Louisiana supreme court should be reversed.

Thank you very much.

Chief Justice Rehnquist: Thank you, Mr. Wagner.

The case is submitted.

Unknown Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

Attribution:

The OYEZ Project

Featured:

Csx Transportation, Inc. v. Easterwood - Oral Argument

Fri, 09 Jan 2009 14:49:26 +0000

Case:

Csx Transportation, Inc. v. Easterwood

Media File:

91-790_19930112-argument.mp3

Related Transcript:

1992_91_790_argument.xml

Transcript:

Argument of Howard J. Trienens

Chief Justice Rehnquist: We'll hear argument now in number 91-790, CSX Transportation, Inc. v. Lizzie Beatrice Easterwood, and vice versa.

Mr. Trienens.

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

This case arises from a railroad crossing accident in which respondent's husband died.

Every one of these crossing accidents is a serious matter, and when the number of accidents reached the thousands with the increase in highway traffic, this became a matter of national concern.

Congress faced up to this problem in the Federal Safety Act of 1970.

It authorized the Secretary of Transportation to issue regulations and standards for all areas of railroad safety and it directed the Secretary to undertake a coordinated effort toward solutions to the grade crossing problem under his authority under both the Railway Safety Act and the highway legislation.

Congress went further.

It directed that the Secretary's regulations shall be nationally uniform, and Congress provided a sweeping preemption provision as follows.

A State may adopt or continue in force any law, regulation, order, or standard relating to railroad safety until such time as the Secretary has adopted a rule, regulation, order, or standard covering the subject matter of such State requirement.

Now, the until such time language was to avoid a lapse in responsibilities between the time the statute passed and the regulations were issued.

In 1973, Congress went further.

It passed a highway safety act in which the States were required to survey all highway rail crossings and implement improvements.

Now, as authorized and directed by Congress, the Secretary has issued many, many regulations, and many of those include safety at grade crossings.

As to each such regulation, the subject matter which it covers, the State laws covering the same subject matter are no longer in force under section 434.

Unknown Speaker: At what time, at what date was the State law on grade crossings preempted in your view?

Mr. Trienens: 1977.

Unknown Speaker: And that was at the time of the first regulation was issued?

Mr. Trienens: Yes.

Unknown Speaker: What did that regulation require?

Mr. Trienens: It provided that the responsibility for determining the selection of devices... and we're talking now only about that State law tort duty, not all of them, but the State law tort duty of picking a reasonable selection of a device, gate, sign, flashing lights, which device shall be done.

That responsibility was placed exclusively upon the State authorities.

Unknown Speaker: Even there there was going to be a lapse between the time the State could implement its program and the time when the railroads might begin withdrawing from this field.

Don't you think?

Mr. Trienens: Well, possibly.

I think the literal reading of this and the practical reading of the statute is that when the responsibility shifted, the responsibility shifted.

Of course, this is now, 15, 20 years ago.

So the problem of the lapse doesn't apply in this case at all.

Unknown Speaker: Well, except I think we should identify the point at which preemption occurred.

Mr. Trienens: Under the statute, the preemption occurred when the Secretary issued a regulation covering the subject matter of the State requirement.

That's what the statute says.

That's what Congress did, and that's the way it works.

Unknown Speaker: The problem--

--Go on.

I'm just pressing Justice Kennedy's point.

I think it is an important point because although it's time past and it's not involved in this case, it does bear upon whether your interpretation of when the preemption occurs is a reasonable one.

Your interpretation leaves a time period, namely the period after the promulgation of that regulation imposing upon the States the obligation to make that decision of what kind of mechanism you use and the point at which the State actually issues such a decision with respect to each crossing.

During that time period, there's no regulation by anybody--

Mr. Trienens: No, no.

The--

Unknown Speaker: --railroads, State, Federal, nobody.

Mr. Trienens: --The question is who has got the responsibility and the duty.

There are lots of duties at Federal... at grade crossings.

There's a duty to select the device.

There's a duty to maintain the device.

There's a duty to have a whistle, a duty to blow a whistle.

Some are preempted, some aren't.

Unknown Speaker: And you say that during that lapsed period--

Mr. Trienens: No, no, not the--

Unknown Speaker: --if... during that period, after the promulgation of that regulation, if there were an accident at a rail crossing, the person injured would not be able to sue the railroad because it was no longer the railroad's responsibility to guard the crossing by some device, nor could he sue the State because the State--

Mr. Trienens: --No.

Unknown Speaker: --He couldn't sue the State.

Mr. Trienens: Why?

Why not?

Unknown Speaker: Because the statute had just been passed.

You have to give the State a reasonable time.

The State is certainly not negligent in failing to do it yesterday.

Mr. Trienens: These things didn't happen overnight.

The statute was in 1970.

The statute putting the burden on the States was in... saying that they should be responsible was in 1973.

This regulation was proposed.

The States knew about it for 4 years, 1977.

It just didn't come out of nowhere.

So, this isn't a question of all of a sudden, oh, my goodness, I'm responsible--

Unknown Speaker: No.

I'm talking about an accident that occurred a week after, a week after this regulation.

Whose fault--

Mr. Trienens: --It's also 4 years after Congress passed the Highway Safety Act and section 130 that said that the States had this responsibility.

So, the answer is the triggering of the preemption comes at the time the Secretary issues the regulation.

That's what the statute says.

This is 4 years after Congress had said the States should have this responsibility.

So, here's 4 years in which they could gear up for it.

There is no problem with lapse here, certainly not applied here.

Unknown Speaker: --Mr. Trienens, I'm having a... I guess a different problem about identifying the scope of the subject matter, and let me just give an example.

This is not the only one that I have in mind, but let me just give this as an example.

With respect to those cases in which, as I understand it, Federal funds are used to improve the condition of the... the safety conditions at a grade crossing, and it is determined I guess in accordance with the manual that some kind of a device should be installed, as I understand the reg, the reg provides that the device is to include automatic gates.

Well, the provision that it should include automatic gates leaves open... in fact, it seems to imply... that other devices and other means of warning might be appropriate and might be imposed, which I assume refers back to imposed under State law.

And I further assume, since I don't see anything to the contrary, that it does not... that that assumption does not distinguish between State law in the sense of law under which the State as a government might decide what the devices should be or State law, such as common law or tort law, which might decide the duty incumbent on the railroad which they could only satisfy by certain devices.

So with respect to that particular example, doesn't the regulation itself imply that there is going to be some State law relating to the safety at the grade crossing which survives even that regulation?

Mr. Trienens: No, no.

What it does imply is there is a State responsibility to select and determine the appropriate device at each crossing.

That responsibility is a responsibility imposed by Federal law.

Unknown Speaker: Why does it imply a responsibility as opposed simply to a remaining power?

We don't know what the... we can't tell what the responsibility is for the reg, and it seems to leave it simply open, and I suppose the answer would have to be an answer under State law.

Mr. Trienens: No, because the reg in question... you're referring to I believe part 646 of the manual.

Unknown Speaker: Yes, that's right.

Mr. Trienens: The one I'm talking about is 924 and 655.

The one I'm talking about is pursuant to section 130 of the railway... of the Highway Safety Act of '73 and particularly on the regulations, which are the regulations, after all, which trigger the preemption.

924 and 1204 are the ones that put the responsibility on the States.

And if there were ever any doubt about that, the manual, which is also a... part 655, as incorporated in the CFR, says the determination of need and selection of devices at grade crossings is made by the public agency.

And if there's any doubt about that one, it goes on in a later section, 8(d), and says under the heading selection of systems and devices.

Unknown Speaker: Well, does the manual have the force and effect of law?

Mr. Trienens: It's a regulation.

It's a regulation and a standard.

It so says in the CFR issued by the Secretary.

Unknown Speaker: But even assuming that, isn't it still... number one, your argument basically is that by placing a responsibility on a State or local agency, that that is a regulation on the subject matter within the meaning of the Federal statute.

And I guess I still have the problem that later and more detailed regulations seem to suggest that more has been left open than your argument would conclude.

Mr. Trienens: Well, the manual and the way the States wanted it, because there was a... there was an effort to have further detail and elaborate formulas on whether gates or not gates... the way the States wanted it, knowing they had this responsibility, was to say there was a variety of circumstances, and they wanted more flexibility.

The regulations I'm talking about not only impose the responsibility for selection of devices upon the State officials, but tells them how to go about it.

It says based on an engineering study at the particular crossing, you shall decide what's appropriate.

And then in case you were wondering whether that was exclusive responsibility, the regulation also says traffic control devices shall be placed only by the authority of a public body.

They have the authority, responsibility, and the exclusive responsibility.

Now, is this... what's the State law duty we're talking about here that... prior to preemption?

And I won't invent it myself.

I'll read you from plaintiff's brief.

It says the railroad's common law duty is determining that improved grade crossing devices are needed and implementing devices.

That's the common law duty or actually Georgia's statutory duty which they would impose on the railroad.

Now, these regulations I've been reciting put exactly that, the responsibility, the exclusive responsibility for determining the need for a device and implementing the device on the State authority.

Unknown Speaker: How do we know that the subject matter is the subject matter of all State rules affecting safety at grade crossings as opposed to State rules or simply rules affecting the need for devices, which is simply a subset of the former?

Mr. Trienens: Well, I'm only talking now about the duty to select the appropriate device.

I'm not talking about lots of other duties that a railroad has at a crossing.

Railroads are going to continue to be sued at crossings, and in fact, of the five issues that Mrs. Easterwood raised, three of them are going back for trial or disposition in the trial court one way or the other.

Whatever this Court does on the two narrow duties we're talking about, this case goes back for trial, or it goes back for further proceedings at least, on the three duties that we admit are duties at crossings which were not preempted.

Or at least there was no claim in this case they were preempted, and it goes back.

We're talking about the duty to select as between gates, lights, and signs.

Who makes that determination?

The plaintiff says under Georgia law, the railroad is responsible.

The Secretary has issued regulations saying that the States are exclusively responsible.

Unknown Speaker: Mr. Trienens, why don't... why isn't a better explanation of what you're arguing for that this is conflict preemption?

I have the same trouble that Justice Souter does, squeezing this within the terms regulation, order, or standard relating to railroad safety.

I mean, there's no standard contained in that regulation.

It just allocates the responsibility for issuing the standard.

Now, I can... if you're making the argument that it is inconsistent with placing that responsibility upon the State itself to instead, by State common law, impose that responsibility upon the railroad, then I can understand.

That's a conflict preemption argument.

Mr. Trienens: Well, our argument in our brief makes both the conflict point and the point that the 434 covers the subject matter.

It certainly... nobody on the other side has ever argued this wasn't a matter relating to railroad safety, whether you have a gate or a sign or a light.

That's a matter relating to safety.

No question about that.

The question is whether the Secretary has issued a regulation covering the subject matter, and he has covered it like a blanket on the narrow question of who determines whether it's a gate or a light.

He covered the subject matter.

How can... how more can you cover it?

That's why--

Unknown Speaker: Do you think--

Mr. Trienens: --That's why I emphasized that point.

Unknown Speaker: --Is it sufficient to say that the subject matter of the State requirement is who's responsible?

Mr. Trienens: No, no.

It's more than that.

Unknown Speaker: That's a strange subject matter.

Mr. Trienens: No, no.

It's more than that.

It's not only who's responsible, but how you go at it.

It tells the State how to go at deciding... how to go to the particular grade crossing and how to decide whether to have a gate or not have a gate.

It tells them how to make the engineering judgments.

Your question is whether the Secretary went far enough in the detail.

You know, you could have formulas.

There's mathematical formulas that people... you know, if there's X trains times Y trucks, there ought to be a gate, and if not, no gate.

The States resisted that and said no, no, that isn't the way to do it.

The way you've got it in the regulations is the way it ought to be.

It tells them what to do.

It tells them who's responsible, and it tells them how to do it.

What more... how more can you cover it?

Unknown Speaker: Does the plaintiff's theory include a failure... a theory that somehow the railroad failed to identify the existence of a hazardous crossing?

Mr. Trienens: Well, I... their theory apparently, as stated in their brief, is that the railroad had the responsibility... and presumably implicitly we failed to perform this duty... of determining that improved grade crossing devices are needed and to implement them.

In other words, it was our duty to decide that there should have been a gate there and we didn't do it.

I think that's their case.

Unknown Speaker: Or to at least identify and call to the attention of the State authorities the hazards?

Mr. Trienens: Well, they make that point, but it's... first place, if it's their responsibility... and after all, the railroads work with these people all the time.

The work... the railroads do have an obligation, when called upon, to work with these diagnostic teams that go out to each of these crossings.

So, the railroads are on top of this.

It also has nothing to do with this case because what happened here was there was a diagnostic team, and the railroads were fully in on it.

The diagnostic team went to Cartersville, Georgia.

It went... there are five crossings in Cartersville, Georgia.

They went and they looked at all of them, and they said all right, let's... tentatively let's have gates at all of them.

The City of Cartersville said wait a minute.

At Cook Street, it's too wide.

You got to build an island in the middle of it in order to accommodate a gate.

Putting that island in will cause a hazard to trucks, and therefore, the State authorities who are responsible for selecting devices weighed the highway safety alone, the highway safety in relation to the railroads, and it decided at Cook Street they wouldn't make them build the island.

They would have flashing lights, in fact, six flashing lights on signs and booms, and that they decided... they decided... that there would not be gates at Cook Street.

The railroads didn't decide this.

Unknown Speaker: Well, would that give rise to a State law defense in the cause of--

Mr. Trienens: Well, what it does give rise to is that the States are responsible.

The States are not immune.

The Secretary has made a survey and found that most States there's no immunity.

Unknown Speaker: --Well, excuse me.

Do you think it would give rise to a State law defense?

Mr. Trienens: To whom?

The railroad?

Unknown Speaker: To the railroad?

Mr. Trienens: I don't know because all I'm concerned about here is the fact that having this process, having the Federal regulations prescribing the process, and having a statute that says that when you cover this very subject matter, it's preempted, we don't get to that.

They say, well, you know, maybe you would have a nice State law defense, and maybe a jury would find for you.

But on this narrow issue, this is not for a State court or a State jury.

Unknown Speaker: Mr. Trienens, are you going to talk at all about the speed issue?

I have one question or two questions about that if you're not.

Mr. Trienens: Well, the... on the speed issue, that's the one where we are the respondent.

The court below found there was preemption.

The Solicitor General agrees on preemption on that.

The Secretary has a regulation on speed that has the allowable speed over this and other tracks.

We're not dealing with train operations generally.

We're not talking about lookout here.

We're talking about speed alone, and also speed is not a separate subject.

Speed is not a subject separate from what device do you have at the grade crossing because they're interrelated under the Secretary's regulations.

But any event, our position is the subject matter of train speeds has been covered and it's preempted.

Unknown Speaker: What happens if the train went 70... went over the speed limit?

Would that be a matter of Federal law or State law?

Could they--

Mr. Trienens: It would be a violation of Federal law, but you could sue in the State court on a common law basis under a case Justice Brennan wrote called Crane.

In other words, there would be a violation of this regulation and the railroad would be subject to a suit.

Unknown Speaker: --You could be covered.

And what if the plaintiff claimed that the local... that the speed that the train traveled at was incompatible with essentially a local hazard?

What... how does that play out in your view?

Mr. Trienens: Well, the local hazard... I think the court of appeals below and the Solicitor General, we all agree.

The local... essentially the local hazard is not implicated in this case because if you had said every grade crossing is a local crossing, that would just swallow the national rule that they got out.

Unknown Speaker: Well, but what would be?

What if the plaintiff thought that because of the dense population and a lot of bushes around or something that the 60-mile-an-hour limit was dangerous?

Is there any way... is that... is a claim of that kind preempted, or how does that play out?

Mr. Trienens: Preempted, but there's the City of Cartersville.

If they thought that not only could have gone, but had right sitting in their lap gates at that crossing and they didn't want them.

But if they... under your question, if a city thinks there ought to be gates there, they go to the State department of transportation and say give us a gate.

Unknown Speaker: No, not a gate problem, just that because of the particular local conditions, the 60-mile-an-hour speed... it seems to me you could read the statute as saying the speed limit is not always going to be... there could be an essentially local safety hazard which would indicate that a lower rate of speed would be necessary to avoid the danger at that local place.

Mr. Trienens: Well, if a State... not the city, but if a State were to come along and say because there's something very unusual about the Horseshoe Curve... and I picked that because that's in the legislative history... and therefore, somehow there ought to be a special speed limit there, then I think... then that local exception would apply, but nobody has tried--

Unknown Speaker: And that could apply even in a jury trial, even without a regulation.

Mr. Trienens: --No.

No, no.

It has got to be a State who identifies something extraordinary and then has a statewide--

Unknown Speaker: It's a more stringent law, rule, regulation, order, or standard.

That can't be by adjudication in your view.

Mr. Trienens: --No.

It has got to be a State that has got to get it out.

Unknown Speaker: I guess I have a problem that goes one step beyond Justice Stevens', and again it's a textual problem.

The regulation on speed... it was at 213.9... speaks simply in terms of the maximum allowable speed which again, by its terms, seems to imply to me that there may be some source of authority that could appropriately set a speed as appropriate, but less than that which is allowable, which again implies that there is some State authority left to do this.

Mr. Trienens: Well, we don't agree that there's any such implication, and one of the reasons is that the Secretary of Transportation has a number of motives, one of which is to get the trains through.

Congress has beaten on the Amtrak to speed up the trains, and the speed is... the allowable speed is the speed you're allowed to go at, period, as far as we're concerned.

That's what we think the Secretary... regulations call for, and once he has covered that subject matter, it's preempted.

Unknown Speaker: Suppose the railroad knows that the main road is closed and that a lot of school buses are taking a detour over an unmarked crossing.

Does the railroad have a duty to slow down?

Mr. Trienens: The railroad... no, no.

The question of the--

Unknown Speaker: Snowstorm, fog, no duty to slow down?

Mr. Trienens: --No.

They got a duty to look out, but not as... speed as such.

Unknown Speaker: Suppose they see the school bus stalled.

Do they have a duty to slow down then?

Mr. Trienens: That's a lookout question.

Then you have to take all appropriate measures to avoid the collision.

And of course, there's a problem there.

You got this heavy train and you can't swerve.

But, yes.

Oh, I don't say that at all.

We've got a lookout problem.

He sees the bus.

He has got to everything he can--

Unknown Speaker: Do the regulations talk about a lookout problem, or is this something--

Mr. Trienens: --No.

That's not preempted.

Unknown Speaker: --Why?

Can you tell me why that is?

Mr. Trienens: Well, the Secretary, not having issued a regulation on that, the State law continues in force.

Unknown Speaker: Well, I'm not sure when a lookout problem begins and when a speed problem ends.

Mr. Trienens: Well, if he's going at the allowable speed, he looks, and under your question, he sees a school bus sitting there, he has got to take every step to... first, he has got to maintain an adequate lookout, and secondly, he has got to take every feasible step to avoid the accident.

That's a State law question, not preempted, not involved.

I just want to say one thing about this Federally funded problem that the Solicitor General injected in this case after cert. It doesn't make any sense under 434.

There's no basis for the distinction, and it produced entirely goofy results.

If you have three crossings identically protected, one with Federal funds, one previously erected, and one built with State funds, one is preempted.

Two aren't.

That makes no sense at all.

Besides it's... ironically, all of them in this case, all the Cartersville ones were improved with Federal funds.

So this argument created for this case doesn't apply to this case.

Thank you.

Unknown Speaker: Thank you, Mr. Trienens.

Ms. Mahoney, we'll hear from you.

Argument of Maureen E. Mahoney

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

This is the first time in 20 years that this Court has had an opportunity to interpret the preemptive scope of the FRSA, and we'd like to make three basic points about how we think that it needs to be interpreted.

And the first is that we share the view of the parties that 434 should not be interpreted to preempt common law tort actions against railroads for violations of their duties to operate trains in a safe manner.

Second, we think that it is also important, however, to recognize that under the language when the Secretary has covered the subject matter of a railroad's duty, that standard of care must govern.

It is a Federal standard of care defining the railroad's... the content of the railroad's safety obligations under the circumstances that must control in this case and in other cases.

So, the critical question becomes whether, in fact, the Secretary has covered the subject matter of the particular claims that are at issue.

As to those claims, on the grade crossing issue, we do not think that the regulations cover the subject matter of these claims.

On the speed issue, we think that they do, and let me explain why.

Unknown Speaker: Well, Ms. Mahoney, on the grade crossing area--

Ms Mahoney: Yes, Your Honor.

Unknown Speaker: --how should we view the Manual on Uniform Traffic Control Devices which says the determination of need and selection of devices at a grade crossing is made by the public agency?

Ms Mahoney: We do not disagree that the determination has to be made by the public agency.

What this is referring to is final authority.

It has always been the case--

Unknown Speaker: Well, so, could there be a State tort law obligation on the railroad then to identify the need?

Ms Mahoney: --Absolutely, Your Honor.

We think that the way the manual works, it's simply talking about the system that's in place.

We have to recognize that when we're dealing with grade crossings, although the railroad has the right-of-way across the tracks, the highway is there as well, and the State has to have authority over whether a gate arm is going to be installed on its highway.

It can't allow railroads to go and put up gate arms because they think it's good for safety.

Unknown Speaker: Authority over it, Ms. Mahoney, but not responsibility for it.

The regulation does not simply repeat the situation in place.

At common law, the State has no responsibility to assure the safety of each intersection.

The State has the final word.

The railroad could not put up a gate or a flashing signal without the State's consent.

But it seems to me an enormous change for the Federal Government to say henceforth the State shall have a positive responsibility to assure the safety of these intersections, whereas before under State law, it was the railroad's responsibility.

And it seems to me quite a different system and a system that seems to me in conflict with the old common law rule.

Ms Mahoney: Your Honor, we don't see what you... we do not see anywhere in the statutes or the regulations that say that it is the State's responsibility to ensure that the grade crossings are safe.

In fact--

Unknown Speaker: It does not say that?

Don't they have a responsibility to make studies and to determine what should be put up?

Ms Mahoney: --That's different than the MUTCD.

Now we're talking about the Federal funding program, and yes, to use Federal funds, they have a responsibility to make sure that Federal funds are used properly to survey and prioritize projects for the use of those Federal funds.

The language of the regulations and the language of the statute does not speak in any way to what the State's obligations are with respect to grade crossings that are not improved with Federal funds.

And, in fact, the regulation, 646.210, specifically says that State laws that govern the railroad's share of grade crossing improvements shall not be applied when there are Federal aid projects.

The clear import of that language is that State laws requiring railroads to pay for grade crossing improvements, to undertake the duty to do so, are still in place.

Unknown Speaker: I'm not talking about payment.

I'm talking about responsibility to make the decision.

Is it not the case that for both Federally funded and non-Federally... is it the Government's position that the State has no responsibility under the regulations to inspect grade crossings and to make a determination of what safety features are necessary at those crossings unless Federal funds are being used?

Is that the Government's position?

Ms Mahoney: Unless... only when Federal funds are being used.

Unknown Speaker: Only when Federal.

The State has no responsibility to inspect other crossings at all.

Ms Mahoney: No, not under Federal law.

Under State law, they ordinarily do, but not under Federal law.

The Federal Government did not say as a condition of getting Federal funds, you must go out and implement improvement projects at grade crossings that you're not going to use Federal funds for.

Unknown Speaker: Doesn't the Federal Government--

Ms Mahoney: That would be a Pennhurst problem.

Unknown Speaker: --Ms. Mahoney, doesn't the Federal Government--

--Let her finish her answer.

Ms Mahoney: I'm sorry.

Under Pennhurst, to say to the States that you now will share all of the... you will have the entire responsibility for improving grade crossings throughout your State, you'll not only have to pay for them, but you'll have to assume whatever tort liability there is, would be a condition that is certainly not explicit in the Federal funding statute.

We have consistently interpreted that, the Federal funding provisions, to apply solely to Federally funded projects.

The--

Unknown Speaker: But, Ms. Mahoney, this Manual on Uniform Traffic Control Devices is not speaking about Federally funded projects.

Ms Mahoney: --No, it is not, Your Honor.

Unknown Speaker: It just says the determination of need and selection of devices at a grade crossing--

Ms Mahoney: Yes.

Unknown Speaker: --is made by the public agency--

Ms Mahoney: Yes, it does.

Unknown Speaker: --I take it, meaning the State.

Ms Mahoney: This was adopted by virtue of... the history is important here.

A bulletin in 1977 adopted this, incorporated into part of the manual.

And we think that our interpretation is perfectly consistent.

In other words, need and selection.

A railroad identifies a hazardous crossing.

It comes to the State as every citizen must do when it needs approval, and it says I need a gate arm here.

The State has to determine whether a gate arm is needed there and whether it's appropriate to have it installed.

That's what this language speaks to.

Unknown Speaker: Well, that is certain State responsibility--

Ms Mahoney: State--

Unknown Speaker: --imposed by Federal regulation.

Ms Mahoney: --But it doesn't say that the State must go out on its own and determine what crossings need to be improved.

It doesn't say that it has a financial responsibility or duty to go out and do that.

That was left to State law, and in fact, even in the '89 report to Congress, the Secretary was quite clear that the extent of responsibilities, the joint responsibility, for improving grade crossings still rested with the States.

Unknown Speaker: Ms. Mahoney, does the... are you finished with your answer?

Ms Mahoney: Yes.

Unknown Speaker: Does the State have an obligation under Federal statutes to make a survey of all grade crossings?

Ms Mahoney: To get Federal funds, yes, it does, Your Honor, but it is not required to use that survey for implementing projects that are not Federally funded.

It is solely so that the Federal monies can be used in an appropriate way.

Unknown Speaker: And this State, the State of Georgia, I take it, has undertaken that survey, has it not?

Ms Mahoney: Yes, it has.

Unknown Speaker: And your position is that they are required to survey these nonfunded intersections just for the fun of it.

Ms Mahoney: No, Your Honor.

It's not for the fun of it.

It's so that when Federal monies are used, there can be a determination about where they ought to be used within the State.

Unknown Speaker: But they're not used.

I mean, why can't... they would save a lot of money to say we will decide in advance which ones we'll use Federal money on and we'll survey those.

But that's not what this says.

It says--

Ms Mahoney: Well, you can't--

Unknown Speaker: --you shall survey every one in the State.

Right?

Ms Mahoney: --Your Honor, how can you decide which ones you're going to use it on, if the whole point is you want to prioritize, unless you survey all of them?

Yes, they have to survey them, but we do not tell them, unlike... contrary to what the railroads have said, we do not tell them what hazard index they have to use, how they have to rank them, and we certainly don't tell them--

Unknown Speaker: No, you don't, and your position on the requirement that they shall determine the need is that they shall determine the need if the railroad comes and says there's a need.

Otherwise, they have no responsibility.

Ms Mahoney: --We're talking about under the MUTCD.

Unknown Speaker: That's right.

Ms Mahoney: That's right.

The MUTCD says nothing can be--

Unknown Speaker: That's a very strange interpretation.

Ms Mahoney: --Nothing can be installed on a public roadway unless the responsible local authority says that it's appropriate.

That is true not only with respect to crossing devices, but also with respect to every kind of stop sign that a business may want to have at its corner or at its driveway.

All determinations of this kind--

Unknown Speaker: But there may be a need when no one asks to put up anything.

The railroad doesn't ask a thing.

In that case, nobody determines the need.

Right?

Ms Mahoney: --That's right.

No one determines needs under those circumstances except that under State law, the regulatory authorities do assume responsibility for this.

So, the problem that we're describing, it doesn't really happen, but it occurs under the regime of State law, not under Federally mandated duties.

We are not telling the States that they must improve their Federal... their grade crossings without the use of Federal funds.

And I would emphasize that throughout the history of this problem, that the reports to Congress that the Secretary has done have been quite clear that this is the scheme that was in place before the funding statutes were enacted or supplemented in 1973, and did not recommend any changes in that existing scheme.

In the '89 report, for instance, 3-1, that was submitted to Congress, the Secretary specifically said that the railroads' responsibilities are governed by Federal standards when Federal funds are used, but otherwise there is joint responsibility at the crossings, and that that is not necessarily a wrong concept.

We do... thank you very much, Your Honor.

Unknown Speaker: Thank you, Ms. Mahoney.

Ms. Colston, we'll hear from you.

Argument of Tambra P. Colston

Mr. Colston: Mr. Chief Justice, may it please the Court:

The railroad has gained numerous benefits already from the Federal Railroad Safety Act.

They now ask this Court to benefit you... benefit them further by finding that two traditional common law duties are preempted.

And we have to get to the subject matter of what is preemptive because the regulation is so clear.

The regulation in this case, section 434, bears repeating.

It starts out, Congress declares--

Unknown Speaker: Where can we find this in your brief, Mrs. Colston?

Mr. Colston: --Your Honor, it is all the way through there.

At the very beginning... page 9, Your Honor, at the very bottom it begins.

Unknown Speaker: Thank you.

Mr. Colston: Congress declares that the laws, rules, regulations, orders, and standards relating to railroad safety should be nationally uniform to the extent practicable, thus beginning the section with a recognition that all laws relating to railroad safety can't be completely uniform.

Then the second section.

A State may adopt or continue in force any law, rule, regulation, order, or standard relating to... relating to... railroad safety.

That's preservative of the State's powers.

Then the preempting provision.

Until the Secretary covers the subject matter.

This statute is drawn very narrowly.

Therefore, it must be construed very narrowly and especially in light of the presumption against preemption when you've got such traditional State police powers.

Unknown Speaker: Why do you say the statute is drawn very narrowly, Mrs. Colston?

Mr. Colston: Your Honor, without 434... the preemption might have even been broader without it, but it preserves State laws relating to railroad safety until the Secretary covered the subject matter, and that--

Unknown Speaker: Well, yes, but that doesn't strike me as either a narrow or a broad statute.

It strikes me as a fairly common preemption provision.

Mr. Colston: --Yes, Your Honor, it is fairly common, but the language used... the language Congress chose... we have to assume they knew the meaning of what they were saying.

Unknown Speaker: Well, that's exactly the language I'm referring to, and I'm telling you I don't see how you can classify that as a narrow preemption provision.

Mr. Colston: Your Honor, I classify it as such because it says that State law is preserved relating to railroad safety, and then when it says what's preempted, what does it say?

The Secretary has to cover the subject matter, not... the Secretary didn't say, well, when the Secretary passes a regulation that relates to railroad safety.

The Congress said cover the subject matter.

That's why I say the statute is narrowly drawn.

It's also supported by the legislative history, Your Honor.

The legislative history in a railroad congressional hearing addressing Federal and State roles under the FRSA... this is what Congress said.

The States may adopt or continue in force any law, rule, regulation, et cetera, until the Secretary has promulgated a specific rule.

This prevents the mere enactment of a broad authorizing Federal statute from preempting the field.

Then to ensure even more that State law wouldn't be arbitrarily displaced, they included the local safety hazard exception, which says States may adopt rules, regulations that the Secretary has already covered when there's a local safety hazard and it's not incompatible with the Federal rule and it's not an undue burden on interstate commerce.

Reading this and then reading it as this Court always does in light of its stated purpose, the purpose of the FRSA, not as CSX would have you believe, is not uniformity.

Congress described the purpose as this act to promote safety in all areas of railroad operations and reduce accidents and deaths and injuries caused by railroad related accidents and to reduce damage caused by any accidents involving any carrier of hazardous materials.

And that's very important when we talk about speed.

The Secretary has not covered the two subject matters at issue here under the express terms of section 434 read in light of its stated purpose.

With regard to speed, first of all, section 213 does not regulate what the State's common law regulates.

It does not cover it.

It may relate to speed, but it doesn't completely cover the subject matter.

The scope of the act... the beginning of it says--

Unknown Speaker: The statute does not say completely cover the subject matter.

Mr. Colston: --No, Your Honor.

Unknown Speaker: It said... it says it has to be a... have adopted a rule, regulation, order, or standard covering the subject matter of such State requirement.

Mr. Colston: Yes, Your Honor.

Only the congressional history says completely, but it doesn't say relating to either, and it doesn't say addressing.

And Congress could have chosen those words.

Congress said cover.

And that does not cover the subject matter.

The beginning of section 213, Your Honor, says this is all about track safety standards, and it says, well, we're going to govern the geometry.

We're going to govern the roadbed.

We're going to govern the number and the quality of crossties along a section of track.

Then Congress comes up and says now, based on these factors, how many crossties you have, based on how much... how many joints and rails and all this kind of stuff, they say we're going to classify this section of track right here at Cartersville, Georgia as class 4.

A class 4 track you can travel across based on track structure, geometry, and all that... you can travel across it at 60.

Now, if the railroad wants to upgrade it to a class 6, they can travel at 110.

Now, then you can see that they were addressing one thing.

You can read it from the text of that act.

They were governing how fast a train can travel and not derail, and that's all--

Unknown Speaker: Ms. Colston, I thought about this when I was reading it.

Do these speeds... these speeds you say are totally determined by the character of the roadbed.

Mr. Colston: --Absolutely.

Unknown Speaker: Does that mean that in these rail yards that are near Union Station down here if the roadbed is good enough, the speed would be 60 or 110?

Mr. Colston: Yes, Your Honor.

Yes, Your Honor.

According to section--

Unknown Speaker: Are they shown that way on the national maps, that if you want to, you can do 110 in the rail yard?

Mr. Colston: --Your Honor, I don't know what the national maps show.

I will tell you that if this Court finds that speed is preempted under this section, the only thing that has to be considered in traveling 110 is whether you're sitting on a class 6 track, and that doesn't have anything to do with grade crossing safety, weather, fog, schools in the nearby area, high volumes of traffic going across the area, nothing that the common law controls.

You can see also--

Unknown Speaker: You say that common... under your view, I take it, every municipality in the State of Georgia could pass a speed limit for trains passing through it?

Mr. Colston: --Yes, Your Honor, and in most cases they do.

Ours is... our case is common law.

There's a lot of cases out there that did deal with municipal ordinances, and those cases held that it was preempted, but not preempted for the reasons--

Unknown Speaker: Those cases held what was preempted?

That the local ordinances--

Mr. Colston: --The local speed ordinances because they said they--

Unknown Speaker: --That the local ordinances were invalid?

Mr. Colston: --In the lower courts.

That's what the lower courts were saying, but they were--

Unknown Speaker: I'm asking what is your position if a municipality passes an ordinance regulating the speed of trains.

Mr. Colston: --I believe, Your Honor, that ordinance is not preempted.

It does not... this section 213 does not cover the subject matter of that requirement because that requirement would be based on the same factors as the State's common law, the traffic--

Unknown Speaker: And different municipalities could have different speed limits in the State of Georgia.

Mr. Colston: --Yes, Your Honor, and I understand the concern that you're getting at.

But the purpose of the FRSA is not to burden interstate commerce... to place... take a burden away.

The purpose is to promote safety.

Wouldn't it be counterproductive to allow the railroads to travel at 110 miles an hour through Cartersville, Georgia at a crossing with 150 feet of sight distance, that they have these trucks going over all the time?

Unknown Speaker: Well, you don't deny that the Secretary could do that if he wanted to.

Mr. Colston: He sure could.

Unknown Speaker: Your point here is just that this particular regulation doesn't do it.

Mr. Colston: That's absolutely right, Your Honor.

Unknown Speaker: So, if your... I mean, you acknowledge, do you not, that if the Secretary wanted to establish uniform speed limits for trains, he could.

Mr. Colston: He certainly could.

I'm not--

Unknown Speaker: You just say he hasn't done it here.

Mr. Colston: --No, sir, he has not, and I'm not certain how long he'd be Secretary if he did because the headlines, if they said... can you imagine saying Congress says we can travel 110 miles an hour across... through grade crossings on all railroad tracks in the United States.

How likely would it be that it would have been passed?

Then, also to support that this regulation only covers derailments and track classification is Senate report 91-6--

Unknown Speaker: I wonder if you're right about that.

Supposing they had adequate... the gates went down.

When the gates are down and the lights are flashing, how... why do you care how fast the train is going?

Mr. Colston: --That would be great, Your Honor, but 65 percent of the crossings out there have no active protection at all.

Unknown Speaker: But what I'm suggesting is that perhaps the protection against the particular accidents you describe must rely on the crossing problem rather than the speed of the train.

Mr. Colston: It's both very important, Your Honor.

As far as--

Unknown Speaker: But if the crossing is adequately protected, I don't know why, if I'm sitting there in my car, I wouldn't rather have the train go by real fast rather than slow.

Mr. Colston: --Yes, sir.

[Laughter]

I know what you mean.

One of the witnesses in this case was kind of upset because she didn't get to get her free bag of coffee by getting to the grocery store at a certain time, and so she was very aggravated by this.

But, Your Honor--

Unknown Speaker: It's a safety factor too, is it not?

Mr. Colston: --Yes, it is.

Unknown Speaker: I mean, not everybody is as patient as Justice Stevens and would sit there if it was a slow--

[Laughter]

Mr. Colston: Absolutely, Your Honor, and it is a safety factor.

However, the Secretary noted in the reports to Congress that it's also a safety factor to have these trains slow down because of the common sense involved.

The slower the train is going, the more time that the motorist has to perceive the train's presence and to react to it, like at this crossing with only 150 feet of sight distance.

At 35 miles an hour, it was upon Mr. Easterwood in 3.2 seconds.

Imagine if you doubled that to 60 miles an hour.

Your Honor, as far as if a gate arm always were in place at every crossing in Georgia, and we had unlimited Federal funds and could just put them everywhere, and they always worked properly, they didn't ever malfunction, and they didn't ever give false warnings, and they didn't ever do any of those things, you're right.

Speed would not be an issue, but that's not the reality of it, sir.

The reality of it is that there's not gate arms at every crossing.

In fact, most of them there's not.

Many of the crossings are not even a recipient of Federal funds because they're not public crossings to begin with.

Unknown Speaker: What's your position if a grade crossing has been improved with the crossing gate using Federal funds?

Mr. Colston: Your Honor, if the crossing has been improved--

Unknown Speaker: Or pardon me.

Let's say crossing lights using Federal funds.

Mr. Colston: --We look at those, the gate arm regulations, strictly as funding regulations.

That's all they are.

Every one of them--

Unknown Speaker: So, your answer is no preemption.

Mr. Colston: --No preemption, sir.

And as Justice O'Connor pointed out, they would have an excellent defense if they did what was required by 646.214 in State law... in State court.

And what jury is going to hold them liable for doing no more than they were allowed to do?

That's the way our system works.

Unknown Speaker: What jury is going to hold a railroad liable for doing everything that the railroad--

Mr. Colston: Your Honor, I believe in the jury system.

Unknown Speaker: --Come on.

[Laughter]

Mr. Colston: I believe in the jury system completely, and I do believe that more times than not they do the right thing.

And they know that when you put gate arms up and the State says that's enough, they have enough sense to know that you don't hold them liable just because you got a poor, little old lady over here that doesn't have a husband anymore.

They have sympathy, but not that much.

I know because I'm in front of juries all the time.

Now, these are funding regulations, and funding regulations, Your Honor, do not displace State tort law unless they do so with such explicitness that the States know by accepting Federal funds how much of their law was going to be displaced.

That's not the case here.

Every regulation cited applies to Federal fund projects.

The prioritization is to receive Federal funds; even the Secretary states her position... or his position as overseer to ensure that Federal money is appropriately spent.

The regulations that were promulgated by the Secretary did just that, ensure that Federal money is appropriately spent and, of course, the Federal Government wants to do that.

And why do they give it to the States?

You all were asking that question earlier.

Why do they give it to the States and doesn't that preempt?

No.

They don't have a mechanism for giving it directly to the railroad.

It has to go through the States.

Unknown Speaker: As I understand it, they have to survey every one of the crossings in the State.

Right?

Private as well as public ones.

Mr. Colston: No, sir, not the private crossings at all.

Unknown Speaker: No, not the private, just the public ones.

Mr. Colston: Just the public crossings.

That would be possible--

Unknown Speaker: But they can't look at a map and just say, well, we know.

You know, this is a little rinky rural road.

No big deal.

It's hard to believe that every crossing was required to be examined solely in order to, quote, prioritize.

Certainly you could have eliminated 80 percent of the crossings in the State knowing that those are not the most important ones where you're going to need Federal money.

Mr. Colston: --Well, maybe they do.

Maybe they do take the rinky-dink ones, and they don't worry about those, the ones that are out in the country.

Unknown Speaker: They're not allowed to.

They have to... under the regulations--

Mr. Colston: Well, they're supposed to look at them all.

Unknown Speaker: --they have to do all of them.

Mr. Colston: They're supposed to look at them all.

I don't know how in practice it actually works.

But think about that, Your Honor.

Think about if you accept the Solicitor General's argument, is that once that Federal money is spent, you're preempted.

Then every time that diagnostic team walks down a section of track, down any area in, say, 10 miles and they see three or four crossings, just because they walked down there and their salaries were paid with Federal funds, you're preempted according to the Solicitor General, which would... that can't be.

It can't be.

Take the situation here where a motion detector was--

Unknown Speaker: Mrs. Colston, were there Federal funds involved in the site of this case?

Mr. Colston: --Your Honor, Mr. Trienens was correct up to a point, that they did decide... they did put it... well, let me say this.

They put a motion detector years ago, and the reason why they put the motion detector is they were upgrading four crossings.

When they upgraded those four crossings, they decided to put gate arms at all of them, and that included Cook Street.

They wanted to do that.

But they started at West Avenue.

Unknown Speaker: No.

My question was were Federal funds involved at the site in this case.

Surely you can give a simpler answer than that.

Mr. Colston: I wish I could.

There were, but they were used to improve the West Avenue crossing because the motion detector at Cook Street wouldn't work with the new circuitry at West Avenue.

So, yes, Federal funds were spent to put a motion detector at Cook Street some years ago, but it wasn't for the safety of Cook Street.

It was to make the West Avenue circuitry work because you have to change it all.

It's all tied in together.

So--

Unknown Speaker: And the accident occurred at Cook Street?

Mr. Colston: --Yes, sir.

That's why it's such a complicated answer.

Now, as far as the gate arms and the city saying no, you're not going to do that, I want to tell you what happened.

What happened was is it is big, and they said you can't put an island here because we have lots of tractor-trailer traffic.

And it is.

It's an industrial area, and you know how wide they have to turn when making a turn.

If they put an island in the middle of it, they couldn't have negotiated that turn.

So, they said you got to put extended gate arms on, the longer ones.

And the railroad said, well, then we got to raise our communication lines because they're going to interfere.

And they said, okay, we'll do it, and everybody went on their merry way.

And nobody ever did anything.

The railroad never reported back that they had completed raising their communication lines.

Then Mr. Easterwood is killed, and they're saying, boom, you're preempted because you wouldn't let us do it.

It's not the case.

That's definitely not the case.

And that shows that if you find that these are anything other than funding regulations how difficult the question is going to be in the lower courts as to when preemption starts, when it ends, what it turns on, the lapse.

Is there a lapse?

Is that a problem?

It's just common sense that these are nothing but funding regulations that do not supplant State tort law.

Unknown Speaker: Are Federal funds--

--Excuse me.

Are Federal funds used to conduct the survey?

Mr. Colston: Yes, sir, they are.

The States are given a certain amount of funds, and part of it's used for the surveying process, some to pay the diagnostic team.

And so there you go.

The diagnostic team walks down the track.

Boom, you're preempted under that analysis.

The Secretary in the reports to Congress noted that because the railroad does have tort liability in cases such as... in railroad crossing accidents, this continues, a just... a continuing interest... excuse me.

This justifies a continuing interest on the part of the railroad in the total safety effort.

If they were to be preempted, Your Honors, from placing gate arms at a hazardous crossing, it would remove all incentive to improve safety, and that would be in direct opposition to the purpose of the Federal Railroad Safety Act.

I'm sorry, Justice Scalia, you had a question.

Okay.

Neither in this case is there implied preemption, and I... correct me if I'm pronouncing this wrong, but in Cipollone, it... you all agreed that if you have an express preemption provision, this causes you to not have to look at whether it occupies the field because just by there being a provision, it's assumed that Congress did not want to go any further than what was stated in the provision.

So far as conflict preemption, there is no conflict here either, Your Honors.

CSX, first of all, can easily comply with both of the State requirements at issue here.

First of all, the Solicitor General and the railroad makes the argument that... its counter on the speed argument is because emergency braking will place them in a position where that would cause a derailment, and they all concede that this was aimed at derailments.

Section 213 was aimed at derailments.

Emergency braking is not the question here.

If you slow down to what's reasonable, you shouldn't ever have to emergency brake.

And a point that came out earlier during Mr. Trienens' argument was very interesting, the fact that the proper lookout claim still remains in this case.

The proper lookout claim couldn't possibly remain if the speed is preempted because--

Unknown Speaker: You have to look out.

You just don't have to reduce your speed.

[Laughter]

Mr. Colston: --Yes, Your Honor.

That kind of makes the State requirement superfluous.

You know, well, there he goes.

[Laughter]

And that would not make sense.

I'm sorry.

The Secretary... well, let me state then also it is supported in the legislative history that these were just for derailments, and that's all they were for is for derailments.

In Senate report 91-619, the Senate members were talking about recent catastrophes that had happened from derailments, and they cited one case, one example, where a car derailed.

And it was carrying hazardous chemicals, and it caused an explosion.

The explosion destroyed the city's major industry.

It destroyed several homes, and it contaminated the water supply for several months.

Then they found out that a $50 track repair would have made... caused that derailment not to occur, that that would have happened.

If... Congress, the Senate members, noted that because of that, they thought that the derailments were caused by poor track conditions combined with highe average speeds.

Mr. Parker pointed out to me this morning in the USA Today, the bottom, left-hand corner, an article says 69 percent of train accidents are derailments.

The Secretary in section 213 was only regulating Congress' perceived cause of these terrible derailments that happen so frequently, poor track conditions combined with higher average speeds.

Thank you.

Unknown Speaker: I guess it's a little unfair to say that lookout is inconsistent with the speed limit.

I mean, you have a speed limit of 30 miles in residential areas, let's say.

Certainly that doesn't mean if you see a pedestrian walking in front of you, you can maintain your 30-mile speed, does it?

Mr. Colston: Well, Your Honor, under their interpretation, they say that they don't.

In fact, in their reply brief... it amazed me... they said we still have the duty to slow down to avoid a collision.

What's the difference between slowing down to avoid a collision, a specific collision--

Unknown Speaker: I hope you slow down in residential areas when you're driving a car--

Mr. Colston: --Yes, Your Honor.

Unknown Speaker: --and it says 30 miles or 25 miles and you see a pedestrian.

You, nonetheless, slow down, don't you?

Mr. Colston: Yes, Your Honor, and--

Unknown Speaker: But you'd say what's the maximum speed.

The maximum speed is 25 or 30 miles an hour.

Right?

Mr. Colston: --Right, but--

Unknown Speaker: That's all they're saying here I guess.

Mr. Colston: --That is all they're saying, but what we're doing with the railroad is no more than we're doing with a truck driver on I-75.

If he comes to an area where the lanes narrow down into one because they're doing construction, we require him to slow down, to not kill somebody.

We don't pat him on the back and say that's okay.

Unknown Speaker: Maybe I don't understand the speed issue, but... your answer.

I thought their position was they could go 60 miles an hour.

Mr. Colston: It is, and now they're saying in their reply brief that they have the duty to slow down.

And that's what's inconceivable to me, Your Honor, is I don't see what the difference is in slowing down to avoid a specific collision and slowing down to avoid a collision because you're in a dangerous area.

But they--

Unknown Speaker: I suppose it's the difference between when you're on an interstate highway that has a posted speed limit of 55 and there's a major curve.

You are not negligent if it's good weather and everything else is okay and you go 55 miles an hour.

Right?

Mr. Colston: --Right.

Unknown Speaker: But you would be negligent if there were, you know, somebody fallen down in the road and you continued at that same speed.

Mr. Colston: Or--

Unknown Speaker: That's all they're saying--

Mr. Colston: --Yes, Your Honor.

Unknown Speaker: --that the normal track conditions allow them to continue to go at whatever that speed is.

Mr. Colston: That's right.

Unknown Speaker: And if they see an obstruction, of course, they have the duty to slow.

Mr. Colston: And if they knew... by that same reasoning, if they knew that there was a little path there because it was a national park and pedestrians, people, frequently and bicyclers frequently went over the tracks there to go into the other part of the national park, would they then not have a duty to know that that hazard is up there and that it's very likely that an accident could occur because the conditions are so bad and not slow down.

It's inconceivable, Your Honor, that the Secretary would pass a regulation like that in the name of safety.

Thank you.

Unknown Speaker: Thank you, Mrs. Colston.

Mr. Trienens, you have 2 minutes remaining.

Rebuttal of Howard J. Trienens

Mr. Trienens: I'd like to devote that entirely to the confusion on Federal funding.

The States, as everybody knows, get a lot of Federal money for all kinds of purposes on the highways, and the States accept certain responsibilities to get all that money.

And one of them is, imposed in the 1973 act, each State shall conduct and maintain a survey of all highways, to identify rail crossings which may require separation or protective devices, and establish and implement a schedule of projects for this purpose.

States have done that.

They haven't objected to it.

They're doing it.

The Federal funds it.

And my point is that quite apart from this myopic view on part 646, that this requirement is now embraced not only in the statute, but also in the Federal regs.

It's in 924.

It's in 1204.

These are regulations and they trigger the preemption.

The manual, which counsel for the Solicitor General said, oh, that's a mere bulletin... it is a regulation.

It's in the CFR, and the R stands for regulation.

It's described in the CFR as a regulation and a standard, and it specifically puts the responsibility for this narrow question of who determines gates or no gates on the States.

Period.

And once they do that, 434 kicks in.

Having covered that narrow subject matter, not liability generally at grade crossings... we'll keep getting sued every time there's an accident, but as to this determination, the Secretary has covered that subject matter and that preempts expressly.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Trienens.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Cipollone v. Liggett Group - Oral Argument

Fri, 09 Jan 2009 14:49:29 +0000

Case:

Cipollone v. Liggett Group

Media File:

90-1038_19911008-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Marc Z. Edell

Chief Justice Rehnquist: We'll hear argument now in number 90-1038, Cipollone v. the Liggett Group.

Mr. Edell.

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

The issue in this case is whether the Federal Cigarette Labeling Act preempts State common law tort claims against cigarette manufacturers for failure to warn, fraud, deception, and misrepresentation.

In 1964, the Surgeon General's Advisory Committee on Smoking and Health issued its landmark report.

In that report, it indicted cigarette smoking as the major cause of preventable death in the United States.

In response to that report, States and municipalities across the country began proposing legislation that would require cigarette manufacturers to place warning labels on their packs of cigarettes and in their advertising.

At the same time, the Federal Trade Commission began its rulemaking process which would likewise require cigarette manufacturers to place a specific warning on packs of cigarettes and in their advertising.

In the wake of all this activity, in 1965, Congress intervened.

Congress intervened for two reasons.

First, to decide what steps it should take on a national basis in light of the Surgeon General's report and its conclusions.

And second, to address the cigarette manufacturers' concern that if they were forced by these various State regulations and the Federal Trade Commission to put different warning labels on packages of cigarettes and in their advertising, they would not be able to conduct business on a national basis.

Congress heard hearings for many weeks.

Industry representatives testified.

Submissions were made.

The industry again asked for preemption of State regulations and of the FTC so that they could go ahead and do business.

Congress, in enacting the 1965 Cigarette Labeling Act required, one, a specific warning on packs of cigarettes; and two, it gave the industry the preemption it asked for, not preemption of State common law tort claims... claims that the industry had already been faced with for over a decade prior to the 1965 act.

It preempted any statements to be required on packages of cigarettes other than the Federally mandated statement, and it preempted any warning requirements in cigarette advertising whatsoever.

In 1969, Congress intervened again on the issue of preemption.

It was not because the cigarette manufacturers, now 15 years into the litigation, decided that they needed some protection from these tort suits.

The reason was that the section 1334(b), that is the preemption section applicable to warning labels in advertising, was to expire on July 1, 1969.

Congress again held hearings.

And again the industry said, we need preemption of State regulations that would require us to put different warning labels on packs of cigarettes and in our advertising.

And again, Congress gave them their request.

But Congress decided in 1969 to restructure the act somewhat.

It restructured it by giving the Federal Trade Commission freedom now to proceed with its rulemaking process to decide whether or not warnings should be required in cigarette advertising.

It restructured it also to make clear that not only were the States, but also the States' political subdivisions were also precluded from imposing these regulations that would require warning labels in advertising or in... on packages of cigarettes.

In 1969, Congress also decided on a new warning, and for other reasons it removed cigarette advertising from electronic media.

At no time during the 1969 hearings or in the 1965 hearings did the industry ask for protection for these cases.

At no time during either of the hearings in 1965 or '69 is there any suggestion that Congress, any one Congressman... Congressperson... suggested that there would be preemption of State common law tort claims.

All discussions regarding State common law tort claims were based upon the assumption that these cases were to continue.

Unknown Speaker: Well, the language Congress used is... certainly can be construed more broadly than you're suggesting.

Don't you agree with that?

Mr. Edell: I don't agree with that, Chief Justice Rehnquist.

Unknown Speaker: You don't think that the provision of section (b) could be read to preclude the sort of failure to warn claims in State tort litigation?

Mr. Edell: No, I don't, Chief Justice Rehnquist.

Unknown Speaker: Then you think the Third Circuit is simply irrational, I suppose, if you don't think it can even reasonably be read that way.

Mr. Edell: I think that the natural read of section 1334(b) does not suggest that these cases... that these cases are encompassed in that preemption.

And in fact, the Third Circuit did not read 1334(b) as specifically including these cases.

The Third Circuit said that on the issue of expressed preemption, 1334(b) did not state that these cases were preempted.

Unknown Speaker: Suppose in a suit such as the type that was heard here the judge says, ladies and gentlemen of the jury, you're instructed that the warnings currently on cigarette packages are required by Federal law, and that as a matter of Federal and State law they're adequate.

And that you may impose no additional prohibition or requirement on such advertisements.

Is that a proper instruction to the jury?

Mr. Edell: As it stands today under the Third Circuit's ruling?

Unknown Speaker: No.

Is that a proper interpretation of instruction to the jury based on this statute?

Mr. Edell: No, I don't think so.

I think that--

Unknown Speaker: You can't instruct the jury that?

Mr. Edell: --I don't think that as a matter of law, this statute but for the Third Circuit's opinion--

Unknown Speaker: Forget about the Third Circuit's opinion.

Mr. Edell: --Okay.

Unknown Speaker: What do you think is the proper interpretation of the statute?

Is the manufacturer entitled to that instruction based on your reading of the statute?

Mr. Edell: No.

I think that the manufacturer is entitled to the instruction that the jury, in considering whether or not the manufacturer met its standard of care that's required under common law, placed a warning required by the Federal Government on its packs of cigarettes and in its cigarette advertising.

But until the Third Circuit opinion, it has historically been in the area of tort law that if a manufacturer, or anyone else for that matter, follows a regulation, that that regulation sets the floor and not the ceiling for manufacturers' behavior.

Unknown Speaker: So the manufacturer's not entitled to an instruction that these labels as a matter of Federal law are adequate and sufficient, and that the jury may not impose as a matter of State law any more restrictive requirement.

Mr. Edell: To answer the first part of your question, Justice--

Unknown Speaker: I mean, isn't that just the words of the statute?

Mr. Edell: --It is.

It is, but with respect to tort law, juries don't decide what further language should be placed on packages of cigarettes or in cigarette advertising at any time.

For example, in this case let's assume the jury heard all of the evidence.

It saw the Federally mandated warning.

It saw the warning in the advertisement.

It saw the advertising.

It saw all of the internal documents that we've developed during the course of discovery, some of which are a part of our appendix.

And where the industry attempted to neutralize the effect of the Federally mandated warning.

The only question that the jury would then answer would be, question, did cigarette manufacturer X adequately inform its consumers of the health hazards of cigarette smoking?

Yes or no.

And if they answered no, that doesn't mean that the warning itself is not adequate.

It could very well be that but for the intentional acts to neutralize that warning that the warning by itself is adequate.

And this is not an alien concept.

This is a concept that--

Unknown Speaker: Let me just... I just want to make clear.

Would it be error for the district... for the trial court to instruct the jury that you may require... you may impose no requirement or prohibition other than what is set forth in the Federal law?

Mr. Edell: --I don't see how that fits in the context of a tort action.

Unknown Speaker: Well, what's wrong with reading a statute to jury?

It's the law, isn't it?

Mr. Edell: Well, it's... with all due respect, Justice Kennedy, I don't know whether or not it's relevant on the issue of... the issue that the jury is to decide.

The issue to be decided is whether or not they adequately informed their consumers.

Unknown Speaker: May I ask a related question?

Part of the basis for the liability, I think, was on fraudulent misrepresentation in advertising.

Is that right?

Mr. Edell: That's correct.

Unknown Speaker: And 1334(b) says no requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising.

Now, a tort suit based on fraudulent misrepresentation in advertising does appear to seek to impose a State law prohibition within the meaning of that subsection.

What option does the manufacturer have other than to cease using the advertising?

And how is that not covered by (b) in the literal language?

I know that's not the basis on which CA-3 decided, but I just wonder, in the context of the fraudulent misrepresentation, how it is not covered by (b).

Mr. Edell: Justices O'Connor, I think that is probably one of the more difficult issues in this case.

Not necessarily only on fraudulent misrepresentation, because the question that's posed to the jury on that issue is, did cigarette manufacturer X fraudulently misrepresent to its consumers the health hazards of cigarette smoking.

And when the jury considers that issue, they will consider not only the advertising, they will consider the public relations communications.

They will consider all of the activities of the industry, the suppression of test results.

So a yes answer to that question does not necessarily, even if the manufacturer wanted to do something, does not necessarily require them from no longer using the particular advertising.

Because we don't know from the jury verdict whether or not it was the... a particular advertisement that convinced the jury that there was fraudulent misrepresentation.

I think the harder issue, and I will admit it, is the express warranty issue, where you have a particular advertisement, and a jury says this particular advertisement is a breach of warranty.

The cigarette manufacturer has the choice of, one, paying the judgment, as we say in our brief, and merrily proceeding to employ the same express warranty... and that's a business decision that they make.

And that is the difference between requirements, if you will, and tort actions.

It leaves the discretion on the manufacturer as to how to proceed.

But yes, at some juncture with $ 500, 000, 000, 000 billion worth of--

Unknown Speaker: Excuse me.

Suppose you have a regulation that has as the sanction for its violation only the payment of money.

Why isn't that precisely the same as a tort action?

Mr. Edell: --Because a regulation gives the manufacturer no discretion of what their activities are.

Unknown Speaker: Yes, he does.

He can violate it and pay the money, just as with the tort action.

You violate the law, the tort law, and pay the money.

Mr. Edell: But then you are a lawbreaker.

I mean--

Unknown Speaker: You're not a lawbreaker when you intentionally violate someone's rights under the common law of torts?

Mr. Edell: --You're not violating a law, you're violating a standard, if you will, Justice Scalia, a standard of how we interact between ourselves as citizens.

It is a moral... a standard of morality that we impose upon ourselves.

Unknown Speaker: Is that so even if the governmental sanction is not called a criminal sanction, but it is just a civil penalty?

Mr. Edell: I believe so.

I think that the difference is the exercise of discretion.

Unknown Speaker: What about punitive damages?

Suppose the jury not only finds the cigarette manufacturer misrepresented contrary to common law and imposes compensatory damages, but even imposes punitive damages.

Does that change your answer at all?

Mr. Edell: It would give the manufacturer greater incentive to exercise its discretion in a reasonable fashion, yes, I believe so.

Unknown Speaker: But I mean, you'd say punitive damages are also allowed because they do not impose, or are not based, upon any requirement of law?

Mr. Edell: They're not regulations, and this act is directed to regulations.

Unknown Speaker: What is it?

What does it have to be to be a regulation?

Mr. Edell: It has to be an ordinance.

It has to be a statute.

It has to be--

Unknown Speaker: Depends on whether it's created by the courts or by a legislative or executive agency.

Is that the distinction you're drawing?

Mr. Edell: --I would say that for the purposes of this act, if the executive branch was empowered to enact a particular proclamation that would require a cigarette manufacturer to do something violative of this act--

Unknown Speaker: Oh, I know that, but about a court?

Suppose a court... suppose a State supreme court gets specific enough that it says in one of its decisions, under the common law of our State a manufacturer is liable unless the manufacturer says on the cigarette package, in these words, beware, cigarettes may cause cancer, emphysema, and death.

And the State supreme court says that's the common law in our State.

Does that violate... is that all right?

Mr. Edell: --I don't think that that was what Congress was trying to prevent.

I think Congress was well aware of these tort actions.

I think they were willing to accept any tension that might exist between compensating the individual who is injured as a result of that tortious conduct.

I think as a matter of fact, a State can impose absolute liability on a cigarette manufacturer.

Unknown Speaker: So long as it does it through a court decision and not an executive or legislative.

Mr. Edell: No, but--

Unknown Speaker: And what if, in following up to Justice Scalia's question, the court also granted an injunction against the future sale of cigarettes unless it had that warning on it?

Mr. Edell: --If there was a tort action, if there was a... for example, a nuisance action, that would require a manufacturer to specifically place a particular warning in an advertisement, and if they failed to do that, then an injunction would issue.

I would think that that would come close to a conflict and that the act would not... the intent of the act would not tolerate it.

Unknown Speaker: Well, my hypothetical was a little simpler.

My hypothetical was an action for damages.

At the end of the complaint he says, and I also ask for such other relief as the court deems appropriate.

And after entering the injunction... and he sues on behalf of a class of people who smoke a lot... after getting a damage judgment the court does enter the equitable decree.

Mr. Edell: But that's not how... our court system doesn't permit that.

The concept of the--

Unknown Speaker: You mean New Jersey's court system doesn't?

Mr. Edell: --There's no tort system, product liability tort system that I know of in this United States that grants equitable relief like that, that would actually regulate the behavior directly of the manufacturer.

All that the jury does is say, under the circumstances, they failed to meet the responsibility the consequences of which are you must pay.

Unknown Speaker: It's his State, Mr. Edell.

He has a State supreme court that says we're going to issue these injunctions.

[Laughter]

There are a lot of areas of the law where they do that.

I don't know about New Jersey and cigarette cases, but it's not unusual to grant equitable relief in addition to damages.

Do you think that would be preemptive?

Mr. Edell: I think that if equitable relief could be... would include an injunction, I think that that comes very close to an actual conflict.

Unknown Speaker: Well, Mr. Edell, in the same general area, I suppose the award of compensation in a tort suit is based on finding some preexisting duty by the tort feasor... a duty.

Mr. Edell: Yes.

Unknown Speaker: And why isn't a duty determined by State law somehow regulatory?

Has this Court ever thought that it could be, for instance in the Garman case or other cases?

Have we ever looked at tort liability and said yes, that can be a form of regulation?

Mr. Edell: Yes, Justice O'Connor.

What the Court said in Garman was that it could have a regulatory effect.

And given the broad nature of the preemption in Garman, it is a conflict.

It's not an expressed preemption, but it's a conflict.

But I think if we look at some of the more recent jurisprudence from this Court.

If we look at Silkwood, if we look at English, if we look at Goodyear, if think that we see the Court saying, indirect regulatory effect is something much, much different than direct regulatory effect that Congress intended to prohibit.

Unknown Speaker: Well, I think that's true.

But of course in Silkwood, it appears at least that we referred to an affirmative intent on the part of Congress to preserve State tort remedies.

And I'm not sure here we see what Congress intended, other than by the language that it used.

Mr. Edell: Well, I think that if we look at the legislative history, we don't see a whisper, Justice O'Connor, of an intent to preempt.

And we start out with the assumption that State common law tort claims are to continue.

That's our presumption that we walk into this Court with.

And I think if you look at the structure of the act also.

This Court, for example, in Ingersoll, said let's look for some special feature here that will help us distinguish whether or not this is a matter that should be preempted.

And the special feature this Court found so persuasive there was the alternative remedial scheme.

We look at this act and we say to ourselves, there's no remedial scheme whatsoever.

Congress did away with 100 years of development of common law, provided no remedial scheme.

Not a whisper of it is contained in the legislative history, not in any committee reports.

And we walk into this Court with a presumption against preemption and we're supposed to assume that that's the way Congress did it?

It doesn't coincide with the way things work.

And I think it's an absurd suggestion.

Unknown Speaker: Maybe it's also, as some of the earlier questioning suggested it, I mean what we're grappling with is, it also seems a little absurd to think that Congress said, you can't do this, unless of course, you do it through the courts.

If you do it through the courts, you know, you can completely frustrate our handiwork.

So long as that requirement, you know, beware cigarettes may cause... cigarettes cause cancer, emphysema, and possibly death... so long as it's some judge who says that that has to be there, it's okay.

Could Congress possibly have meant that?

Mr. Edell: Yes, Justice Scalia.

I think we see evidence of it.

And I don't like to compare one act to another, but just the concept of the absurdity of the thought, we see evidence of it in the Smokeless Tobacco Act.

There the Congress said, this is the specific warning that should be put on packs of smokeless tobacco.

And yet it provided at the very same time, in light of all of the preemption decisions, a savings clause saying, it's okay, we say this is the warning, but you can continue to sue.

That's a specific example that I could give you.

Now, I guess, you know, in the end the burden is not on us to show that Congress intended that these matters were to continue.

It's the burden of the respondents to show with crystal clarity, I would suggest, that it was Congress' intent to do away with these tort actions.

I think that with respect to the tension issue, Congress was willing to accept the tension that these lawsuits might produce.

And again, when we talk about these lawsuits, we talk about, is it realistic to assume that it's going to change the behavior of this industry?

Is it realistic to assume a failure to warn claim will require them to change their warning label--

Unknown Speaker: Mr. Edell, certainly in some of the debates over so-called tort reform, one of the arguments used by people who are against capping damages and that sort of thing, is that these kind of suits are the best way to regulate an industry and to keep its products safe.

Mr. Edell: --There is no question that there are those who think that this... products liability is the way to affect behavior.

But the basic concept of products liability is premised upon compensation as opposed to anything else.

That the State of New Jersey could impose absolute liability, they can impose a tax upon cigarette manufacturers, use that tax to pay for the injuries that occur to smokers.

That would not be preempted.

Unknown Speaker: They are still not regulating?

Mr. Edell: No, they're not regulations.

They're not regulatory.

They may have some indirect effect, Chief Justice Rehnquist.

Unknown Speaker: And I'm not sure where you came down with punitive damages.

What about punitive damages?

Is that a harder case?

Mr. Edell: I don't think it's a harder case.

I think Congress was willing to stand by that also.

Just one more... I want to reserve the remainder of my time.

Just one other matter on the conflict issue.

The manufacturers, in order to make sure that their consumers are adequately warned, could probably... I mean, there are a myriad of ways of resolving that, but the most effective way is just to stop their intentional concerted effort to neutralize the Government action.

It's really quite a thought to think that Congress--

Unknown Speaker: Well, would you be satisfied with a result that said, if you could convince a judge or a jury that the companies are actually neutralizing or negating their warnings, that you can recover?

Mr. Edell: --As part of the lump, Judge?

Unknown Speaker: No, that's all you can recover.

Mr. Edell: I'll take whatever I can get, Justice.

[Laughter]

Unknown Speaker: Well, I know, but would you be satisfied?

But I take it you want to go much farther than that.

Mr. Edell: I do.

I do.

Yes, I do.

Unknown Speaker: So you would not be satisfied at all with just the failure to conform to their warnings.

Mr. Edell: I would be satisfied in part but not in whole.

Unknown Speaker: Yes, I thought so.

[Laughter]

Mr. Farr, we'll hear now from you.

Argument of H. Bartow Farr, III

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

I would like at the outset to briefly summarize why we think that the act preempts the claims at issue here.

First, it was the judgment of Congress reflected in the act that the Federal Government should make the ultimate decisions about what cigarette companies must or must not say.

That is that it, along with the Federal agencies, should set the standards of conduct that the companies were required to meet in this area.

To carry out this scheme, the States were preempted from setting their own standards of conduct, and it naturally follows that unless Congress says otherwise in the act, that Congress also means to preempt the States from enforcing their standards of conduct, whether they choose to do so by sanctions, like fines, or remedial provisions, like damages and injunctions.

Second, Congress did not mean to preempt just some State restrictions.

Although Congress clearly was concerned and wanted to preempt the ability of the States to require warnings in advertisements, it wanted to preempt any restrictions, like bans on advertising or partial bans on advertising that would upset the balance of interest, national interest, that Congress itself had struck in the act.

And that scope of preemption covers all the claims before this Court.

Now in discussing the question of preemption, I think it is useful to keep in mind the background against which Congress was legislating in this area.

As petitioner has noted, after the Surgeon General's report came out, there were a number of different proposals regarding restrictions that could be put on the marketing of cigarettes.

There were a number of different warnings that had been drafted and proposed, and there were proposals to require warnings on packages, to require warnings in advertisements, to ban advertising altogether as far as cigarettes were concerned, or less restrictive bans on advertising.

And what Congress recognized, correctly, was that this was a national problem and it needed a national solution.

And thus, that it was the Federal Government, Congress together with the agencies, that would have to ultimately set the requirements that the companies would have to meet.

Unknown Speaker: This sounds like an argument of field preemption.

Mr. Farr: Well, it is in a sense, Your Honor, it is that Congress would--

Unknown Speaker: Are you... I take it you're in a sense disagreeing with the court of appeals.

Mr. Farr: --We both agree and disagree with the court of appeals.

We think that--

Unknown Speaker: So you really aren't defending the court of appeals opinion.

Mr. Farr: --I certainly would defend the part of it in which it found preemption.

What I would say differently, Justice White, is that I do not think that the court of appeals, frankly, gave enough weight to the plain language of section 1334(b).

Unknown Speaker: In that regard, Mr. Farr, do you think it looked at the plain language of the '65 statute or the '69 statute?

Mr. Farr: Well, clearly, the courts were interpreting the '69 statute.

Unknown Speaker: Well, do you think the '69 statute changed the meaning of the '65 statute?

Mr. Farr: No, I don't.

Unknown Speaker: So you would be content to rest your case on the language of the '65 statute?

Mr. Farr: I would be content to rest my case on the '65 statute, but let me explain the difference between your question and my answer, if I might.

Unknown Speaker: That will take some doing.

[Laughter]

Mr. Farr: To start, the 1969 act, I think, clearly preempts by its very terms requirements and prohibitions.

The 1965 act, as far as 1334(b) is concerned, which is not the entire act, of course, but just that specific preemption provision, does not contain as broad language as the '69 act.

Our position, however, is the act as a whole--

Unknown Speaker: So it only relates to statements in advertising.

Mr. Farr: --Pardon me?

Unknown Speaker: It only relates to statements in advertising.

Mr. Farr: That's correct.

But our contention is that the act as a whole, when you take into account the purposes and policies of section 1331, was in fact intended even for that 4-year period to also cover what the 1969 act clearly covers.

And what happened in fact, and the legislative history supports this... in 1969, what was before Congress was essentially a debate about the scope of the 1965 act.

A number of Congressmen took the position that the 1965 act essentially covered only what your question would suggest, Justice Stevens, simply requirements about statements in advertising.

And that was the position that the court of appeals had taken here in D.C. in the Banzhaf case.

However, a number of other Congressmen said that is not what the 1965 statute did.

What it did was preempted all State regulation of advertising.

And what Congress did in 1969, therefore, and what the Senate report indicates, is that it clarified what the meaning of the 1965 act as a whole was intended to be.

So we believe that in fact the scope of both acts is the same.

Unknown Speaker: As far as your field preemption field argument is concerned, I take it that's what you're talking about.

Mr. Farr: We believe that the field is essentially the same.

I mean, to some extent any preemptive provision preempts some field, and that's of course what we're saying.

Unknown Speaker: But if there is a so-called field preemption that you're arguing for and that you have to get around to express conflict or frustration, doesn't the '69 act help you in that regard?

Mr. Farr: Well, I think the entire act should be read together.

This is why I think it is difficult to say we are relying only on one theory of preemption.

Because we think you can get there by a number of different routes.

To start with, as I said, we think the language of 1334(a) and (b) together convey a very broad scope of preemption.

They cover all requirements regarding warnings and labeling.

They require all... rather they cover all requirements and prohibitions with respect to advertising and promotion.

However, even if you didn't have that, what you do have all along is a clear intention by Congress to set the policy in the field.

Section 1331 talks about a comprehensive Federal program whereby the public will be warned.

And yet, and this is an important part, at the same time Congress was concerned that the national economy not be unduly disrupted and that the companies not be subjected to disuniform, in its word, diverse and disuniform regulations.

Unknown Speaker: Mr. Farr, do you think that your theory means that Congress intended to set a ceiling on the amount of information that consumers would receive from the manufacturers?

Mr. Farr: I don't think Congress intended to set a ceiling on the amount of information that consumers would receive.

I think what Congress intended to do was to set a regulatory structure, in other words, a structure in which the Federal Government would set the requirements for what the companies had to do.

Unknown Speaker: The lower limit of a requirement so that additional warnings are appropriate perhaps?

Mr. Farr: Well, what Congress did in the area of warnings, I believe, Justice O'Connor, is to say the companies have to provide this particular warning on their packaging.

Unknown Speaker: As a minimum?

Mr. Farr: That is the both the minimum and the maximum that they are required to put on their package.

In other words, as far as requirements go, it is a floor and a ceiling.

Congress did not leave open--

Unknown Speaker: Are they prohibited from adding additional warnings on their packages, in your view, by that language?

Mr. Farr: --Assuming they're not required to do so by State law, but are simply acting on their own?

Unknown Speaker: Well, we can get to both.

Mr. Farr: Well, I ask the question because I think there is a distinction.

Unknown Speaker: Without regard to State law, is the manufacturer under the terms of the act free to add additional warnings?

Mr. Farr: I do not read the act as specifically prohibiting a manufacturer from putting additional warnings on a package.

However--

Unknown Speaker: All right, then do you think that it's open to a State, through its tort law, to establish a duty to provide additional warnings?

Mr. Farr: --No, I do not.

That is the distinction that I am drawing.

I think the act quite clearly is talking about the power of the States to require additional warning.

Unknown Speaker: But there is a presumption, I guess, that Congress didn't intend to disrupt State tort law.

Mr. Farr: Well, I think any case in which you are examining preemption starts with that presumption.

But I think the next question is at what point is that presumption properly overcome.

The position we would take is that when Congress says in plain language in the act that States may not impose any other requirements within a particular field, whether it happens to be labeling or whether it is advertising and promotion, and indeed where the structure of the act makes clear that Congress itself is the one that wants to set the policies and set the requirements for good reason, that that itself overcomes any presumption against preemption.

Unknown Speaker: Well, in the Smokeless Tobacco Act, Congress was pretty clear in indicating that it thought State tort suits could continue.

Mr. Farr: But I think that, in fact, points out the very clear difference between this situation and the situation that you have in the Smokeless Act, and in fact, in Silkwood and Goodyear Atomic, which were mentioned earlier.

Our position is that when Congress preempts the ability of the States to set substantive standards, the natural conclusion is that Congress has also preempted any ability on the part of the States to enforce those standards, as I said before, by fines, by criminal penalties, by suits for damages, by injunctions.

The exception is where Congress makes clear in the act that despite its preemption of the standards, it is willing to tolerate some particular form of enforcement.

In other words, that it is willing to have its policies frustrated.

Unknown Speaker: I was going to say, isn't the sort of the limit of the obvious effectiveness of your argument, though, in the fact that when you speak of Congress establishing substantive standards, and as you did earlier, standards of conduct, that simply leaves open the question whether Congress is establishing substantive standards for advertising and promotion or substantive standards governing ultimate liability.

Clearly, they're establishing substantive standards for advertising and promotion.

Nobody would disagree.

I assume nobody would disagree with you there.

But it seems to me that the closest you've come so far to an argument that those substantive standards go beyond advertising and promotion to the questions of ultimate liability or ultimate conduct, if you will, in selling cigarettes is in the remark that you made earlier that in the debate over the scope of the original act, Congress clarified it in the 1969 amendments in favor of a broad rather than a narrow reading.

Is your best argument for that reading of Congress' clarification the language of the 1969 amendments or can you point to some kind of an explicit statement in legislative history in which somebody says, we're taking the broad view by using this new language?

Mr. Farr: Well, I think there is both, Justice Souter.

I think what Congress was dealing with, frankly throughout, from 1965 on, was the variety of different means of regulation, a variety of different efforts at both the State and the Federal level to impose restrictions on cigarette companies.

And I think what Congress did was to say quite explicitly, certainly in 1969 explicitly, that we do not want the States to be imposing requirements or prohibitions in this area.

That, supported by the legislative history, I think, makes clear that Congress does not want a State, for example, to require that a warning be put in an advertisement.

I think that's common ground among the parties here.

That, at the very minimum, is what Congress had in mind.

However, the problem is from there on there is really no sensible place to draw any line.

If a State can say all right, maybe we're preempted from requiring a warning, what we will do is we'll ban advertising altogether, or we'll ban advertising that doesn't carry a warning, or we will say that any advertising even if it does carry a warning, but shows attractive subjects, pleasant settings, is misleading because it suggests that smoking and health are compatible and we as a State have made the judgment that they are not.

In all of those situations, it seems to me, Congress is saying this is not something we want the States to be free to do.

If such action is necessary, we will take it.

And of course, in 1969... excuse me, just to finish the answer... in 1969, of course, Congress stepped in and did ban some advertising, with respect to broadcast advertising.

Unknown Speaker: Now your argument would also be consistent with... the argument that you have just made would be consistent with the text of the '69 amendment if that text had omitted the language with respect to the advertising or promotion of cigarettes, wouldn't it?

In other words, there would have been no need to put in that qualification with respect to advertising and promotion if they wanted to find the clearest way to occupy the field not merely of promotion, but of all regulation including promotion.

Mr. Farr: Oh, well, Justice Souter, I'm sorry.

I want to make clear what my position is and perhaps I have not made it clear.

We are not suggesting that Congress has occupied the entire field of smoking and health.

The field that we are talking about is essentially the requirements that can be imposed with regard to information about smoking and health, what I loosely called at the beginning what the companies must say, what the companies must not say.

That is what Congress was directly involved in.

Unknown Speaker: In other words, it was involved with the means, if you will, of providing these regulations.

Mr. Farr: I'm sorry, I'm not sure I understand the question.

Unknown Speaker: The means being the use of advertising and promotion to sell the cigarettes as opposed to regulating, let's say, through tort law which might be a source of regulation if there were no advertising whatsoever.

Mr. Farr: Well, it depends on what the aim of the particular law is.

Again, we're not suggesting that all tort suits are preempted.

We have said in our brief that tort suits based, for example, on fairly common strict liability theories like manufacturing defects or design defects are not preempted.

And we're not suggesting here that that is part of the field that Congress has occupied.

Unknown Speaker: Mr. Farr, what if a cigarette manufacturer voluntarily puts on the package, cigarettes may be bad for your health in some respects, but scientific evidence shows that they are good in other respects.

They fight bronchial asthma germs or something like that.

And there's no evidence for this, this is purely fanciful.

Mr. Farr: If the question is could a State regulate that or provide a tort suit based on that, our answer is no, that that is something that is corrected at the Federal level, and clearly would be corrected by the FTC.

They would be down on the cigarette companies in a minute for doing something like that.

But the Congress did not intend--

Unknown Speaker: But if they didn't... if the FTC chose not to move, there could be no tort remedy under general misrepresentation, fraud, or anything else.

Mr. Farr: --That's correct.

Unknown Speaker: The entire field of fraud, deceit?

Mr. Farr: Well, let me explain why that is true.

That what you have here is the difficulty of trying to decide where the lines begin and end.

Now I'm sure that if Congress was confident that it could say we will allow some State requirements, as long as those requirements only go to the most egregious examples of conduct, that Congress might well have considered that.

But that, I think, is simply an impractical way to look at the system.

That once you say to the States we are going to allow you to apply your standards in this field, whether it's to intentional misrepresentation to whatever an adequate warning would be, at that point, you essentially cannot have national standards.

You can't have both national standards and have 51 or more State standards.

Unknown Speaker: You know, there are two limitations in this text, and we were speaking with Mr. Edell mostly about the limitation requirement or prohibition, what constitutes a requirement of prohibition.

But it also says based on smoking and health.

And maybe what Congress meant by that is that the prohibition has to be one that is rather narrowly focused.

And a general fraud or deceit prohibition is not a prohibition based on smoking and health.

You're not allowed to lie.

We don't care whether you do it about the benefits of... the health benefits of cigarette or anything else, you're just not allowed to lie.

Mr. Farr: But if that were true, Justice Scalia, then the State could have a general standard that says you have to give adequate warnings about products that you sell in this State, and say, we're not saying that you... we're not applying a specific standard to cigarettes, we're just applying our general standard to your warning.

And it's not adequate.

Unknown Speaker: That's right.

That's exactly your opponent's argument.

Mr. Farr: Well, the problem is it doesn't make any sense.

That... there is no reason to think that Congress was essentially playing a guessing game here.

What Congress said was if you are indiscreet enough to pass a specific statute or apply, or to have a law that is specific with regard to cigarettes, and that requires a different warning, or that prohibits something in advertising, that's perfectly all right with us, even though it will have exactly the same effect on the national policies and all of that, we're willing to tolerate that.

But, if in fact... excuse me, we're not willing to tolerate that.

But if you have a general prohibition and then apply it specifically to cigarettes to say this warning is not good enough, this kind of advertising can't be allowed in our State, that's perfectly acceptable to us.

The effect of both of them is exactly the same.

Let me take an example.

If a State has a statute that says we do not permit deceptive or misleading advertising in this State, and we have an agency that is set up to administer this statute.

And it will review your advertising to determine whether it is permitted or not.

And that agency then determines that any advertising by a cigarette company is inherently misleading unless it just has the name of the cigarette.

There is no reason to think that so long as the agency is acting that way and not... or by a specific adjudication, that it would make any difference.

And yet one would be more general, one would be more specific, and the overall statute could be quite general.

But the effect, ultimately, is the same.

What the State is saying is, in our State, you have to meet these standards of conduct, and that is essentially the price that you have to pay to market in our State.

Unknown Speaker: Well, Mr. Farr, suppose the State just passes a law and says no one may bring into the State any product that's determined by a commission to be dangerous to the public health.

And it is decided that a whole list of products including cigarettes are dangerous to the public health.

And here a cigarette company brings in some cigarettes in violation, and it is... and they say well, this is... you're just wrong.

We're not, this product isn't dangerous to public health.

Well, they lose the case.

Do you think that's preemptive?

Mr. Farr: Not under the analysis that I am talking about.

Now, but I want to be clear.

Unknown Speaker: I know.

So that would just be an ordinary tort suit that says, look, you've brought in a dangerous product and you've hurt somebody, and you're going to have to pay.

We don't care what... we're not saying anything about advertising, warnings or anything else.

Here is just a dangerous instrumentality.

Mr. Farr: But this is the point--

Unknown Speaker: Was that kind of a suit preempted?

Mr. Farr: --If... let me give the answer that says it is not preempted under the analysis that I am talking about.

There is an argument to be made under this statute which is not part of the argument that we're making with respect to these claims, that Congress expected cigarettes could be sold lawfully in the State.

But that is a completely different analysis from the analysis that I'm making, starting with the preemption provisions in 1334(b).

What they relate to are labeling, advertising, and promotion.

Now the example that you've given, Justice White, simply does not fit within that field, so--

Unknown Speaker: But you think the particular litigation that's involved here is in the field of information.

Mr. Farr: --Absolutely.

Unknown Speaker: All of the causes of action.

Mr. Farr: This in fact goes back, I think, to the question that Justice Scalia asked about what do the words "based on" mean.

Every claim in this case quite clearly is based on some relationship between smoking and health.

You did not warn enough about smoking and health.

You misrepresented the relationship between smoking and health.

Unknown Speaker: It's a good argument.

And it's based on the essentially inane consequences that ensue if you say the States can do through court decisions what they couldn't do through regulations.

What you're saying is that's sort of an absurd way to read the statute.

Mr. Farr: It is not--

Unknown Speaker: Except you have, you know, the Smokeless Tobacco Act, which clearly produces exactly such an absurd result, doesn't it?

Mr. Farr: --Well, that's the point that I was making earlier.

Unknown Speaker: So maybe it's not such an absurd result.

[Laughter]

Mr. Farr: It is not... what I think would be more absurd, to borrow that word, would be to attribute that to Congress where Congress has given no other indication in the statute.

If Congress, as it did in Silkwood, says explicitly in the act, there will be tort suits... I mean, that's the necessary implication of the provision that was being construed in Silkwood, which set a limit on the damages for tort suits.

Or in Goodyear Atomic, Congress says explicitly, workman's compensation laws will apply exactly the same to Federal facilities within states as they do to any other facility.

The Smokeless Tobacco Act, again, you have an explicit provision.

So at that point it is entirely legitimate, it seems to me, for the Court to say Congress is willing to accept the tension between some regulation and the effort to set uniform national standards or to protect Federal facilities or whatever the Federal goal is but not--

Unknown Speaker: You still haven't quite got around to explaining why Congress would want to occupy the field and not ever have a remedy or provide a remedy for injury caused by a dangerous product.

Mr. Farr: --Justice White, let me... you see, I think there's a little bit of a misconception about the relationship between the remedies and the standards.

Unknown Speaker: There's a remedy before the FTC to correct misleading advertising and things like that.

But you're not going to recover any money.

Mr. Farr: But there's more than that.

Let me set out, if I can... excuse me.

Let me set out if I can what I think is the landscape as far as remedies are concerned.

What Congress has clearly prohibited are remedies based on State requirements.

That is what Congress, we say, has shut down.

State requirements within the field of labeling, advertising, and promotion, what the companies can and cannot say.

However, that doesn't exhaust the field, to begin with.

There are other types of suits that can be brought connected with smoking which are outside the field entirely, as I've indicated before.

So when the plaintiffs are saying there is not a remedy here, when they are saying, for example, there is not a remedy for failure to warn, what they're really saying is there is not a failure for not... there is not a remedy for not giving a greater warning than the warning that Congress required and said was the only warning that you could be required to give.

In the misrepresentation field, for example, to the extent that the claims are based, as they typically are, on standard product advertising, that again is specifically an area in which the Congress did not want the States to be able to set requirements.

So the fact that one would say you have engaged, in our view, in misleading advertising within our State because you have shown, as I say, attractive people in an ad, or an attractive setting, the fact that you cannot bring a claim for that and get a remedy any more than an agency could fine you for doing the same thing is because Congress did not intend the States to be able to do that.

Unknown Speaker: I suppose the fact perhaps is that in order to get a tort remedy such as this, you're going to get in... to impose liability, you're going to have to say something about the failure to warn or the misrepresentation, or something like that.

You just can't go into court and say this product is dangerous.

Mr. Farr: Not... one could do that, but the claims--

Unknown Speaker: I know, but he may not win.

Mr. Farr: --The claims before this Court are not those claims.

And that's what I want to emphasize.

The claims here are not claims in which somebody simply says the product is dangerous.

They are claims based on--

Unknown Speaker: What you're saying is that there is no need for a remedy unless there's a wrong.

And they've defined the scope of the wrong.

Mr. Farr: --That's correct.

Unknown Speaker: I suppose there is a remedy if your clients just sold cigarettes without the warning label on them.

Mr. Farr: That's correct.

That was the point.

Unknown Speaker: So there is a remedy for whatever Congress has set as a permissible... can be defined as a wrong.

Mr. Farr: That's absolutely correct.

The preemption provisions do not apply if you do not comply with the specific Federal requirement about the warning on the package.

Unknown Speaker: Mr. Farr, is there a remedy in your scheme for at least this... the cigarette company publishes the warning required by Federal law, but then has under it, the Surgeon General's report is full of baloney.

[Laughter]

It says that.

You know, this report is not worth the paper it's written on.

Mr. Farr: Justice Scalia, the short answer is no.

But the reason--

Unknown Speaker: They can do that?

Mr. Farr: --I'm sorry, there is no remedy.

Unknown Speaker: No remedy.

The FTC will take care of that.

Mr. Farr: The FTC will take care of it.

The difficulty... the point that I want to make here at the end is that when you were talking about the extreme hypothetical, the one, obviously, that causes anybody discomfort when they're thinking about the conduct, that is precisely the conduct that the FTC would be on instantly.

It could get temporary restraining orders against it, could stop before it even happened.

And Congress clearly understood that power.

It reaffirmed the power of the FTC, it urged the FTC to use it liberally.

Unknown Speaker: If it's truthful, if it just says, you know, not everyone agrees with the Surgeon General's report.

How can the FTC come down on that?

Mr. Farr: Well, if you're saying that--

Unknown Speaker: It just says, you know, many experts disagree with the Surgeon General's report.

Can that be on the cigarette under the Government warning?

Mr. Farr: --I think it would... I mean, I don't know whether that would ultimately be a deceptive act or not.

Unknown Speaker: But unless it's deceptive, the FTC wouldn't be able to do anything about it?

Mr. Farr: Well, if it is the kind of deception on which you could base a State tort claim, I am quite confident that the FTC would have jurisdiction to handle it.

Unknown Speaker: Thank you, Mr. Farr.

Mr. Edell, do you have rebuttal?

Rebuttal of Marc Z. Edell

Mr. Edell: Since we've spent a lot of time on the 1969 language of 1334(b), I just wish to point out one thing.

That if a jury was to say, cigarette manufacturer, you failed to adequately inform your consumers about the health hazards of cigarettes, what requirements or prohibitions would that impose on cigarette manufacturers in their advertising and promotion?

None.

Unknown Speaker: It would surely tell them they had to do something more than they'd done in the facts of the case.

Mr. Edell: That's correct.

That's correct, Justice Stevens.

Unknown Speaker: It would tell them that the warning proscribed by the Federal Government was not adequate.

Mr. Edell: But we're talking about this specific language, advertising and promotion.

That's the broader language that respondents seem to fall back on.

And in this specific language, a failure to warn claim or an inadequate warn claim--

Unknown Speaker: Well, how do you ever warn except through advertising and promotion and labeling?

Mr. Edell: --You do it through a variety of means.

I mean, you can take out an ad in the newspaper like--

Unknown Speaker: Well, that's part of advertising.

Mr. Edell: --Not an ad in terms of a product ad.

What you do is you say, instead of saying R.J. Reynolds, can we have an open debate on cigarette smoking and health, what you do is you say, you know what, the Surgeon General's right.

Cigarette smoking does cause cancer, heart disease.

It's the major cause of disease, preventable death in the United States, kills 400,000 Americans every year.

Maybe that's what's necessary when you look at--

Unknown Speaker: If that's what's necessary to avoid tort liability, it seems to me that that is imposing a requirement there, a prohibition, in the teeth of the statute.

Rebuttal of H. Bartow Farr, III

Mr. Farr: In terms of their product advertising, Justice Stevens?

Unknown Speaker: If you say their failure to do that, it would be a breach of duty that gives rise to damage liability.

Mr. Farr: I misspoke then.

What I meant to say is they could take that step in order to adequately inform.

Unknown Speaker: But then you're saying the failure to take that step can give rise to liability.

Mr. Farr: No, they can do it in a variety of other ways.

They could make sure that their consumers are adequately informed.

As I said before, they could stop their concerted effort to neutralize the effectiveness of the health warning.

They, through nonproduct promotion, nonproduct public relations that is unconstrained by the FTC.

Unknown Speaker: Mr. Edell, it doesn't seem to me satisfactory to say a requirement is not being imposed so long as you do not have to do any single thing, but you must do 1 of 10 things.

I still consider that a requirement, don't you?

It isn't enough to say, well, they wouldn't have to do it this way, they could do it a lot of other ways.

Mr. Farr: I think when you're talking about--

Unknown Speaker: To say you must do it 1 of 100 ways is still to impose a requirement, isn't it?

Mr. Farr: --I think it gives them the discretion if they want to take some remedial measures.

Requirement forces you to do it.

If you want to take some remedial measures, there are myriad ways of doing it other than a way that would conflict with the act.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Edell.

The case is submitted.

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Cipollone v. Liggett Group - Oral Reargument

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Steelworkers v. Rawson - Oral Argument

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Steelworkers v. Rawson

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Transcript:

Argument of George H. Cohen

Chief Justice Rehnquist: We'll hear argument next in Number 89-322, United Steelworkers of America v. Tharon Rawson.

Mr. Cohen?

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

In this case the United Steelworkers of America negotiated a collective bargaining provision with the Sunshine Mining Company giving the union the right to accompany a state inspector in his state mine inspection, and as well to accompany a company representative, the safety engineer, in periodic tours of the mine.

The steelworkers union thereafter exercised that right which was provided by the collective bargaining agreement.

The Supreme Court of Idaho ruled that solely by virtue of having exercised that right, the union assumed the affirmative duty under Idaho tort law to exercise due care in inspecting, and made it clear that what it meant by that was that the union had an obligation to detect any safety hazards that could have or should have been detected in the course of a reasonable inspection.

The issue presented in this Court is whether the Idaho state tort law is preempted by the Federal duty of fair representation which governs the union in the conduct of its functions in administering and enforcing a collective bargaining agreement.

We bring to this Court a case that has gone through summary judgment, extensive discovery and a spectrum of undisputed facts.

Insofar as the collective bargaining agreement is concerned, that agreement, as I stated, makes clear that the union has these two particular roles in accompanying the state mine and the company inspector.

The contract begins by referring to the fact that the company will continue to assume its responsibility to provide a safe and healthful work place.

The company then agrees to provide the union the limited role that I have just described.

The contract does not provide that the union has a right on its own to inspect the mine, and the contract does not provide that the union shall be entitled to correct any defects or deficiencies that might be noticed during the course of either of these types of inspections.

Indeed, the limited nature of the union's role is reflected in part by the fact that the union, under Federal law, did not have the right to even accompany a Federal inspector during the Federal inspections of the mine, and the company would not permit the union to do so.

Unknown Speaker: Well, Mr. Cohen, if the provisions of the collective bargaining agreement are clear, although they give the union very little authority, and perhaps the Supreme Court of Idaho has piled on a lot of responsibility commensurate with that authority, I don't know that that goes to the preemption question.

The preemption question, I thought, was whether the Court would have to interpret the collective bargaining agreement.

Mr. Cohen: Well, with two... there is two aspects of the preemption issue.

One would be the question of interpretation, but there is a more threshold proposition, Mr. Chief Justice.

Unknown Speaker: So you don't rely on the interpretation aspect?

Mr. Cohen: Well, parenthetically, as we have argued in our brief, there is no question but that before the question of whether or not the union assumed any duty, because before the union... unless and until the union assumes a duty, there can be no tort liability.

The question of whether or not there is any assumption of a duty would have to turn on an interpretation of the collective bargaining agreement.

That would go to the question of whether a tort was committed under state law.

We have a threshold proposition.

The threshold proposition--

Unknown Speaker: Well, but you... I still don't think you have answered my question.

Do you rely on that part of the preemption doctrine, as you describe it, which says you cannot as a state court interpret a collective bargaining agreement?

Mr. Cohen: --No.

The more precise formulation, Mr. Chief Justice, would be that when you are interpreting it you must apply Federal law, whether you are a state court or a Federal court.

Yes, we do rely on that in our supplemental position that under no circumstance could there ever have been a duty found to exist here on the union to inspect.

But the... but the basic premise and the focus of our position is that effort by the State of Idaho to impose a tort law obligation on the union, arising out of the, quote, Mr. Chief Justice... however the, anyone wants to frame the actual conduct, the union was engaged in that conduct exclusively because it was the collective bargaining agent.

It had obtained a provision in the collective bargaining agreement to permit it to do the accompanying, and it was actually exercising that right to accompany the inspector.

Here we were, then--

Unknown Speaker: Now, what... what of our cases supports this, what you are, is apparently your primary position?

Mr. Cohen: --Well, the case that supports our primary position is Vaca v. Sipes, for the basic proposition that insofar as the representational function of processing of grievance and administering the grievance arbitration proceeding is concerned, there is a Federal duty.

The Federal duty was designed to accommodate all the competing interests, carefully delimitated what that Federal duty would be, and that Federal duty occupies the field.

It is the exclusive duty, insofar as, and I think this is--

Unknown Speaker: Certainly Vaca doesn't say it is the exclusive duty, does it?

Mr. Cohen: --Yes it does.

Vaca says insofar as the union is administering the contract through the grievance arbitration proceeding, Federal law governs.

And the square holding of Vaca was the Missouri Supreme Court's attempt to apply Missouri law to impose a duty on the union different from the Federal duty of fair representation could not stand, and in fact was held not to be applicable.

Unknown Speaker: Suppose, Mr. Cohen, the contract here expressly put a... placed a duty on the union, namely that the union did promise to inspect the mine.

You would take the same position that, that although there... I suppose there would be a 301 action against the union?

But does it also owe a duty of fair representation to carry out that duty correctly?

Mr. Cohen: I think I would respond as follows, Justice White.

Theoretically, as this Court in fact recognized in I.B.E.W. v. Hechler, theoretically the union could assume by contract duties in excess of what the traditional kind of representational service is.

That is at least theoretically possible.

I think the Court would understand and appreciate that is a very unlikely circumstance, given the reality of collective bargaining, the union acting for and on behalf of people in that unit, exacting promises and commitments from the employer.

It would be a very unusual circumstance to believe that in that process of collective bargaining, the consequence would be that the union would assume a duty which was then enforceable by members of the bargaining unit.

However, even were that to take place, we would have to look at that collective bargaining agreement, interpret it to see is this that very unusual circumstance where employer permitted a union to assume that kind of authority, and in fact, the union actually assumed it.

Unknown Speaker: Well, what about, what about my question now?

Mr. Cohen: Your question, as I understood it, was in that--

Unknown Speaker: Suppose the union undertakes, in the collective bargaining agreement, to inspect the mine?

Mr. Cohen: --That would not, obviously, be this case.

Unknown Speaker: Because that is what this case is.

The state court, as I understand it, construed this contract as the union undertaking a duty to inspect.

Mr. Cohen: The state--

Unknown Speaker: So, let's assume that is right.

Then what about... what about preemption?

Mr. Cohen: --All right, now--

Unknown Speaker: What would be your primary position then?

Mr. Cohen: --Our position would basically be this Court has not addressed that problem.

But it would be... it would be... there are circumstances and factors and considerations at work in that kind of a situation that are not at work here.

Because let me say--

Unknown Speaker: Well, why not?

Why not?

Didn't the--

Mr. Cohen: --Because the argument would be, Mr., Justice White, the argument would be, in that kind of a situation the union arguably is displacing the managerial function of inspecting, and the union then would be assuming what would traditionally be an employer role.

Unknown Speaker: --Do you agree that the Idaho Supreme Court interpreted the collective bargaining contract to put a duty on the union--

Mr. Cohen: Absolutely.

Unknown Speaker: --to inspect?

Mr. Cohen: Absolutely.

Unknown Speaker: Well--

Mr. Cohen: But we... but in fact--

Unknown Speaker: --Now, suppose we accept that?

Mr. Cohen: --But, in fact--

Unknown Speaker: Suppose we accept that?

You need to wait until Justice White finishes with his question before you begin your response.

Suppose... suppose... suppose he... we accept that construction of the contract?

Then what is your primary position?

Mr. Cohen: --Accepting the construction of the contract as the findings were made here was that all the union did was accompany.

If we accept it... there is no disputed fact as to what the union's conduct was, Justice White.

It was accompany.

In fact, the state--

Unknown Speaker: You're just not answering my question.

Mr. Cohen: --the state court characterized it as doing more.

Unknown Speaker: Well, so, if we, suppose we agree with them.

Mr. Cohen: If we did more, if we did more our position would be as long as the union was basically performing a representational function, and what they were trying to do was influencing the way the employer carried out its safety and health responsibility, that would continue to be preempted.

We do recognize, however--

Unknown Speaker: It would be preempted because of the duty of fair representation?

Mr. Cohen: --Yes, yes.

Unknown Speaker: Not because it's... it would be a 301 action?

Mr. Cohen: It would... it would be preempted because it was essentially a duty of fair representation case.

But I am not denying that there is a possibility that a provision could be agreed to that somehow would create some kind of an additional 301 claim that might be enforceable.

Unknown Speaker: Well, that is your fallback position, isn't it?

Mr. Cohen: Well, yes.

It's a fallback in this sense.

This Court, earlier this term in the Breininger case, where what was involved was a hiring hall, and the union said after all what we are really doing is taking over a managerial function, this Court said well, the reality is you are administering a safety... a provision of a collective bargaining agreement.

And insofar as you are doing that, the Federal duty of fair representation governs your conduct, and you must conduct yourself consistent with that Federal duty.

Now, the... as I said, the Vaca case directly addressed the question where there was one particular type of representational activity involved, one particular activity, namely, the grievance process.

The, our analysis of the Federal law is that that same approach is equally applicable, as long as you have an exclusive bargaining agent functioning, administering or enforcing a provision of a collective bargaining agreement.

That is the nature of the conduct that was being sought to be regulated here.

No matter how you want to characterize the plaintiffs' theory, the complaint alleged at the beginning, the union undertook to act as an accident prevention representative and to enforce the safety and health articles of the collective bargaining agreement, and the union performed that service negligently.

That was the focus in which this case proceeded.

It has continued to proceed as the basic thrust of the plaintiffs.

Our position is that insofar as that aspect of the union's conduct is concerned, the union has a duty.

Now, when this Court and the basic national labor policy reviewed the question of how do you accommodate the interests of individual employees, their bargaining representative, and the company, when you have that kind of conduct taking place.

And the line that was drawn, the effort to accommodate all those competing interests, which comes right out of the core of the National Labor Relations Act when a union is conducting its activities, was to say on the one hand the union is going to be the exclusive representative, the representative of everyone in that unit.

But with that extraordinary grant of power we have to accommodate the interests of individual employees against such abuses.

And the balance that was struck was designed to assure on the one hand employees' rights would be protected, but on the other hand the union would be left in a position that it could be a viable collective bargaining representative and serve the interests of everyone in the bargaining unit.

And out of that combination of interests and concerns came the Federal duty of fair representation, a duty which says the union must act fairly to all the people in the unit, that it must exercise its discretion in complete good faith and with honesty of purpose and that it cannot engage in any hostility or discrimination against anyone or treat anyone arbitrarily.

Unknown Speaker: Excuse me, Mr. Cohen.

Mr. Cohen: Yes.

Unknown Speaker: Is it your position, then, that there is a Federal common law of torts against the union for any... any negligence in its assumed exercise of bargaining activities?

Mr. Cohen: Justice Scalia, I wouldn't say it is a Federal common... Federal common law of torts.

We would say that by virtue of having this authority and responsibility, that principle, that Federal law principle governs the manner in which the union conducts itself, incidentally a principle in which negligence has no role.

Unknown Speaker: You, you would say that this Court, that this suit could have been brought in Federal court, then, on a Federal theory that the union, through its actions, assumed the obligation to inspect, and its... its breach of that assumption gives rise to a Federal cause of action?

Mr. Cohen: We would say that there is a Federal claim for the breach of the duty of fair representation.

That there always is when a union is conducting itself and administering and enforcing a provision of a collective bargaining agreement.

Unknown Speaker: No, no, no.

This hasn't... this is not... it has nothing to do with a collective... let's assume there was nothing in the collective bargaining agreement at all about accompanying mine inspectors or anything else.

But, in point of fact, the union got into the habit of going around with the, with the mine inspectors, and indeed... just what the state court said here.

Mr. Cohen: I am sure you can appreciate, Justice Scalia, that the union, I know of no instance where a company would have allowed a union--

Unknown Speaker: Well, I know that, but this... it happens--

Mr. Cohen: --to engage in that.

But were that to be the case, the union still is functioning as the exclusive bargaining representative.

Unknown Speaker: --And... and there would be a Federal cause of action.

Mr. Cohen: And the Federal... it would be a Federal cause of action, but that would be the only cause of action for that kind of conduct, because what the union is trying to do in that circumstance is to influence the manner in which the employer is providing, is satisfying its relationship to that union.

Now, in most cases if there was a collective bargaining agreement, obviously that would be the union's purpose, to try to monitor the way the employer was living up to its commitments, and certainly to be in a position to try to influence the employer in the manner in which the employer was carrying out its responsibilities.

Unknown Speaker: Mr. Cohen, take Justice Scalia's hypothetical a step further, if you will.

Supposing that the union officers... you don't need to look at the clock.

Suppose that the union officers were on their way to inspect the mine in a union-owned car ran over someone negligently.

Now, would there be any question what the plaintiff in that case, the injured person, could sue in the Idaho state courts?

Mr. Cohen: Absolutely could sue via common law action.

It could, the duty of fair representation would play no role in that kind of a circumstance.

And precisely because the duty of fair representation would place no role, we aren't in a unique circumstance--

Unknown Speaker: So, so if we were to conclude that the duty of fair representation really played no part in Justice Scalia's hypothetical, then that would mean that that... this... that action too would be... could be brought in state court?

Mr. Cohen: --Yes, but I want to--

Unknown Speaker: Your position is contrary, I realize that.

Mr. Cohen: --Our position is you have to look to the nature of the conduct in question.

Driving an automobile, how the local union preserves its personal property.

Those are areas where we have acknowledged in our brief... indeed I don't think it's acknowledgement... are completely outside the parameters of the operation of the Federal duty of fair representation.

All common law obligations that any other citizen would owe are owed by the union.

But in a sense, Chief Justice, that highlights the contrast from the actual situation presented here, because here we're in that very unique area where the union is functioning as the exclusive agent, as the administrator of the safety and health provision, and as the representative of everyone in that mine, designed to influence the way in which the employer is conducting its--

Unknown Speaker: Suppose that, take it a step further.

The contract says explicitly the union shall have no duty to inspect the mine.

This is solely the duty of the employer.

The union then, on its own, tells the employees we have inspected mine shaft number 12 and find it safe.

And they are negligent in that and people are injured.

Cause of action there against the union?

Mr. Cohen: --Well, the question would be whether or not there was a misrepresentation by the union, and whether it would be reasonable for anyone to rely on that circumstance.

Unknown Speaker: You know what the Idaho tort law is.

The Idaho tort law is there, in the situation I put, that there be a cause of action for negligence.

Mr. Cohen: I... I still believe--

Unknown Speaker: Is it somehow displaced by Federal law?

Mr. Cohen: --In that situation, I think, once again, we are in the area where you have at least, the argument would at least be you're predominantly involved in the union's conducting its exclusive representative status and providing services to individuals.

I know that the line can move further along depending on a spectrum of facts and circumstances.

Certainly, where a contract's involved we don't have that problem.

But I think we would at least have the basis for maintaining the argument that there still is the functioning of the union in its traditional representative status that is at work there.

I recognize there could be competing considerations in that regard, but there are no competing considerations here, as we say, because there is no dispute that... the only reason the union was functioning here was because it had obtained a provision in the agreement which gave it the limited right that it had to accompany the inspector.

Unknown Speaker: In my situation, my hypothetical, I want you to stipulate that the union was negligent in what they did.

Would there be a Federal cause of action?

Mr. Cohen: Well, insofar as a Federal cause of action is concerned, mere negligence or bad judgment does not on the merits make out a claim for a breach of the duty of fair representation.

There is a good reason for that, and the reason is the policy concern that you want to give the union a wide range of reasonableness when it is conducting its activities and having to make the judgment that it has to make as the bargaining representative.

Should we inspect.

How do we inspect.

What kind of collective bargaining protections are we going to try to achieve in the contract.

Unknown Speaker: This isn't the duty of fair representation, though.

It's a tort arising out of an activity that it was performing in the conduct of its duty of fair... we're not saying that the union has violated its contractual obligations at all.

We're... your thesis is if a tort arises out of its either express contractual performance, or out of any other aspect of its trying to make the employer accountable for the relations with the workers, that tort is excluded from state law.

It's a separate tort.

It's not the duty of fair representation.

Now, does that tort exist under Federal law or not?

Mr. Cohen: I don't believe it does.

Unknown Speaker: There is just no such tort.

All you have is--

Mr. Cohen: I am certainly not aware of one that does this, but we are still back to our fundamental proposition.

No matter how the court tried to characterize the duty it was trying to place on the union, it's the act or conduct sought to be regulated that is the key consideration.

And whether it is a tort under one state law or another, the bottom line is, we believe, that insofar as the union is conducting itself as the exclusive bargaining representative, doing the services to protect people in the unit, then there is no room for state law to apply.

Unknown Speaker: --So in effect you are arguing for a Federal immunity?

Mr. Cohen: Not a Federal immunity--

Unknown Speaker: You say that there is only duty of fair representation, and that it doesn't include that, and it's not state law--

Mr. Cohen: --Justice Kennedy, the... if the Federal duty of fair representation applies, then there is a legal standard--

Unknown Speaker: --But you're telling us that it doesn't.

Mr. Cohen: --In the case that we are concerned with, we have a Federal duty of fair representation that is at work, is the exclusive duty and the governing duty as to our conduct, and the Plaintiffs have abstained proceeding on that basis.

They didn't plead any breach of the Federal duty.

They didn't, they disclaimed ever relying on it.

And after all these years of summary judgment proceeding, it is absolutely clear that that was good judgment because they could not make out a breach of the duty of fair representation.

Now, if the Idaho state law decision were to stand, in essence what that court has said is merely by accompanying the inspector they determined that we assumed an affirmative duty to inspect.

And here is where the union would be left in those circumstances.

Either we would have to in fact achieve the right to inspect, to conduct our own inspections, a right I might add that there is nothing to suggest we would ever achieve from this employer or perhaps any other employer, given the state of this record that they wouldn't even allow us to accompany the Federal inspector.

So we would either have to do that so that we could have in fact a meaningful inspection right, or we would have to choose not to participate in circumstances where what the union did was make the following judgment.

We are going to have rank and file employees accompany the inspector.

We are going to use the union's representative, the rank and file employee status, as a means of communication to allow the miners who are actually on the job, who are facing possible hazards, to notify, to communicate with the union so in fact those concerns could be passed on to the inspector or the company.

That was the judgment that the union made as to how it was going to conduct its activities.

And to set aside that, to allow the state law to function in these circumstances, would in those circumstances in essence undermine the union's right to have made this judgment, a right which is at the heart of the duty of fair representation and the accommodations that have been made when you have the three parties at work, namely the individual employee, the union and the company.

I think I will reserve my remaining time, Chief Justice.

Unknown Speaker: Very well, Mr. Cohen.

Mr. Howard, we'll hear now from you.

Argument of Kenneth B. Howard

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

This case involves two issues that have been raised by the Petitioner in this case.

One is whether or not the Idaho common law is preempted by 301 in this particular instance, and the second is whether or not there is a duty of fair representation, and whether that is the only duty, the sole duty that the union owes under this kind of a circumstance.

Unknown Speaker: Well, didn't... didn't the Idaho Supreme Court find a duty on the union to inspect?

Mr. Howard: Yes... yes--

Unknown Speaker: And didn't they base that on the collective bargaining contract, their interpretation of the collective bargaining contract?

Mr. Howard: --Yes and no.

Unknown Speaker: How do you say it's no?

Mr. Howard: The supreme court in its... it had three opinions on this particular case.

If you read all of the opinions there is discussion in those opinions about the collective bargaining agreement.

There is no question about that.

But after the case was remanded to the Idaho Supreme Court and it reviewed its language in the context of the Hechler decision by this Court, the Idaho Supreme Court clearly said we are not looking to and don't care about what the collective bargaining agreement says.

That is not important in establishing whether or not there is a state-based cause of action established--

Unknown Speaker: Well, I know, where did they find... purport to find the duty to inspect?

Mr. Howard: --The duty to--

Unknown Speaker: They didn't say that just any collective bargaining agent for miners has a duty to inspect a mine.

Mr. Howard: --No, clearly not.

Unknown Speaker: Well, then, under state law.

So where did they get it?

Mr. Howard: The duty to inspect comes from the undertaking itself.

It comes from--

Unknown Speaker: What undertaking?

Mr. Howard: --The undertaking of going down and inspecting.

You look at the conduct, at the actions involved in the inspecting.

Had... had the union, under Idaho law, had the union promised in the collective bargaining agreement, for instance, to inspect, and never inspected, there would be no cause of action under Idaho law.

Idaho law does not recognize a breach of a contract by failure to do something that you promised to do.

There is no such tort--

Unknown Speaker: As I understand it they didn't find a duty to inspect.

They found a duty to inspect carefully.

That is to say, if you do inspect you have a duty to inspect carefully.

But they didn't find a duty to inspect, did they?

Mr. Howard: --Justice Scalia, I believe that they did find a duty to inspect based upon the facts in the record at this point in time.

Obviously, here, we have not had a trial on the merits yet.

We are addressing this case, even after these 18 years, based upon the status of the record.

Unknown Speaker: Then I really don't understand the case.

I thought what the Idaho court was saying was that if you choose to inspect, though you have no duty to, you have to do it carefully.

Which is, you know, sort of old tort law.

But you are saying that that is not what they said.

Mr. Howard: No.

Unknown Speaker: They said there was a duty to inspect.

Mr. Howard: I believe that they said if we can prove, if the plaintiffs can prove that there was in fact an inspection taking place, that is our obligation, then there is a duty to do it carefully.

Yes, there is a duty to do it with reasonable care.

That is part of our burden of proof though, is to show the undertaking itself.

Unknown Speaker: So... so... well, all right.

You have given me two answers.

Which one is it, the last one?

Mr. Howard: I am sorry, I don't understand.

Unknown Speaker: They did not find a duty to inspect.

They simply found that if you inspect you have to do it carefully.

Is that an accurate description of what you think they said?

Mr. Howard: That's correct.

I believe that that is correct.

Unknown Speaker: May I ask then, if... if instead of a union we had here a trade association which was interested in improving mine safety throughout its... all the member companies, and they sent a committee along, to go along with the routine inspection by the employer.

They had three people just go along, they want to see what the... how they are doing, and they are sloppy.

They don't find anything that is in plain sight and they don't report anything.

Would they assume a liability under Idaho law to the people who were later injured by an explosion?

Mr. Howard: Justice Stevens, the Idaho law relating to this subject requires certain foundational elements be proved before you can determine whether somebody has established the necessary undertaking.

It has to be an undertaking under either 323 or 324--

Unknown Speaker: Well, I am asking... I think Justice Scalia and I are both trying to find out what the source of the duty is.

And I thought your response was the source of the duty is the fact that they did in fact inspect.

Mr. Howard: --That is correct.

Unknown Speaker: But is that... if that is enough, then in my trade association example they would have the same duty.

Mr. Howard: If the inspection rises to the level necessary to meet the elements of the cause, the state recognized cause of action, yes.

Unknown Speaker: But what, what elements are there?

They are sloppy.

I mean, in my hypothesis they have the proof, they have got the consent of the company to go along on whatever the periodic inspection is, and they see a lot of stuff that somebody ought to recognize as being very dangerous, but they don't tell anybody.

They figure we're going to write notes about it, and in the future when we write our report we'll say these are dangerous practices, but we don't feel we have any responsibility other than to find out what we can during the course of inspection.

Does the very fact that they are making an inspection impose a duty to do anything with the knowledge they gain thereby?

Mr. Howard: To the extent that we have the words of the Idaho Supreme Court, the answer to your question is yes.

The elements that were asserted at the time that, and were inferentially but not specifically adopted by the Idaho Supreme Court, was that the elements that are contained in the Restatement of Torts 324A.

Unknown Speaker: I take it that includes some reliance on the part of the injured party?

Mr. Howard: Some reliance on behalf of either the injured party or, if it is 324... or excuse me, 324A, it can be the undertaking that is, an undertaking taken on behalf of someone else for the protection of a third party.

There you can have the reliance of either the third party or the person who you undertook the reliance for.

Unknown Speaker: Well, how can you proceed in the tort action in Idaho without establishing or relying upon the collective bargaining agreement provision regarding the union participation in the inspection?

Mr. Howard: Justice O'Connor--

Unknown Speaker: Won't that have to be part of your cause of action?

And I assume it will be part of the defense as well, to try to show the reasonableness of any reliance and the extent of any duty.

Mr. Howard: --The duty recognized by the Idaho Supreme Court does not rely at all upon the collective bargaining agreement.

Had the collective bargaining agreement laid down certain guidelines--

Unknown Speaker: But you say it did rely on a restatement view of this type of tort action.

Mr. Howard: --That is correct.

It... but--

Unknown Speaker: So, ultimately there is going to have to be some kind of duty established.

Otherwise, as Justice Stevens suggests, any volunteer going along on an inspection, a newspaper reporter, anybody, would become automatically liable.

And you surely don't take that position.

Mr. Howard: --Do not... we do not take that position, Justice O'Connor.

Unknown Speaker: So you have to rely on the nature of the duty created under the collective bargaining agreement, don't you?

Mr. Howard: Not under the collective bargaining agreement.

By an examination of the conduct itself.

If, for instance, we... we were examining the conduct of the union in this particular case with regard to an inspection, and there was never an inspection with regard to a certain area of the mine.

They never walked into it but they did inspect a different area of the mine, but the collective bargaining agreement said you should inspect the whole mine.

We could not rely upon the collective bargaining agreement under Idaho law.

Also, with regard--

Unknown Speaker: Well, I take it under Justice O'Connor's hypothetical, if you have some... and Justice Stevens', if you have some independent volunteer that goes down there and makes an inspection, that person is liable (a) if it is negligently done and (b) if the injured party reasonably relies on it.

Isn't that the theory of the Idaho court, or is it?

Mr. Howard: --Those are two of the elements involved.

The elements also involved... it has to be an undertaking of services for the protection of another.

That is why it is relevant in this case, particularly with regard to safety.

The Restatement of Torts is not just talk about any kind of undertaking, it talks about the undertaking of services for the protection of another, and it has to then either increase the risk of harm or it has to call for some reliance on the part of the parties involved.

Unknown Speaker: You mean... you don't mean undertaking in the sense of a promise.

It's just, you... just by conduct you act in a way for the purpose of protecting somebody.

Mr. Howard: That is correct, Justice White.

It is the conduct itself which is the focus of the examination under the Idaho law in this case.

Unknown Speaker: It is crucial to the Idaho law that it be for the benefit of another, right?

I mean, if... if the people who did inspecting were insurance underwriters, and the only reason they are looking for it is to see whether it is worth taking out a policy on this mine, they would not acquire any obligation to the miners by that inspection, I assume.

Right?

Mr. Howard: Justice Scalia, yes, absent some showing that they undertook for that--

Unknown Speaker: For the miners.

Mr. Howard: --Right.

Unknown Speaker: So the only way you really get this union is because the union did it for the workers, and doesn't that really get you into the collective bargaining agreement?

The only reason you know that these people are not like insurance underwriters is because they are the bargaining representatives of these people.

Doesn't the whole tort ultimately rest upon their bargaining representative capacity?

Mr. Howard: Justice Scalia, I don't believe that it does.

What the common law of Idaho does is supply that same kind of an obligation to anyone.

It isn't just a union, you don't just have to go back to the union undertaking the services for the protection of another on behalf of the employer.

If the union nonetheless has that obligation or takes on that obligation under its collective bargaining agreement, and has an independent duty, a parallel duty, if you will, under the state law, then the state law does provide this obligation.

The state law doesn't arise, however, unless the union actively engages in the conduct itself, and the examination of the conduct yields the duty.

Unknown Speaker: The conduct for the benefit of the other.

The thing is, it seems to me you don't quite reach your goal unless you prove that the unit did it... did it for the benefit of the employees.

And the only way you prove that is to show the jury that this is their union.

Of course it is doing it for their benefit.

It is not an insurance underwriter.

And that gets you into the collective bargaining agreement, it seems to me.

It gets you into the relationship of the union as the collective bargaining representative of the employees.

Mr. Howard: I don't believe, Justice Scalia, that the Idaho law or the Restatement of Torts requires that it be for the benefit necessarily of the union members.

The elements are that the services are services to another, and they are undertaken... the services that are owed by a third person for the protection of a third person.

Now, the benefit may, may in fact flow to the employer in this case, who is having part of its obligation as an employer undertaken by the union.

The union may view it, and even the union members may view it in fact as a partial benefit to them.

But in fact the employer may be receiving the benefit, so I am not sure an analysis strictly based on benefit is consistent with the restatement position.

We look at whether or not the services are undertaken for the benefit of another, for the protection of another, and whether or not those services are owed by a third person.

Unknown Speaker: May I just ask one other question?

Is there any place in your pleading, other than paragraph 13 of the complaint, where you set forth your concept of what the state law cause of action is?

Mr. Howard: Within the pleading itself, meaning the--

Unknown Speaker: Yes.

Mr. Howard: --complaint, not the interrogatories and--

Unknown Speaker: Yes.

Mr. Howard: --No, there is not.

That is the extent of the pleadings that have been filed in this case, I think are the ones that are in the appendix--

Unknown Speaker: And they were written at a time when you apparently did rely on the collective bargaining agreement as creating some of the duty.

Mr. Howard: --I think--

Unknown Speaker: At least they appear to be, that they undertook--

Mr. Howard: --I think, Justice Stevens, that they were written at a time when the basic notice pleadings were the foundational view that we were taking in this particular case.

We had established... we had pled that there was a duty that arose under state law--

Unknown Speaker: --The failure is you... they failed to require fire drills, and they failed to require personal protective equipment.

That sort of thing.

Failed to... I take it those would be failures in its bargaining capacity to get the company to do those things, the way you described them there.

Mr. Howard: --No, there were failures in terms of the conduct of what was done and what was done negligently with regard to this particular undertaking.

Under the Idaho law, if we cannot prove that there was in fact conduct which was undertaken and done negligently, we lose this case on a factual basis.

We do not carry our burden of proof.

Unknown Speaker: I still... it's still hard for me to understand... somehow or other before you can find a tort you have got to find what the duty was that was assumed, just exactly what its dimensions were that you alleged were... I am still... and the Idaho Supreme Court really is not very helpful.

It says they, they assumed a duty by engaging in this conduct.

But their description would cover my hypothetical case, but you don't seem to go that far.

My... of trade association or just some volunteer making an inspection.

What... what is your... maybe you could just state it for me.

What do you think that the union's duty was?

Mr. Howard: In this particular case?

Unknown Speaker: And how it arose.

Mr. Howard: The union, by actually engaging in the inspections, by going underground and by factually addressing issues in an actual capacity--

Unknown Speaker: What do you mean by an actual capacity?

Mr. Howard: --Going underground, making the inspections--

Unknown Speaker: Right.

Mr. Howard: --for the purposes of an inspection.

And with regard, in this particular case, to inspections that were owed in part by the employer.

I don't think there is any question about the fact that the employer owes a fundamental duty to provide a safe place for its... for its workers.

In this particular case, and part of our burden of proof is, at the time of trial, to show that this undertaking was one that was owed by another, owed by the employer.

So the duty to provide a reasonably safe place to work has, as part and parcel of it, a duty to inspect and to examine the premises, and to determine what unsafe conditions may exist and what needs to corrected, and what the corrective process should be.

To the extent that the union actually engaged in that conduct, that is the extent of the duty that I think that the Idaho Supreme Court has established that the union owes in this case--

Unknown Speaker: But if their conduct measures their duty, they obviously did what the conduct shows.

You are in fact saying they failed to do something more.

Mr. Howard: --No, what I am saying, Justice Stevens, is that once they engage in that duty, then they have to do it in a reasonably prudent fashion.

They have to exercise due care.

The due care becomes the standard with which they discharge that duty.

Unknown Speaker: Well, say they... they look at a lot of things and they acquire some information.

Now what... don't you have to say they have some duty to report what they found to someone?

Or what?

I... I'm still not... I mean, they have looked at it, they have engaged in the conduct.

And then you are saying they've got a duty to do something more.

Mr. Howard: They have a duty to do something with that information, yes, to act--

Unknown Speaker: And where is... what is the source of that duty?

Mr. Howard: --The duty just, again, is to act with regard to reasonable care.

Now, what reasonable care is under the circumstances of this particular case is what did they do and was it reasonable.

They could report this particular deficiency, whatever it may be, or corrective process, to management.

If manage... if they had no obligation more than that, and that... and they did not carry out that reporting aspect of it, and did not act with due care with regard to that reporting--

Unknown Speaker: Well, but if they're... they're being accompanied by management personnel, and they both look at the same thing, are you in effect saying that they saw something that management didn't see, and they had to tell management about what they saw?

Is that what you... I mean, I don't see how you can talk about a duty to report to management when it is a joint inspection.

Mr. Howard: --But there may be a number of things that you see underground, maybe jointly, maybe not, but the obligation then is to carry out some kind of an activity to bring those deficiencies to the attention of the individual who has the ability to correct them.

That may be by way of discussion.

That may be by way of reporting through a committee or reporting directly to some supervisor about the deficiency.

But that is the due care required in this particular case is that to the extent that they engaged in that conduct, they must do it with due care.

They have indicated they don't have that duty of due care at all.

All they have is a duty of fair representation, and that fair representation duty does not extend to due care.

It extends only to the extent that they--

Unknown Speaker: Well, I think they, I think they agree that if they promise to inspect they have a contractual duty to inspect.

Mr. Howard: --Justice White, I think that... at least my reading of the union's position is that to the extent that they undertook a duty to inspect, which they deny... specifically they deny that they inspected in this case.

Unknown Speaker: How do you know what they undertook to do, in the way you use undertake?

How do you know what they did underground?

Mr. Howard: We have to, we have to get... glean that information from the factual circumstance of the case.

That is to call witnesses and to look at examination of records to find out what they did.

Unknown Speaker: Don't you think the union... is it fair to say that the union undertook, or what it did underground was what it bargained the employer out of letting them do?

What did they actually... what did the contract actually entitle the union to do underground?

Just to accompany the Federal inspectors?

I mean the... what did they bargain for and get in the collective bargaining contract?

Mr. Howard: The position which the union has taken, and I, which I concur in, quite frankly, that the collective bargaining gave them by way of rights is several things.

To attend certain visits and inspections by the state inspector but not by the Federal inspector.

Unknown Speaker: Well, just attend.

What were they supposed to do?

They just went with them?

Mr. Howard: That's all, that's all they are saying they had to do.

They had no duty to inspect.

Well, what do you think they--

--I believe that they actually undertook an inspection.

I believe that the proofs in this case show that they actually inspected and reported deficiencies, and they made recommendations, and that they used the occasion of those inspections in order to determine dangerous conditions underground and try and achieve some corrective process, which was outside the collective bargaining agreement.

It was under the state law of Idaho.

It had nothing to do with their powers under the collective bargaining agreement.

We don't examine the collective bargaining agreement at all to find out what they could have done or what they should have done.

What we examine is their actions and find out what they did do, and did they in fact carry that out in a reasonable fashion.

And the answer in that case is... in this particular case is no.

Under the collective bargaining agreement they had set up a joint safety committee consisting of union as well as management individuals.

And they would, after these inspections, go back and visit during these safety meetings for the purpose of exchanging information and making recommendations for corrective action.

To the extent that they engaged in that activity, regardless of what the union provided, or, excuse me, regardless of what the collective bargaining agreement provided, to the extent that they engaged in the activity, the reporting those deficiencies, they had a duty to do it in a reasonable fashion.

And that is all that the Idaho law says.

And there is no comparable Federal law with regard to enforcing that kind of a remedy.

The union has taken the position here that its only duty is that of fair representation, which does not... never raises to the level of due care.

It simply stops at having a duty not to exercise discriminatory conduct or act in an arbitrary fashion.

In this particular case it's odd that the union should say that it has only a duty of fair representation because, first, in order to have a duty of fair representation I would think that they would have to be working within the confines of the collective bargaining agreement.

Our position is that they were not.

They were working within the confines of duty... duties that were actually undertaken underground.

And therefore their duty is one of due care.

And that can't be described by the duty of fair representation, which only reflects upon their traditional role as a collective bargaining agent, as an agent or an entity for the purposes of achieving grievances.

Unknown Speaker: xxx a union is going to be ill advised ever to bargain the employer out of the privilege of attending an inspection.

Mr. Howard: Well, Justice White, I don't think they would be ill advised at all.

I think the reality of present day unionism is that, like any other economic activity in our country, they have to go out and compete for members.

And they are going to provide the best possible service.

If the Federal law only provides that that service never accompanies, or never reaches the level of reasonable care, then they won't achieve reasonable care.

However, if the state law is there to protect the employees with regard to the duty of reasonable care, then everybody will engage in reasonable care and we'll have a safer work place.

Unknown Speaker: You think there is a competitive market out there for unions.

Mr. Howard: I do.

Unknown Speaker: Really?

May I ask one other question?

In your complaint you alleged that the union misrepresented its safety concern and its expertise to the rank and file, and I think there was a fraud... in effect a fraud claim.

Am I correct that that is out of the case now, that the summary judgment was entered against you on the fraud part of the case?

Mr. Howard: That is correct.

The fraud claim is out.

Unknown Speaker: So that you, you don't rely at all on a theory of the union making... at this point in the case, making misrepresentations to its members about its own ability to conduct inspections or the success it has had in inspecting, or anything like that?

Mr. Howard: No, Justice Stevens.

Just upon the conduct itself.

Unknown Speaker: Just that they were negligent in doing the inspection.

You say on the contract?

Mr. Howard: Conduct.

Unknown Speaker: Conduct, all right.

Mr. Howard: One of the aspects of this case with regard to the duty of fair representation that is interesting with regard to the union's position at any rate is that there are a number of developing areas where unions are now starting to engage in traditional roles which had heretofore been strictly the roles of employers.

Unions are starting to own businesses, to direct businesses, to manage businesses, as well as being unions.

There has to be a line someplace between where this duty of fair representation stops and the duty of due care that may be owed by these other roles which the union is engaging in begins.

And that is exactly the demarcation, the line that is drawn in part by this state law.

That state law here indicates that where the union engages in an activity, where it actually undertakes an activity owed by another, in this case by the employer, it is now taking on a partial role of the employer, it must live up to that duty of care which the employer would owe.

It doesn't have a lesser duty of care, and can't be given a lesser duty of care with regard to that particular aspect of its undertaking, or it would do violence to the fact that here we have a duty which would normally be owed by an employer, where they would owe due care, but now, because the employer can shift it to the union, the union does not owe the due care.

The union only owes a different duty, and that is to avoid discriminatory or arbitrary conduct.

Unknown Speaker: xxx the employer shifted... the employer pays what it's... what it has had to pay.

But what it has had to pay is limited by Idaho law.

Mr. Howard: But even under Idaho law the--

Unknown Speaker: Isn't that right?

Mr. Howard: --Well, the employer has a right under Idaho... yes, the employer has a right under Idaho law to retain--

Unknown Speaker: Well, it... it was held to have... it has a duty, and it paid for it.

Mr. Howard: --But Idaho law--

Unknown Speaker: It's strict liability, is it?

Mr. Howard: --Well--

Unknown Speaker: To a limited extent.

Mr. Howard: --Idaho law has... the workmen's compensation law for Idaho certainly has a duty owed by the employer, and it has set up a system in order to... in exchange for the duties owed by the employer directly in the employment capacity, to a statutory scheme.

But Idaho law specifically addresses the liability of third parties who may be engaged by the employer within that employment circumstance.

That protection, that workmen's comp shield, only applies to the immediate employer.

It does not apply to any third parties, whether they are supplying machinery or supplying goods or services or supplying inspection services.

And the Idaho court has long acknowledged that the remedies available through the comp system are not intended through the employer to act as a complete source of remedies for injured people within the work place, that there are other sources of those remedies.

And the comp statute specifically recognizes and authorizes that.

The union simply falls, in this particular case, into the same category that anybody would who was engaging in inspection activities and safety-related activities with regard to working individuals in the work place, and making advices to the employer.

To the extent that they did that as a private individual, whether under a contract or whether under some other kind of an undertaking, to the extent that they did that, they did it negligently.

Unknown Speaker: But... Idaho law is that absent some third party undertaking to inspect for the employer, the liability of the employer is all the injured miners can look to.

Mr. Howard: If the... that is correct.

If there are no other third parties who are engaged in activity which contribute to the loss, then the workmen's compensation is the sole remedy which would be available to the employees.

Thank you.

Unknown Speaker: Thank you, Mr. Howard.

Mr. Cohen, do you have rebuttal?

You have four minutes remaining.

Rebuttal of George H. Cohen

Mr. Cohen: Thank you, Mr. Chief Justice.

I want to just remind the Court we are here on summary judgment.

The state of the record is undisputed in the following regards.

Firstly, that the only reason the union was actually performing and the basis for the performance of its functions was a direct result of Article IX, the safety and health article of the contract.

That is Einar Pederson's affidavit in Joint Appendix page 47a.

He was a member of the local union safety committee.

Thereafter, the actual conduct that the union engaged in was totally consistent with the limited role that was given to it under the collective bargaining agreement, the role in relevant part of accompanying these inspectors.

There is absolutely no record evidence to indicate that the union on its own conducted any inspections of this mine.

Insofar as the question concerning whether the union assumed any of the employer's responsibilities to provide a safe and healthful work place, the trial court, after the full summary judgment proceedings, found, at page 100a of the appendix, that in fact the union did not assume the employer's role or responsibility for safety and health at this work place.

Unknown Speaker: Well, you say the trial court found after summary judgment proceedings.

Mr. Cohen: Yes.

Unknown Speaker: Ordinarily trial courts don't make findings of fact in summary judgment proceedings.

How did this happen?

Mr. Cohen: Well, they laid out the undisputed facts--

Unknown Speaker: Undisputed facts?

Mr. Cohen: --and then the conclusion, Mr. Chief Justice, was the defendant did not undertake to perform the safety functions owed by the Sunshine Mine to rank and file employees.

And then they... they--

Unknown Speaker: So the trial court found that because both parties agreed that it was correct, I take it?

Mr. Cohen: --Yes.

As well as the documentary evidence which demonstrated what the employer's responsibility was.

Unknown Speaker: Suppose we agree with you that the union's duty is measured by the duty of fair representation.

And suppose the case... and you say you can be sued on that duty, under that duty, and that Federal law controls.

Suppose the case goes forward, do you think that the plaintiff could prove a breach of duty of fair representation by proving merely negligence?

Mr. Cohen: No, I don't, Mr. Justice White, and I believe the substance of this Court's holdings in fashioning the duty of fair representation were designed to avoid that, the mere negligence or bad judgments, because on balance, in balancing all the competing interests that are at work here there was a recognition that that would unduly hamstring the manner in which the union was supposed to operate under our Federal labor relations system.

Unknown Speaker: In this context, what would breach the duty in carrying out whatever the collective bargaining... would it have to be arbitrary conduct?

Mr. Cohen: Discriminatory conduct, refusing to look at a problem that a particular employee called to their attention because of the individual's union or non-union membership, because of any internal political disagreement--

Unknown Speaker: Well, what else besides discrimination?

Mr. Cohen: --Arbitrary conduct is, of course--

Unknown Speaker: What does that mean?

You mean negligence is not arbitrary?

Mr. Cohen: --Well, as of this point in time the Court certainly has not accepted the proposition that negligence is arbitrary, yes.

Chief Justice Rehnquist: Thank you, Mr. Cohen.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Yellow Freight System, Inc. v. Donnelly - Oral Argument

Fri, 09 Jan 2009 14:49:17 +0000

Case:

Yellow Freight System, Inc. v. Donnelly

Media File:

89-431_19900228-argument.mp3

Related Transcript:

1989_89_431_argument.xml

Transcript:

Argument of Jeffrey Ivan Pasek

Chief Justice Rehnquist: We'll hear argument first this morning in No. 89-431, Yellow Freight System, Inc. v. Colleen Donnelly.

Mr. Pasek.

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

The issue in this case is whether Federal courts have exclusive jurisdiction over claims arising under Title VII of the Civil Rights Act of 1964, as amended.

The proceedings here began with a complaint filed in the Circuit Court of Cook County under the Illinois Human Rights Act.

Because there was no attempt made to exhaust administrative remedies under Illinois law, Yellow Freight filed a motion to dismiss that complaint for lack of jurisdiction and the plaintiff sought leave to amend.

An agreed order was entered under which the state law complaint was dismissed with prejudice and the motion for leave to amend was continued.

Five days later Yellow Freight filed a removal petition and the Federal district court eventually granted leave to amend.

Yellow Freight filed a motion to dismiss, arguing that any filing by Colleen Donnelly was ineffective because Federal courts have exclusive jurisdiction over Title VII claims.

The parties have agreed in this case that the law governing this was set forth by the Court in Gulf Offshore and recently reapplied by the Court in its Taflin decision, that the presumption in favor of concurrent jurisdiction is a rebuttable one and that it may be rebutted either explicitly or implicitly, explicitly by statutory directive, which is not present in this case, or from the unmistakable implication from legislative history, or by demonstration of a clear incompatibility between state court jurisdiction and the Federal interest.

We submit that the touchstone for this inquiry is congressional intent and that the Court must examine facts such as the language structure and legislative history of the act in order to determine whether Congress intended to confer exclusive jurisdiction on Federal courts.

When the Civil Rights Act of 1964 was adopted, it was against a background of debate over state's rights, and the compromise model which Congress eventually settled on initiated with a model patterned after the National Labor Relations Act which had cease and desist powers and which would have provided for appeals to the circuit courts of appeals and no resort at all to the trial courts of general jurisdiction.

Under such a model, consistent with this Court's decision in the Garner case, there would have been exclusive Federal jurisdiction over those claims.

Thus, it is not surprising that when the promoters of the bill accepted a compromise of private suits for Title VII violations, they presumed that those suits would be brought in the Federal district court.

There is thus no reference in the legislative history that the new rights which were being created would be enforceable in the state courts, and it was the common understanding that the enforcement was to be in the Federal courts.

Representative McCollouch, for example, who was the ranking Republican on the Judiciary Committee, noted that there were several members of the committee who preferred that the ultimate determination of discrimination rests with the Federal judiciary.

The Clark case interpretative memorandum provided--

Unknown Speaker: Or with the Federal judiciary?

Mr. Pasek: --Excuse me?

Unknown Speaker: Or with the Federal judiciary?

I mean--

Mr. Pasek: Yes, sir.

Unknown Speaker: --it depends on how you read that phrase.

I mean, you could say that the ultimate determination should rest with the Federal judiciary or should rest with the Federal judiciary as opposed to the administrative agency that was--

Mr. Pasek: But in either case, it's the Federal authorities who will be making the decision under the statute.

Unknown Speaker: --Yeah, but... but the way you read it, it was as though it was in the context of a discussion of whether there would be enforcement in the states or in the Federal courts.

Is that the context in which... in which the statement was made?

Mr. Pasek: The statement was not made in that context.

The statement was made against the context of whether there would be administrative cease and desist.

Unknown Speaker: That's right.

And what he said is... is we think the ultimate determination should be made by the Federal judiciary, not by the administrative agency.

So it really doesn't say much about--

Mr. Pasek: Well, the... it is consistent with a whole series of other comments made by the supporters of the legislation, the court model, that consistently used reference to the Federal courts.

Unknown Speaker: --Well, Mr. Pasek, it's true that the legislative history contains many references to the supposed Federal court jurisdiction, but does it contain anywhere a discussion of the possible role of state courts?

Mr. Pasek: There is no discussion whatsoever about any role for the state courts.

Unknown Speaker: So it's a little hard to say that it meets the Gulfshore... Gulf Offshore requirement that there be an unmistakable implication of Federal jurisdiction exclusively.

Mr. Pasek: I believe, Your Honor, that when the Congress talks about, as Senator Cotton said, that the process will lead to one place, the door of the Federal court, he was by implication excluding the door of the state court from resolving those cases.

Unknown Speaker: Well, but the thrust of Gulf Offshore's comments was that it has to be an unmistakable implication, and it looks to me like that's hard to make out here.

True, there's lots of discussion of Federal court involvement but just nothing to say unmistakably that state court jurisdiction is precluded.

Mr. Pasek: In this case there was explicit consideration of the role of the states in dealing with employment discrimination claims.

And as Congress was clear to point out, the state role was limited to state enforcement of state law under the deferral process established in Section 706(c).

It would be inconsistent with the deferral process Congress established if you were to say that the plaintiff would be required to pursue remedies under state or local law for 60 days, then that process is to be shifted over to the Federal Equal Employment Opportunity Commission for at least 180 days, following which the aggrieved individual could then file suit presumably in the state court, if that were the case.

There would be no reason to prohibit the state officials initially from hearing the Federal claim if Congress intended that these claims could be brought in the state court in the first instance.

There was in the 1972 legislative history, again, repeated discussion about the role of the Federal courts in language which we submit leaves it unmistakable that Congress presumed that the Federal courts would have exclusive jurisdiction.

In the House, Representative Erlenborn offered the amendment for a court enforcement model, and in distinguishing between the procedures that would apply in the administrative context versus the court enforcement model, he said that the rules of evidence, the rules of civil procedure that apply in the courts, the Federal district courts, as

"my bill would require any case to be tried there, those general rules of evidence do not necessarily apply in administrative hearings. "

Had Congress intended that any courts could have heard those cases, there would have been no reason for him to state that his bill would require the cases to be heard in Federal district courts as opposed to simply courts.

Unknown Speaker: But I... I think we've had cases, haven't we, Mr. Pasek, where the congressional enactment will talk about authorizing a suit in the United States district court and we've said that that is not sufficiently negativing the idea of state court jurisdiction.

It seems to me where someone is talking about the rules of evidence that are going to govern, they say, well, sure, it's the Federal Rules of Evidence, they're contemplating suits in the Federal district court.

But under our cases, I don't think that's enough to exclude state jurisdiction.

Mr. Pasek: I agree that the mere grant of jurisdiction to the Federal courts is not sufficient.

But Congress went beyond that mere grant of jurisdiction through these types of pronouncements by stating, for example, as Speaker Albert said characterizing Representative Erlenborn's position, that the protection of the principles of justice require that these cases be heard only in the Federal courts.

He could have said only in the courts as opposed to administrative agencies.

Representative McCollouch discussing the injunction power stated that the Erlenborn substitute would allow only as Federal court to issue such an injunction.

On the Senate side, you have the same sort of considerations.

When Senator Dominick repeatedly offered his court enforcement amendment, he repeatedly referred to the district courts where, under the Dominick amendment, suits would have to be filed.

He stated on the second consideration of the Dominick amendment that his amendment would

"vest adjudicatory power where it belongs in impartial judges shielded. "

by... shielded

"from political winds by life tenure. "

That does not apply to the state court judicial system.

And specifically he stated that we would be distributing the power to enforce this law to 93 district courts with 398 district judges.

I submit that's about as precise as you can expect someone to be that the intention was that these cases be brought in the Federal district courts.

You couple those legislative assertions with the carefully ordered sequential procedure that I referred to in response to Justice O'Connor's question and it would be inconceivable to think that the sponsors of this legislation who had agreed to the compromise, were presuming that state courts had any role in the enforcement.

This is reinforced by several procedural mechanisms which Congress built into the statute which have application only in the Federal courts.

And as this Court suggests in its Taflin decision, the inclusion of such provisions is a suggestion that Congress did intend exclusive Federal jurisdiction.

Start, for example, with the provisions of Section 706(j) which provide that any civil action under this section shall be subject to appeal as provided in Sections 1291 and 1292 of Title 28.

Now, that provision applies only to the cases that can be taken to the Federal courts of appeals, and those are only cases which arise out of the Federal district courts or thorough the administrative agencies.

I'm not aware of any case in which Congress has specified specific reference to Sections 1291 and 1292 which involve concurrent jurisdiction.

The Seventh Circuit characterized that as merely a grant of jurisdiction.

If that were so, it would be an unnecessary statement by Congress.

And further, Sections 1291 and 1292 carry some important baggage with them over what constitutes an appealable order.

That might be very different under state court systems under which a number of orders which would be characterized as interlocutory and not appealable by this Court could be appealed directly in a state court system, thereby staying proceedings and thereby interfering with the congressional goal of seeking the rapid adjudication of these cases.

Unknown Speaker: In your view, Mr. Pasek, supposing that Congress wanted to specify the appeal procedure in Federal courts, what more should it have done to indicate that... if it were of the mind that state courts should have jurisdiction, too?

Mr. Pasek: If it had not included the reference to 1291 and 1292, that would be some indication that the... well, reverse that.

If Congress had said nothing in the legislative discussion, if the sequential procedure were not present and if the procedural mechanisms which are unique to the Federal system were not present, we wouldn't be here because there would be no basis to argue that the Gulf Offshore standards have been met.

But by including the reference to 1291 and 1292, we submit that that's a strong indication that Congress intended these cases to be brought only in the Federal courts because you would not have cases appealed from the state court system to the Federal courts of appeals.

Unknown Speaker: But we've... we've said in our cases on this issue, have we not, that the granting of jurisdiction to the Federal district courts is not sufficient to show exclusive Federal jurisdiction.

Mr. Pasek: Yes, that's correct.

Unknown Speaker: Well, why should specifying appeal from the Federal district court to the court of appeals be any different than the granting of Federal jurisdiction of the district courts for that purpose?

Mr. Pasek: It's an unusual procedure by Congress to specify that the appeal is to be taken pursuant to Sections 1291 and 1292.

I'm only aware of a few instances in which Congress has ever done that, and all of those statutes are ones in which Congress has at the same time set forth that the jurisdiction is to be exclusively Federal.

For example, you have that in the Natural Gas Act, you have that in the Federal Power Act and in the Connelly Hot Oil Act.

I believe those are the only examples I could find in which, other than Title VII, the Congress has specified the 1291 and 1292 procedure.

In addition, you have the Federal interest in uniformity which might be compromised here because of the possible litigation of these claims in the state courts.

Congress was clear to spell out that the injunctive relief would be issued pursuant to Rule 65.

Rule 65 contains with it specified procedures which protect the interests of the respondents as well as the persons claiming to be aggrieved and there may not be an analog in the state court system for the grant of injunctive relief.

Therefore, you could have a system under which restraining orders would be granted or denied and the result would depend not on the case but simply upon which the court the... the action had been brought.

There is no basis in the legislative history whatsoever to suggest that Congress was attempting to regulate the procedures of the state courts when it included these provisions in the statute.

Similarly, there are provisions of the statute dealing with the time table of the cases, the assignment to individual judges, the expedition of proceedings, the use of magistrates pursuant to Rule 53, under which Congress carefully prescribed certain procedures to apply.

Now, those procedures were part of the compromise that Congress settled on.

A number of those procedures came in with the final consideration of the Dominick amendment where Senator Dominick stated,

"Despite voluminous rhetoric to the contrary, my convictions that U.S. District Court enforcement provides employees and potential employees with the fairest, most effective redress of their grievances remains unshaken. "

The biggest argument against court enforcement at the time was the delay, and Senator Dominick sought to remedy that and to assuage the opponents of the court enforcement system by incorporating the procedural provisions, such as assigning the case to an individual district court judge for an expedited hearing.

Now, the compromise between the proponents of the court enforcement and the cease and desist models is an essential part of this legislation.

If you say, as the Seventh Circuit did, that these provisions simply do not apply if the case is brought in a state court, then you in effect remove the compromises that Congress specifically built into the statute.

Your Honor, if I may, I'd like to reserve the remaining time for rebuttal.

Unknown Speaker: Very well, Mr. Pasek.

Mr. Henely.

Argument of John J. Henely

Mr. Henely: Mr. Chief Justice, may it please the Court:

Because of the... the test or the principle announced in Gulf... Gulf Offshore and recently, five weeks ago, in Taflin, namely that three-prong approach, does the statute itself express that state court shall not have jurisdiction, which we don't have here, and then, secondly, a look at legislative intent and, thirdly, a look at the nature of the Federal law and whether or not it's incompatible with being heard by the state courts, I have to address what counsel for Yellow Freight calls the touchstone of their argument, namely that there is legislative intent here from the congressional debates that the sovereign power of state courts to hear Federal cases, which is rooted in our Federal system, is removed by an examination of intent from what certain senators or congressmen said or didn't say in a bill such as Title VII, which, frankly, was... it was amended 87 times in 83 days.

Later on I have some problem with that analysis, but I must face it head-on.

If there was any mention in the legislative history of state courts... and there are none, it's all... it's always Federal courts, Federal judiciary... my position would be more difficult because it would at least evince some debate on the issue that we are here on, whether or not we intend, Congress, by enacting Title VII to oust or divest the state courts from hearing these claims.

Unknown Speaker: Well, you don't suggest that there would have to be some express mention of state courts, do you?

Mr. Henely: In the... in the legislative history?

Unknown Speaker: Uh-huh.

Mr. Henely: Oh, most certainly.

Unknown Speaker: You do?

Well, what if the legislative history... assuming legislative history could get the job done in the first place, what if the legislative... it was clear that everybody said, these suits may only be brought... may be brought only in the Federal courts?

Mr. Henely: Oh, that's... that's another way of putting it.

Reasonable men may differ, as they have certainly throughout the Federal courts in deciding this issue, as to whether that's enough, but... and that's one of the problems of looking at it.

Unknown Speaker: Well, I take it the argument on the other side is that the legislative history is equivalent to that kind of a statement, that the legislative history indicates that they really meant to have these suits brought only in the Federal courts.

Mr. Henely: Well, and then you'd have to say, well, whether it was a proponent or an opponent it's a problem area.

At any rate, my point in this area is very simply that there's no record in all of the congressional talk about this bill that there was a... a consideration of the issue shall we not let these cases be filed in the state courts.

I frankly don't think they thought about it or talked about it.

Unknown Speaker: Well, Mr. Henely, a good many Federal courts have held that the Federal courts do have exclusive jurisdiction in these cases.

Mr. Henely: Yes, Justice--

Unknown Speaker: There is language to that effect in dicta and opinions of this Court.

Now, are all those courts and all those statements just wrong?

Mr. Henely: --Yes.

Unknown Speaker: Did they misread the legislative history or--

Mr. Henely: They read into--

Unknown Speaker: --where did they go wrong?

Mr. Henely: --the legislative history what they wanted to.

Valenzuela never ever looks at incompatibility; it only looks at legislative history.

Judge Bower in Easterbrook in the Seventh Circuit looked at legislative history and came up with a different conclusion, as did Judge Layton in the district court.

I think that's the problem with legislative intent in the context of concurrent jurisdiction as... as a test.

Unknown Speaker: Well, why would Congress have provided for expedited procedures in these cases in Federal courts and other provisions that apply specifically to these claims in Federal courts if they intended state court jurisdiction to be concurrent?

Mr. Henely: Well, Congress certainly has the power to tag on procedural provisions to any enactment.

There is talk in the legislative history of a Federal court backlog of 19 or 20 months at the time in 1964.

I think the answer is they were concerned about long delays for both plaintiffs and claimed-against defendants--

Unknown Speaker: Well, I guess a good many state courts have long delays, don't they?

Mr. Henely: --Yes, ma'am.

Unknown Speaker: And so if jurisdiction were to lie there would Congress have intended, do you think, that the cases be heard there?

Mr. Henely: Well, it... it may be eventually, if this Court holds concurrent jurisdiction, that an issue will arise sometime in the future that state courts in hearing Title VII cases must expedite them as the statute states.

A possible future issue.

At any rate, the legislative history is not a one-way street in this regard.

This Court made some observations in the Kremer decision which indicates concurrent state court jurisdiction.

For example, one of the original proposals in the Title VII debates was that those states... and at the time half of the states had their own Fair Employment Practices laws... those states which had FEP laws, the jurisdiction of Title VII would not apply to them.

It follows from that that if that were the enactment of Title VII, certainly there would be... have to be concurrent state court jurisdiction with regard to fair employment practices laws.

There are statements with regard to... by Senator Humphrey that this employment of Title VII here is to implement and broaden rather than supplant the existing state court laws and procedures for adjudicating employment practices complaints.

The language and the set-up of... of the statute itself, with the interplay between EEOC and the involvement of state court agencies right in the statute, in my view, suggests an attempt to involve the states.

And if we're going to involve the states, it makes sense to involve the judicial power of the states as well.

At any rate, I think that, depending on what one is looking for in the legislative history of Title VII, one may find support that there is an implication one way or another.

Unknown Speaker: Has the United States appeared in any of these court of appeals cases and expressed its opinion on--

Mr. Henely: I don't think so, Your Honor.

You mean through the Attorney General?

Unknown Speaker: --Yes.

Mr. Henely: I don't believe so.

What I want to talk about briefly is the idea of... of Taflin so recently decided by this Court, issues very, very close to this one, involved.

It is suggested that one of the implications from the fact that Congress put procedural requirements in Title VII, mentioning appeals to Federal courts, mentioning injunctions, mentioning expedited assignment to a district court judge or, if he can't hear it, then to a magistrate.

There were issues in... in the RICO Taflin case regarding procedures... nationwide service, venue, et cetera... which certainly were not a stumbling block to a finding that since Congress has not excluded the state courts from jurisdiction under RICO, state courts have concurrent jurisdiction.

Going back to Claflin, hundred-year-ago decision, but the reading of it makes some sense.

Mr. Justice Bradley, in deciding an issue of concurrent jurisdiction arising out of the bankruptcy laws of 1867, relies very heavily on Alexander Hamilton's Number 82 Federalist.

That was written one year before the Judicial Act, and Hamilton sets forth his ideas of Federalism as applied to the judicial power and concurrent jurisdiction.

And Hamilton says that, because of the supremacy clause, the Federal courts... the Federal legislature, Congress, can exclude state court jurisdiction basically in two ways.

One, by just expressing it in the statute or, secondly, by implication arising out of an incompatibility with the Federal enactment and its being decided with state courts.

He makes no mention of taking a look at legislative intent by way of history, maybe just because it was brand new.

But Mr. Justice Bradley in Claflin does not suggest that a look at legislative history gives us a clear answer to the question of whether or not there is incompatibility.

And in reviewing this issue and the work involved, in... in having a principle upon which we're going to decide whether or not in future cases there is exclusive jurisdiction or there is concurrent jurisdiction, and in looking at the fact that the Federal courts who have decided the question in this case have had different opinions on it, reasonable men can differ as to whether or not there is unmistakable implication in the legislative intent not expressed in the statute.

And it seems to me that if there is a look at legislative intent, it must be tied into the basis for it.

What is the basis of Congress intending to remove state court jurisdiction?

What is the reason?

The answer has to be that there is some basic incompatibility between our Federal enactment here, this law, and it being decided by state courts.

One of the district courts who held concurrent jurisdiction in here in Indiana sent a law clerk to look through 55 titles of the Federal Code and found out that 72 times Congress had expressly divested states from concurrent jurisdiction.

They... they know how to do it.

There's no question about it.

My final point is that if concurrent--

Unknown Speaker: Are you suggesting then that we just hold that the law either... on its face must exclude state court jurisdiction--

Mr. Henely: --No.

Unknown Speaker: --or that there is concurrent jurisdiction?

Mr. Henely: No, no.

Not at all.

I... I submit that... that--

Unknown Speaker: Well, I would think--

Mr. Henely: --I follow Alexander Hamilton.

Unknown Speaker: --that might be... that might be one suggestion you might make.

Mr. Henely: That was not my point.

I believe that courts must look at the incompatibility issue.

I don't think a look at legislative intent is determinative or decisive without coupling it to the rationale, the basis, which has to be incompatibility.

My final suggestion is that absolutely no harm is done to the Federal purpose of Title VII or to the parties in any Title VII issue if state court concurrent jurisdiction is found.

A plaintiff may choose Federal court.

Or, if he chooses state court, a defendant may remove.

Any peculiarly strategic advantages of the Federal court are preserved to either plaintiff or defendant under concurrent jurisdiction, whereas, if exclusive jurisdiction is found, we have problems because of preclusion, that if issues of discrimination are adjudicated by a state court, the Federal courts will apply res judicata notwithstanding the fact that in the state court the plaintiff could not have Title VII as the basis of his complaint.

For all of those reasons, I urge the Court to affirm the Seventh Circuit.

Thank you very much.

Unknown Speaker: Thank you, Mr. Henely.

Do you have rebuttal, Mr. Pasek?

Rebuttal of Jeffrey Ivan Pasek

Mr. Pasek: Yes, I do, Your Honor.

First, with regard to Taflin, this Court recognized that Congress could proceed, assuming exclusive Federal jurisdiction.

And given the start with the NLRB model and then the move to the trial court litigation model without any mention of the state courts, we submit it shows just that assumption.

The involvement of the states that Mr. Henely talked about was specifically worked out by the reference to state agencies, but it was under state law where the states were to have any role.

In Section 706(c) Congress specifically talks about resort to the states, the initially instituting a proceeding with the state or local agency under state law, not under Federal law.

Where Congress wanted the states to be involved with this statute, which touched so deeply on issues of state rights versus Federal rights, it knew how to provide for it.

You... you asked the question, Your Honors, about whether or not the United States had ever taken a position on this issue, and indeed it has, before this Court.

In United States v. Minnick, the Solicitor General filed a brief with this Court in 1981 arguing in favor of exclusive jurisdiction of Federal courts to hear Title VII claims.

Finally, with respect to the issue of preclusion, I'm surprised that a plaintiff would be in favor of having concurrent jurisdiction because it is a nearly universal rule, as Justice Kennedy noted in his Eichman case on the Ninth Circuit, a nearly universal principle that preclusion will apply only if the first court rendering the decision had jurisdiction over the second claim.

So that if you have concurrent jurisdiction, a plaintiff could indeed be claim-precluded, having litigated in the state court.

If you have a--

Unknown Speaker: Well, this plaintiff chose the state court, didn't it?

Mr. Pasek: --Yes, she did.

Unknown Speaker: Well, so there will be some that will forego the advantages of the Federal court, or try to.

Mr. Pasek: The determination will then of course be made as a basis of state law, what... what preclusion the state would provide.

And Congress was careful here and concerned that, because of its distrust of the states in this area that the reference to the states was through the administrative procedure and was for a very narrow period of time.

And I would submit that--

Unknown Speaker: Well, you really have to gather something out of the legislative history other than a desire to make... to make a... the Federal courts available to a plaintiff and to have an expeditious procedure available for the plaintiff in the Federal courts.

You have to go on and say that... that that's the only judicial system that the plaintiff may choose.

Mr. Pasek: --That's correct.

Yes.

And where there is that exclusive jurisdiction, then the plaintiff will not be claim precluded.

Now, the plaintiff could still be issue precluded, as this Court held in Kremer.

The result of that case was no discrimination and... and the Court was... was required to dismiss based upon the New York state proceedings affirmed by a state court.

But if... if there is a concurrent jurisdiction, then the plaintiffs presumably would be precluded more.

Finally, Your Honors, with respect to that issue, there will be parallel litigation and there will be parallel litigation whether you choose to have concurrent jurisdiction or exclusively Federal jurisdiction because at the state level the overwhelming majority of the states... I believe all except three... have adopted statutes which contain discrimination provisions and discrimination remedies.

The overwhelming majority of those states provide for jurisdiction through a cease and desist type administrative agency similar to the National Labor Relations Board.

So, if you say that plaintiffs can bring their claims in state courts, there can then be a Title VII claim proceeding in the state court and a parallel proceeding under the state administrative law, where the state administrative agency has no jurisdiction to consider the Title VII claim.

The advantage, consistent with the congressional intent of providing for exclusive jurisdiction, is that the states can serve Federalism's interests by trying to resolve the discrimination complaints under state law and the Federal claims can be heard in Federal court where, under the Dominick amendment, the claims were required to be heard.

Unknown Speaker: Did the courts of appeals that have decided for your position, did they... did they rely exclusively on the legislative history or did they find some incompatibility?

Mr. Pasek: Well, the Valenzuela case drew also upon the statutory provisions calling for the expedited proceedings, the assignment of a single judge, the application of Rule 65 standards, appeals to be handled under Section 1291 and 1292.

Those are explicitly dealt with in the Valenzuela opinion.

The other courts of appeals--

Unknown Speaker: And those were thought to be incompatible with state--

Mr. Pasek: --Well, they--

Unknown Speaker: --jurisdiction?

Mr. Pasek: --They were, I would submit, both incompatible with state jurisdiction and evidence of the congressional intent because you are then left with the position of whether or not to force the states to realign their court administration system to accommodate the procedures that were an essential part of the compromise that Congress reached.

The general principle has always been that while states are required to provide a forum for Federal rights, the state courts can arrange their court systems and their judicial administration as they see fit.

Unknown Speaker: Well, actually, incompatibility would just... itself just be evidence of congressional intent, wouldn't it?

Mr. Pasek: I believe that it would, yes.

Now, you would also have incompatibility in the sense that you have, for example, under the National Labor Relations Act, where it would be incompatible to allow a state court to hear a claim which even the Federal district courts were not able to hear.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Pasek.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Tafflin v. Levitt - Oral Argument

Fri, 09 Jan 2009 14:49:22 +0000

Case:

Tafflin v. Levitt

Media File:

88-1650_19891127-argument.mp3

Related Transcript:

1989_88_1650_argument.xml

Transcript:

ORAL ARGUMENT OF M. NORMAN GOLDBERGER ON BEHALF OF THE PETITIONERS

Chief Justice Rehnquist: We'll hear argument next in No. 88-1650, Francine Tafflin v. Jeffrey A. Levitt.

We'll wait just a moment, Mr. Goldberger.

Very well, Mr. Goldberger, you may proceed.

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

The issue presented in this case is whether the private civil treble damage remedy provided by Congress in the Racketeer Influenced and Corrupt Organizations Act known as RICO and codified at 18 U.S.C. Section 1964(c) is within the exclusive jurisdiction of the federal courts.

We contend that Section 1964(c) is within the exclusive jurisdiction of the federal courts.

This Court in the Gulf Offshore case set forth the test that it had applied in determining whether any given congressional enactment is within the exclusive jurisdiction of the federal courts.

Analysis must always begin with the presumption that jurisdiction is concurrent.

Congress, however, does have the power to confer exclusive jurisdiction on the federal courts, and with respect with each congressional enactment the question is whether Congress intended to exercise that power.

This Court in Gulf Offshore set forth three methods by which the congressional intent to confer exclusive jurisdiction could be discerned.

First, that congressional intent could be discerned by an explicit statutory directive that jurisdiction be exclusive.

Second, the congressional intent to confer exclusive jurisdiction could be discerned by an unmistakable implication from legislative history.

Third, the congressional intent to confer exclusive jurisdiction could be discerned by an incompatibility between federal interests and the exercise of state court jurisdiction.

Unidentified Justice: Mr. Goldberger, do you think there is any difference between the standards laid down in Gulf Offshore and the traditional standards of the Claflin case?

Mr. Goldberger: Your Honor, I do not think so.

There was in Claflin a holding that exclusive jurisdiction could be determined either explicitly or implicitly, and also a reference to incompatibility in Claflin.

I think Gulf Offshore and Claflin, therefore, are entirely compatible.

With respect to Section 1964(c) there is no explicit statutory directive that jurisdiction be exclusive.

There is, however, an unmistakable implication that arises from the legislative history of Section 1964(c) as well as exclusive jurisdiction can also be seen because of an incompatibility between the exercise--

Unidentified Justice: Well, where do you find in the legislative history that Congress even considered the question?

Mr. Goldberger: --Your Honor, there is no explicit legislative discussion of the question of exclusive jurisdiction.

There is, however, a clear reliance on Section 4 of the Clayton Act in drafting Section 1964(c) of RICO.

Unidentified Justice: Yeah, but that falls far short of any kind of indication by Congress that they didn't expect the normal presumption of concurrent jurisdiction to apply.

Mr. Goldberger: Your Honor--

Unidentified Justice: It looks to me like you're just left with your argument on incompatibility and I'm not sure it is.

Mr. Goldberger: --Your Honor, I think under this Court's decision in the Cannon case and Lorillard v. Pons that when Congress bases one statute on another statute it is presumed to know what this Court's interpretation is for a statute.

And absent any change in the applicable language to incorporate that language... incorporate those precedents in the--

Unidentified Justice: Well, it isn't all that clear that this Court was on the right track under the Clayton Act.

Why would we want to extend it to a new statute?

Mr. Goldberger: --I think, Your Honor, whether this Court was on the right track with respect to Clayton may be in some sense beside the point because it is what Congress knew this Court had done when it enacted Section 1964(c).

That is, Congress was aware of the Court's decisions in Freeman v. Bee Machine Company and in General Investment that jurisdiction was exclusive.

Thereby, when it enacted Section 1964(c) it was presumably adopting those decisions as well, for it made no change in the statutory language between the Clayton Act and Section 1964(c).

Moreover, this Court has previously recognized these two similarities between Section 1964(c) and Section 4 in interpreting Section 1964(c).

Thus, in the Sedima decision, this Court was confronted with the question of whether there was a requirement that there be a prior predicate act conviction before a successful 64... 1964(c) action could be brought.

In part relying on the history of the Clayton Act and this Court's interpretations of the Clayton Act, the Court concluded that it was... such a predicate act conviction was unnecessary.

The Court made similar references to Section 4 of the Clayton Act and Section 1964(c) in trying to adopt the proper statute of limitations in the Malley-Duff decision.

And also, in deciding whether RICO claims were arbitrable, this Court also made reference to Section 4 of the Clayton Act and noted the similarity in purpose and structure between Section 4 of the Clayton Act and Section 1964(c).

This congressional intent to model Section 1964(c) on Section 4 of the Clayton Act does give rise to an implication that Congress intended Section 1964(c) to be interpreted in the same way as Section 4 of the Clayton Act and to provide for exclusive jurisdiction.

This congressional intent that Section 1964(c) be interpreted in the same way is buttressed by an examination of RICO's underlying policies and structures which are incompatible with any exercise of state court jurisdiction.

To begin with, many of the predicate acts which form the heart of any Section 1964(c) claim, the pattern of racketeering activity, are federal crimes.

Congress in 18 U.S.C. Section 3231 has provided that jurisdiction over federal offenses shall be exclusively federal.

At least one of the purposes of Section 3231 has been to enable there to be an orderly development of the federal criminal laws and to provide for the development of expertise with respect to those federal criminal laws.

If jurisdiction is held to be concurrent, in every RICO case in which there is an allegation of a federal predicate offense the state courts will necessarily have to become involved in the interpretation of these federal criminal offenses.

Unidentified Justice: Well, it seems to me that state courts are called upon to interpret federal law in every situation in which there is concurrent jurisdiction.

I don't see why this is any different.

Mr. Goldberger: Your Honor, it's because of the congressional enactment in 3131... in 18 U.S.C. Section 3231... committing jurisdiction of the federal criminal offenses to the federal courts exclusively.

There is not concurrent jurisdiction over federal criminal offenses.

And therefore, Congress has expressed its intent as to how federal criminal offenses are to be treated.

Unidentified Justice: And state courts can follow that federal interpretation as they employ suits under RICO it seems to me.

I don't see that it arises... or, that it rises to the level of any serious incompatibility.

Mr. Goldberger: Your Honor, if you take as a given that Section 3231 has as its purpose the development of expertise and the development of... the orderly development of the federal criminal laws, there is an incompatibility.

It arises because there will be over time the accretion of state court precedent with respect to federal criminal offenses, which today does not exist.

The predictability of the federal criminal laws will, as a result, necessarily be undercut, and the congressional purpose in enacting Section 3231 will also be undercut.

Unidentified Justice: Do you think the state courts would just go off on their own in interpreting federal criminal laws?

Just like federal courts construing questions of state law tend to follow state law, I would think the state courts would tend to follow federal court decisions in the area of federal criminal law.

Mr. Goldberger: Your Honor, they may or may not follow federal court decisions.

They certainly will follow the decisions of this Court, bound as they are by the supremacy clause.

But they may not necessarily follow, and they are under no obligation to follow, the decisions of the federal circuits or the federal district courts.

Moreover, there... the crimes that are involved as predicate acts under RICO may well be still in the stage of development.

This Court's recent holdings with respect to the mail fraud statute in the McNally decision is an example where the mail fraud statute although on the books for a number of years is constantly developing.

So that it's not that all the law is certain at this state with respect to any of these criminal offenses.

Unidentified Justice: Well, we couldn't get something much more fouled up than we had under the McNally case with a uniform federal--

Mr. Goldberger: Your Honor, it may be that it was fowled up under uniform federal jurisdiction, but I suggest that it may become even more fouled up, to use your terms, if the state courts in all 50 jurisdictions are permitted to issue opinions on the federal criminal laws which they would necessarily have to do in the context of ruling on motions for summary judgment, in the context of jury instructions, and even in the context of discovery motions as they discuss the relevancy of various discovery which is sought.

In addition to the incompatibility which is provided by the use of the federal criminal laws in the RICO statute, incompatibility also arises because of the broad nature of RICO itself.

This Court has noted in Sedima and the recent H.J. decision that RICO was deliberately crafted by Congress as a broad statute so as to catch within its parameters all types of repetitive criminal conduct which was invasive of the business community.

Necessarily the terms used by Congress were somewhat vague and broad when the statute was drafted.

As a result, the various terms in RICO, such as enterprise and pattern, have received what this Court called in H.J. a plethora of opinions and the concurrence called a kaleidoscope of views.

If the state courts are permitted to exercise jurisdiction over RICO, civil RICO actions, this plethora of opinions over many of the issues still remaining under RICO and even under the pattern issue, which this Court has now left to basically a case-by-case analysis, will increase and the natural synergy of the federal system is not available to harmonize the various outstanding issues and the opinions which may issue with respect to these various outstanding issues.

Unidentified Justice: --I think what you're saying is that if there is any statute that can't suffer from leaving it to state courts it's RICO.

Is that--

Mr. Goldberger: Your Honor, that... that statute and perhaps the antitrust laws.

And it is no coincidence that Section 1964(c) is based on Section 4 of the Clayton Act.

Both were deliberately broad attempts to reach out and attack problems invasive of the national economy.

Finally, the procedural devices which are available to litigants in Section 1964(c) actions provided by Congress in connection with those actions are simply unavailable in state courts.

Thus, Section 1965(b) provides for a nationwide service of process.

Section 1965(d) provides for expanded subpoena power.

Section 1965(a) provides for expanded venue.

And by their terms, those provisions are not applicable to the state courts.

As a result, the Congress in enacting RICO recognized that the patterns of criminal conduct which it sought to reach out and attack were in many instances multi-state and nationwide in scope.

It therefore provided plaintiffs with nationwide procedural devices to attack this nationwide problem.

At least one of the purposes of Section 1964(c) was to create plaintiffs who would become private to the attorney general and assist in the extirpation of what Congress saw as the evil which it sought to address in RICO, namely the invasiveness of organized criminal activity into the legitimate business world.

If state courts are to exercise jurisdiction, plaintiffs will not be able to utilize all the procedures provided by Congress and therefore--

Unidentified Justice: --Mr. Goldberger, what's the name of the case in which this Court decided that state courts did not have jurisdiction over Clayton Act claims?

Mr. Goldberger: --Your Honor, Freeman v. Bee Machine Company and General Investment are the two cases that--

Unidentified Justice: Freeman v. Bee decided that?

Mr. Goldberger: --Your Honor, in... I believe it's footnote 4, but I'm not sure--

Unidentified Justice: Don't... please go on with your argument.

Mr. Goldberger: --Six, your Honor.

I'm sorry, it's note 6.

Taken together, the congressional reliance on Section 4 of the Clayton Act, the modeling of Section 1964(c) on that section, this Court's interpretation of Section 4 as providing exclusive jurisdiction... create the unmistakable implication that Congress intended jurisdiction under Section 1964 (c) to be exclusive.

This conclusion is buttressed by the incompatibility which arises if state courts exercise jurisdiction because of their interpretation of federal criminal offenses which Congress has provided... has provided shall only be in the hands of federal courts under Section 3231, and because of the procedural devices provided by Congress, and, in addition, because of the very broad nature of RICO itself.

Mr. Chief Justice, I would like to reserve the remainder of my time.

Unidentified Justice: Very well, Mr. Goldberger.

Mr. Marks.

ORAL ARGUMENT OF ANDREW H. MARKS ON BEHALF OF THE RESPONDENTS

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

It is striking in listening to Petitioners' argument that they drop from this Court's unmistakable implication test the word "unmistakable", and that they drop from this Court's clear and disabling incompatibility test the words "clear and disabling".

The governing rule here is both clear and well-established.

The state courts have an inherent right to adjudicate all claims that their constitutions and their state legislatures empower them to hear.

It matters not whether those claims arise under state law or under federal law, or under the laws of India or France or any other foreign sovereign for that matter.

The state courts can be stripped of their inherent power to adjudicate federal claims only in two limited circumstances: where Congress has clearly indicated its intent to do so either by explicit statutory language or unmistakable... an unmistakable indication in its legislative deliberations or where the very exercise of state adjudicatory power would be fundamentally incompatible with and inimical to Congress' purposes in enacting the particular statute or with the federal government status as a superior sovereign.

This rule is deeply... this rule is deeply rooted in our federal system.

For the first 100 years of our republic, the federal courts had no general federal question jurisdiction.

The state courts alone had jurisdiction over most federal claims.

This allocation of juridical authority reflected the conviction of the Constitution's framers and of the First Congress, that the state courts were both competent and appropriate arbiters of federal claims.

Unidentified Justice: Mr. Marks, do you think the Court's decision to say that Clayton Act jurisdiction was exclusively in federal courts meets that test?

Mr. Marks: Your Honor, I think that there are distinctions that the Court may well have relied on in... in determining that there is exclusive jurisdiction over the Clayton Act.

First and foremost, quite in contrast to RICO, there is an indication in the legislative history that Congress thought about the issue and at least some indication that it was Congress' intent to delegate exclusively to federal courts the responsibility for interpreting the antitrust laws.

Secondly, I think the Court's decision in the Clayton Act cases is probably best explained by the remarkably open-ended texture of the Clayton Act and the antitrust laws and the historical context in what that issue came before the court.

After all, that... that open texture of a law for the first time criminalizing legitimate business conduct called out to the courts to really develop a federal common law regulating business conduct that... that the Court may well have recognized to have a pervasive effect on interstate commerce.

So, I think both because of... of the legislative history and because of the historical... context of the Clayton Acts, I think that the Court may have approached it differently than... than we're dealing here with today under RICO.

Unidentified Justice: But, of course, the Court really didn't say anything in the... in the Bee case.

It just has one sentence and a footnote.

Mr. Marks: That's true, your Honor.

And, in addition, the General Investment case certainly doesn't... doesn't go into the analysis that this Court has prescribed in Claflin and has consistently followed to this date.

The rule of inherent state court jurisdiction over federal claims remained undisturbed when in 1875 Congress for the first time gave the federal courts general federal question jurisdiction.

The rule remains undiminished today.

It is particularly appropriate, we submit, to apply this historic rule of concurrent jurisdiction to RICO.

Civil claims under RICO implicate no overriding issues of federal policy.

Thus, we have here no specialized administrative tribunal created to interpret or enforce RICO.

The vast majority of RICO cases involve claims of garden-variety fraud, the type of claim with which the federal courts... or, the state courts... pardon me... are intimately familiar.

In addition, state law violations as well as federal law violations comprise RICO's predicate acts.

Moreover, the states plainly share the federal government's interest in eradicating organized crime and in compensating its victims.

More than half the states have enacted their own versions of little RICO, modeled after the federal act.

It is particularly noteworthy in this regard that each of the state high courts that has considered the issue has ruled that its courts are competent and appropriate tribunals to adjudicate federal RICO claims.

Finally, and most significantly, RICO's remedial purposes will be promoted by giving victims of organized crime a choice of forums in which to assert their claims for damages.

It has been conceded that RICO's legislative history is mute as to whether Congress gave... even gave thought to the issue of exclusive versus concurrent jurisdiction.

Every court that has examined the Act's legislative history has come to this conclusion.

As Justice O'Connor recognized, it's abundantly clear that Congress never even considered the issue.

This is not surprising.

This is... quote... recognized in the Shearson/American Express v. McMahon case.

The addition of RICO's civil damages remedy was an 11th hour amendment to that legislation and received only brief discussion.

The only fragment of legislative history that the proponents of exclusive jurisdiction seize on is that Congress borrowed the treble damage remedy that had been used successfully in the Claytons Act and put that remedy into the text of RICO.

Whereas here... whereas here it is clear that Congress never even considered the issue of whether to divest the state courts of their inherent jurisdiction, such modeling, we submit, cannot meet this Court's unmistakable implication test.

Moreover, in the case of RICO this modeling is a particularly weak analogy because, as this Court has recognized, the legislative history of RICO shows that Congress did not intend by adopting the treble damage remedy to bring with it all of the... of the baggage that... had been developed with the antitrust laws over the years, particularly, as legislative indicates, that Congress did not want to incorporate the many obstacles to enforcement of the antitrust private damage remedy that had been developed.

This Court has never found an implication in legislative history sufficient to rebut the strong presumption of concurrent jurisdiction.

The rigor with which this Court has applied its unmistakable implication test is demonstrated, we believe, by both Gulf Offshore and the Court's Section 1983 decisions.

The legislative history of the Outer Continental Shelf Lands Act, which the Court considered in Gulf Offshore, contained a clear statement of concern by the opponents of that bill that the law would have the effect of providing exclusive federal jurisdiction over claims under that Act.

The Court dismissed that evidence of legislative intent as insufficient to constitute an unmistakable implication of an intent to strip the state courts of their jurisdiction.

Even more instructive is the Court's determination that Section 1983 claims are subject to concurrent jurisdiction.

The legislative history of Section 1983 makes unmistakably clear that Congress' predominant concern was creating a federal forum for the vindication of federal rights against state officials.

Yet, despite that predominant focus by Congress, this Court has concluded that Section 1983 claims are subject to concurrent, not exclusive, jurisdiction.

Turning to the disabling incompatibility test, here we have no inconsistency, much less any incompatibility, between RICO's... RICO'S purposes and the state court adjudication of civil damage claims.

The overriding purpose of RICO's civil damage provisions was to provide a remedy for innocent parties who are victimized by organized crime.

Congress expressly admonished the courts to construe RICO liberally to effectuate those remedial purposes.

This Court has consistently found that permitting the state courts to entertain federal causes of action facilitates the enforcement of federal rights.

Here, recognizing state court jurisdiction over RICO claims will allow persons victimized by organized crime to pursue their claims in the first instance in forums which they may find more convenient or less expensive.

Certainly there is nothing inconsistent with RICO's remedial aims in providing plaintiffs this choice.

Indeed, it is the closing not the opening of state courts that would undermine RICO's purposes.

Let me... let me address briefly the three policy considerations on which Petitioners rest their incompatibility argument.

None, we submit, comes close to showing any disabling incompatibility.

As I understand the argument today, they essentially collapsed two of those considerations into one.

That is, the concern with uniformity of interpretation and what they have deemed inappropriateness of a state court interpretation of a statute that relies on federal criminal laws in part.

With respect to the uniformity argument, this identical argument was advanced and rejected by the court in Dowd Box.

Just as in Dowd, there is simply no evidence here that Congress believed uniform interpretation to be any more important with respect to RICO than with respect to the myriad of other federal statutes that the state courts apply every day of the week.

With respect to the inappropriateness of... that... the Petitioners allege of the state court's interpreting federal criminal laws, the concern, as I understand it today, is that somehow the state courts may create bad precedent by misinterpreting the federal criminal laws.

In the first instance, as has been pointed out, the state courts are obliged to follow the precedence of this Court in interpreting the federal criminal laws.

There is nothing, moreover, in our constitutional scheme that prohibits the state courts from adjudicating federal criminal cases.

Indeed, as the Court recognized in Testa v. Kat, there have been times in the history of our republic where Congress has delegated to the federal courts the enforcement of federal criminal laws.

There is also nothing unique about recognizing concurrent jurisdiction of the state courts to hear civil cases where there is a criminal analog.

That is exactly the situation in Section 1983.

That statute, of course, has a criminal analog in 18 U.S.C. Section 242.

Finally, the same incompatibility argument in different guise was made to the Court in McMahon and this Court rejected it.

The Court said... the argument was made that private arbitral panels were an inappropriate forum for there to be interpretation of straight... of federal criminal laws.

The Court rejected that.

The court... certainly, state courts have more experience in interpreting the criminal laws than private arbitral panels.

Finally, there has been... the Petitioners have made some argument concerning the fact that there are certain procedural advantages to proceeding in federal court and that Congress' inclusion of those procedural advantages expanded service of process and broad venue in some way evidences an intent by Congress to relegate all civil RICO claims to the federal courts.

Those procedure... procedural benefits are just that, procedural.

They're not substantive.

They are not an integral part of RICO.

And it is wholly... consistent with RICO's remedial purposes to allow plaintiffs in the first instance to choose whether they want to avail themselves of those benefits of the federal courts or whether to pursue their claims in the state courts.

Let me close by saying that this Court has consistently and emphatically held that the state courts are competent and have inherent power to adjudicate both federal statutory and constitutional claims.

Here the exercise of concurrent state court jurisdiction will further, not frustrate, the redial purposes of the statute.

In view of the conceded absence of a statutory directive to the contrary and Congress' failure even to consider the issue during its legislative deliberations, it is clear that RICO does not fall within that limited class of cases in which the presumed jurisdiction of the state courts has been rebutted.

We, therefore, urge the Court to affirm the judgment below.

Thank you.

Unidentified Justice: Thank you, Mr. Marks.

Mr. Goldberger, you have 15 minutes remaining.

REBUTTAL ARGUMENT OF M. NORMAN GOLDBERGER ON BEHALF OF THE PETITIONERS

Mr. Goldberger: Just briefly.

First, respondents place reliance on the Section 1983 cases which hold that jurisdiction is concurrent under that act and on the Dowd Box decision.

Both of those cases are distinguishable.

In the case of Section 1983 this Court in Patsy v. Board of Regents and Felder v. Casey engaged in an extensive analysis which demonstrated that Congress in enacting Section 1983 in fact had an affirmative intent to retain concurrent jurisdiction over Section 1983 claims.

The same is true with... respect to the Dowd Box decision.

The court there engaged in analysis of Section 301 and determined that Congress in enacting that section intended to expand, not to contract, the four that were available for Section 301 actions.

In addition, the Respondents indicate that there is Congressional history which shows that Congress did not intend to adapt all of the baggage of the Clayton Act to Section 1964(c) actions.

There is some legislative history that supports that, but as Justice Marshall pointed out in his dissent in the Sedima case and as other courts have pointed out as well, there is a limitation in that legislative history which indicates that what Congress was concerned about was importing into Section 1964(c) concepts of antitrust standing and antitrust injury.

There is no indication that Congress was concerned in any way of limiting this Court's holding in Freeman and General Investment.

Unidentified Justice: Are the two cases you cite for exclusivity... is that the best you've got?

Mr. Goldberger: Your Honor, in terms of this case, I think that's the best we've got because Congress deliberately did model Section 1964(c)--

Unidentified Justice: Well, I know, but--

Mr. Goldberger: --on Section--

Unidentified Justice: --in holding that the Clayton Act enforcement is exclusively in the federal courts, are those two cases the best you've got?

Mr. Goldberger: --Yes, your Honor.

Oh, no, there's another decision.

In the Marrese decision, this Court reaffirmed that holding and cited--

Unidentified Justice: And you cited that?

Did you cite that?

Mr. Goldberger: --Yes, your Honor, we did.

It is... it appears at... Marrese is... I'm sorry, your Honor.

Unidentified Justice: Well, you didn't cite it... you didn't cite it along when you cited these other two?

Mr. Goldberger: No, your Honor, we did not.

Marrese... Marrese appears at... I'm sorry, Your Honor, I--

Unidentified Justice: Is it in your brief... in your index?

Mr. Goldberger: --Thank you.

Unidentified Justice: What's the name of the case?

Mr. Goldberger: It's Marrese v. American Academy of Orthopedic Surgeons, your Honor.

Unidentified Justice: Oh, yeah.

Yeah.

Mr. Goldberger: It's 470 U.S. 373.

Unidentified Justice: And where is it cited?

Mr. Goldberger: It appears in the Respondents' brief, Your Honor, on page 25.

Unidentified Justice: You also say you rely on a case called Continental something for the proposition that antitrust actions cannot be brought in state court?

Am I misquoting you?

Mr. Goldberger: I think so... I think so, your Honor.

I think it's... it's General Investment--

Unidentified Justice: General Investment.

Mr. Goldberger: --General Investment and Freeman v. Bee Machine.

Unidentified Justice: I don't find General Investment in your brief.

Do you have a citation?

I mean, I don't find it in your index.

Do you have a citation?

There it is right there.

No, that's the other side.

Do you have--

--It's 260, 261?

Mr. Goldberger: 260 U.S. 261.

Yes, your Honor.

Unidentified Justice: Thank you.

Going back to Marrese for a second, isn't that the case in which Judge Posner on the Seventh Circuit after the remand suggested that maybe the old rule wasn't so correct after all?

Mr. Goldberger: Yes, your Honor.

The Seventh Circuit has in two opinions--

Unidentified Justice: Yeah.

Mr. Goldberger: --suggested that perhaps the Clayton Act decisions were not--

Unidentified Justice: Were not correct.

Mr. Goldberger: --the best-decided decisions.

But I think the point here, to reiterate, is not whether the Clayton Act decisions were the best-decided decisions, but rather than Congress in enacting Section 1964(c) was aware of those decisions and made no change in applicable language when it enacted Section 1964(c).

Finally, I would just like to address the contention that RICO actions... there's nothing anomalous about state court judges interpreting federal law since federal court judges will be interpreting state law into RICO actions, which is, I understand, the arguments the Respondents have made.

Congress made a choice when it enacted RICO.

It made a choice to in fact federalize some state criminal laws.

It anticipated, therefore, that federal court judges would in fact be interpreting state criminal laws.

It did not anticipate that federal laws would be interpreted in the state... federal criminal laws would be interpreted in the state courts and that somehow Section 3231 would be changed by the enactment of Section 1964(c).

For all the reasons I've just stated and the reasons I stated in my opening remarks, we would urge the Court to reverse the judgment below.

Chief Justice Rehnquist: Thank you, Mr. Goldberger.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Oklahoma Tax Commission v. Graham - Oral Argument

Sun, 06 Feb 2011 03:46:50 +0000

Case:

Oklahoma Tax Commission v. Graham

Media File:

88-266_19890221-argument.mp3

Related Transcript:

88-266_19890221-argument.xml

Transcript:

ORAL ARGUMENT OF DAVID ALLEN MILEY, ESQ. ON BEHALF OF THE PETITIONER

Chief Justice William H. Rehnquist: We'll hear argument now in Number 88-266, Oklahoma Tax Commission versus Jan Graham.

Mr. Miley, you may proceed whenever you're ready.

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

Today this Court is asked to decide whether an Indian tribe is answerable in state court for ignoring its obligation to collect and remit taxes to the State of Oklahoma despite this Court's sanction of state laws imposing such obligations.

The Tax Commission brought this action in state district court to enjoin the Chickasaw Nation from operating a motel business until all taxes were collected and remitted to the state in compliance with state tax laws.

The tribe removed this case to the federal court, and that court denied the state's motion to remand on the basis that a suit against an Indian tribe is a federal matter.

After assuming jurisdiction, the federal court then dismissed the state's case holding that an Indian tribe cannot be sued without its consent under the Indian sovereignty doctrine.

In affirming these decisions, the Tenth Circuit ruled that an Indian tribe enjoys absolute sovereign immunity within its territory and thereby foreclosed the state's right to have its valid taxes collected.

The first question we ask this Court to consider is whether removal jurisdiction exists in this case.

The state submits that federal removal jurisdiction does not exist because the state's lawsuit is not based on federal law to any extent, but only alleges violations of state law to which the Tax Commission requests relief provided by state law.

The respondent urges that its status as an Indian tribe creates a federal cause of action that is properly removable.

However, this Court has held in the Mescalero Apache Tribe opinion in 1973 that the federal government does not have exclusive jurisdiction over an Indian tribe for all purposes and that the encouragement for tribal economic development under the Indian Reorganization Act does not establish a tribal business as an arm of the government and, therefore, off reservation activity is within the reach of state law.

But the heart of the matter is that the Tax Commission's complaint properly pleads a cause of action to collect state taxes which is based exclusively on state law, as it must be.

The tribe may raise substantial federal questions in defense of the state's claim, but federal questions in a defensive argument cannot serve as a basis for federal removal jurisdiction.

Under the well pleaded complaint rule, a federal statute or a substantial question of federal law must be the basis of the plaintiff's claim rather than a basis of the defendant's defense.

And, therefore, this case should be remanded to the state district court.

But beyond the issue of removal jurisdiction, this case concerns whether the Indian sovereignty doctrine bars the state's lawsuit.

Unidentified Justice: I don't think... if this Court were to conclude that the case had been improperly removed from the state trial court to the Federal District Court, we wouldn't then get to the... the question of the sovereignty, would we?

Mr. Miley: You would not get to that question, and the state would have to decide if that was a proper defense to the state's actions.

The state district court would have to determine if that was a valid defense so that once the removal issue is... is decided in the state's favor, we would not have to determine whether the state's case should be dismissed based on Indian sovereign immunity.

Unidentified Justice: Well, the state court might have to make that decision.

Mr. Miley: The state court may have to make that decision, but the state court has already made that decision.

In another case the state supreme court has ruled in the State ex rel. May versus Seneca-Cayuga Tribe... the Oklahoma Supreme Court ruled that the Indian sovereignty doctrine does not bar the state's lawsuit.

So that if this case was remanded to the state court, the case would be tried on the merits.

Unidentified Justice: And the tribe would have a right to appeal again through the state courts and eventually to this court--

Mr. Miley: That--

Unidentified Justice: --on that point?

Mr. Miley: --That is correct.

So that the Indian sovereignty doctrine at this point only comes into play if the state loses on the removal jurisdiction argument.

And I feel that that is a fairly clear-cut argument in that the Indian tribe is not a part of the federal government.

The activity is off-reservation, and I feel that under the Mescalero case and under Moe versus the Confederated Tribes cons... under the Moe decision and the Colville decision, I believe, whether... whether the business activity is on or off of a reservation, this court has ruled that the state does have a right to have its... its valid taxes collected.

Unidentified Justice: May I interrupt you?

You said that this... this incident, this business is conducted off the reservation.

Mr. Miley: Yes.

Unidentified Justice: And the record in the case consists just of the complaint, doesn't it?

Mr. Miley: That is correct.

Unidentified Justice: And does the complaint allege that the... that the... this Murray... whatever it is... Sulphur, Oklahoma, is... is or is not within the reservation?

I don't think the complaint says one way or another.

Mr. Miley: No.

It... it alleges that the state laws were violated by this motel operation and sues the owners and operators of the motel.

Unidentified Justice: But what I mean is we cannot tell from the record whether the hotel is on the reservation or off the reservation, can we?

Mr. Miley: No, you cannot because... because that wasn't developed.

No evidence was developed in the case.

Unidentified Justice: Not... no allegation even one way or the other?

Don't we just have the complaint?

That's the whole--

Mr. Miley: That alleges that taxes are owed.

Unidentified Justice: --Yeah.

Mr. Miley: Yes.

Unidentified Justice: Is there a reservation?

Mr. Miley: No, there's no reservations in Oklahoma, so... I believe that was... that has been briefed throughout the case because many times it is necessary to--

Unidentified Justice: This is one of the assimilated tribes, is it?

Mr. Miley: --Yes.

We contend that is... that it is... the tribes in Oklahoma have been assimilated rather than operate under the reservation system.

Unidentified Justice: But isn't there any trust property, Indian trust property in Oklahoma?

Mr. Miley: Yes.

This--

Unidentified Justice: Well, is this... is this... is this establishment on Indian trust property or not?

Mr. Miley: --It... well, it is not on an allotment as defined in Title 18 United States Code 1151(c) because the Indian title to this particular piece of land was extinguished, and it did go into non-Indian ownership.

This tribe did purchase this particular motel property in 1972 and in 1985 under Title 25 U.S.C. Section 501, which allows transfer of lands acquired by tribes to the United States in trust for the benefit of the tribe, this land was placed in trust with the United States for the tribe's benefit.

However, as this Court has ruled in the Mescalero opinion, the transfer in trust does not create Indian country which... which many of the cases involving the allocation of jurisdiction between the state and a tribe consists of so that... so that this piece of property, although it is held in trust, that statute did not create any broad exemptions from taxes or regulation that all other businesses throughout the state are subject to.

Therefore... going on with my... I think I've fairly well said all I can about the... the removal question which... which may determine the outcome presently.

Unidentified Justice: Let me ask you, counsel, do the tribes have the authority to waive their immunity from suit?

Mr. Miley: I believe they do have authority to waive immunity from suit.

Unidentified Justice: Have we so helm or is there a case that establishes that?

Mr. Miley: I am not aware of a case that establishes their ability to waive, but they have not made a waiver in this case.

Unidentified Justice: Was there a disposition at that time?

Yes.

Mr. Miley: However, I don't think the waiver is necessary because their sovereignty does not extend that far, does not extend over the state's lawsuit.

Unidentified Justice: Well, I recognize you claim, of courser they don't have immunity anyway, but they claim they do.

Mr. Miley: Yes.

Unidentified Justice: But you also take a position that it can be waived if they do have it?

Mr. Miley: I... I'm assuming that it can be waive.

I didn't... I believe they do have sovereign immunity over their internal relations such that tribal rites, say, a tribal member or a person wanting to establish tribal membership was denied for some reason.

The tribe... that would be a relationship internal to the tribe, but they would have plenary authority over and a suit against the tribe on that issue may not be maintained because of the tribe's sovereign immunity.

However, when the tribe operates a business in the... it... it steps outside the reach or that... their internal... their sphere of internal jurisdiction or internal relations and steps into the reach of state law so that the tribe may properly allege a cause of action against them to collect taxes when the tribe chooses to enter the business community.

So that their sovereign immunity is not a question at that point.

It is raised in defense, but I contend that it's not a valid defense.

Unidentified Justice: Counsel, does the new Indian gaming Regulatory Act complete foreclose future efforts by Oklahoma to tax Indian bingo games?

Mr. Miley: I believe it does.

It completely occupies the field, and the Tenth Circuit has also held that the State of Oklahoma cannot tax Indian bingo operations, And, therefore, we are--

Unidentified Justice: But it's not retroactive, I take it?

Mr. Miley: --That it is not retroactive?

Unidentified Justice: This new act?

Does it cover your case so that this new act precludes this--

Mr. Miley: Well, this is a motel.

This is a motel business.

A bingo operation was... was operated there, plus a restaurant.

However, the state sales tax applies against the rental of motel rooms.

It applies against restaurant sales.

Unidentified Justice: --The state isn't trying to tax any of the bingo operation?

Mr. Miley: No, not at this point.

We did allege that taxes were owed on the bingo operation.

Unidentified Justice: I thought that was part of the complaint.

Mr. Miley: That was part of the complaint and now that is foreclosed, so when we do reach the merits of this case, bingo sales will not be a part of the effort to tax in this case.

Unidentified Justice: Why is that?

Mr. Miley: Because of the new Indian Gaming Regulatory Act.

Unidentified Justice: Does that say that it's retroactive, that it applies retroactively?

Mr. Miley: Not it doesn't, but we have not collected any taxes from the bingo operations thus far, and the Tenth Circuit in the Creek Nation... Oklahoma Tax Commission versus the Creek Nation... held that we could not tax bingo sales.

So--

Unidentified Justice: We have a line of decision that says you decide the case on the basis of current law, and that's the current law.

But we have another line of decision that says that laws are not normally to be interpreted to be retroactive.

And I'm just wondering which of the two lines you were using here.

Mr. Miley: --Well, I... I suppose I am interpreting the current law as it stands in that now we will not be able to assert that cause.

Unidentified Justice: You're not asserting.

That's out of this case?

Mr. Miley: Yes.

Yes, it is out of this case right now.

So, the... as far as the... these tribes' sovereign immunity, the state does recognize that the tribe does have a tribal government and can tax its own sales.

However, these taxes do not displace or preempt the state taxes, but the state aria the tribe can tax the same transactions, but that really goes more to the... the merits of the case, but really the... what the point is is that the Indian sovereignty doctrine does not bar the state's suit because that doctrine has been adjusted to accommodate the state's legitimate interest in taxing its citizens, and I do not feel that this... the state's interest... I feel that the state's interest could be fulfilled by the tribe's Business enterprise, and the tribe could fulfill their interests in the economic development of their business because the state tax will not prevent the tribe from sustaining their economic development, just as it does not prevent all other businesses from making a profit in the state.

But if the state cannot rely on the decisions of this Court which I feel recognize the state's right to have its taxes collected from its citizens, then the state's right to have this tribe collect the tax and remit it will be lost forever if the Tenth Circuit decision stands because the tribe has expressed that regardless of the merits of the case, they do not intend to collect the state's taxes, and if they can successfully avoid a lawsuit, by asserting sovereign immunity in a federal court, they do not feel compelled to... to abide by state law and collect the state's taxes.

So that in that case, whole areas of state taxation will be put beyond the reach of state jurisdiction, and the state taxing system will necessarily be restructured by the Tenth Circuit's opinion in that regard because we will not be--

Unidentified Justice: Well, that's not the issue before us, is it, the merits of whether--

Mr. Miley: --No, the merits... but the merits are bound up in the... the... the sovereign immunity of tribe, and I feel that if the state has its right... has a right, it must also have the ability to enforce that right against the tribe.

Unidentified Justice: --I just don't see why we have to address that at all.

Mr. Miley: Well, you wouldn't have to address it if... if the defense of sovereign immunity is not a valid defense, because it would have to go back down for trial at that point.

So that to... to conclude this argument, I... I think from reading the cases, the trend in this Court has been away from the idea of inherent Indian sovereignty and toward reliance on... on federal preemption or on infringement of tribal government.

So that when state action is not... is not preempted or infringed, that the... the requirements under state tax laws may validly be imposed against the tribe and necessarily since taxes are... are enforced, are complied with voluntarily, but are enforced principally, the only... the only avenue we have to enforce is... is the state courts because, of course, the federal government does not enforce state laws.

And without that... without enforcement we... we see that we cannot... if we cannot come to court to... to have our rights vindicated, then the state will have lost its... lost its rights.

If the Court doesn't have any further questions.

Unidentified Justice: Thank you, Mr. Miley.

We'll hear now from you, Mr. Rabon.

ORAL ARGUMENT OF BOB RABON ON BEHALF OF RESPONDENTS

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

If I might, I would like to respond to a question that Justice Kennedy asked, I believe, regarding whether or not the tribe had waived its sovereign immunity or whether it can waive its sovereign immunity and whether or not this Court has held whether it can.

The tribe here has not waived its sovereign immunity from suit.

I know of no decision of this Court that holds that a tribe can waive its sovereign immunity absent some act of Congress.

Unidentified Justice: Nor that it can't.

Mr. Rabon: Nor that it can't.

I think there's... I don't recall the citation, but I think there's a Ninth Circuit court case that says that they can.

I'm not sure about that, and don't have the citation.

Unidentified Justice: Well, some of the cases are ones in which the tribe brings suit, and it's usually a concomitant of bringing suit that waivers implied to that extent, but if we assume that tribal immunity can be waived, then that issue is particularly speculative at this time, and it would seem to me to more like defense than an element of the complaint.

Mr. Rabon: Well, we don't view it in that light.

We see the... the fact that a complaint is filed in state court against an Indian tribe asserting the right to apply state tax laws, asserting coercive state civil jurisdiction, impliedly asserting an abrogation of sovereign immunity, we see those as affirmative matters and not necessarily matters that should be raised on... by defense.

Unidentified Justice: Well, what if the suit... there were a state brought against a state anti the state wanted to assert 11th Amendment immunity?

That's no more than a defense, isn't it?

Wouldn't you have to get into federal court or to be removed into federal court?

Wouldn't you have to have some other basis under federal law to get there other than the 11th immunity defense?

Why isn't this exactly the same?

Mr. Rabon: I think that the... I think that it would be incumbent upon the plaintiff in that case to allege... when you have a state as a party defendant--

Unidentified Justice: Right.

Mr. Rabon: --to allege the authority to... and that's happening in this case.

Unidentified Justice: There's no case for that proposition that, I know of.

Can you cite me one?

Mr. Rabon: No, Your Honor.

Unidentified Justice: The general rule surely is under the well pleaded complaint doctrine that the plaintiff sets forth its basis for recovery.

And if that involves only state law, then it's not removable.

Mr. Rabon: That is one test.

Unidentified Justice: Well, what other test is there?

Mr. Rabon: Well, in the case of Gulley versus First National Bank, the Court, Justice Cardoza, said that there were other criteria, standards for removal of Jurisdiction that you look to, such as the probable course of the trial, the real substance of the case.

He said that while a suit to enforce a right or rights with origins under... with their origins in federal law may not necessarily be federal unless it really and substantially involves a dispute or controversy respecting the validity, construction or effect of such law upon which the determination of which the result depends.

Unidentified Justice: Well, Gulley was decided in 1936, and in cases as recently as our Caterpillar, which are maybe one or two years old, certainly we've talked and talked only really about the well pleaded complaint doctrine.

Mr. Rabon: That assumes that the state can create a cause of action against an Indian tribe, and we don't think that they can.

in Caterpillar--

Unidentified Justice: Well, but the... under the well pleaded complaint doctrine, you don't decide on how good a cause of action a complaint states.

That's for the court in which the plaintiff sues to decide.

All you decide under the well pleaded complaint doctrine is whether there's something in the complaint that shows you that the plaintiff is relying on federal law to establish his case, And you... you're... this just doesn't meet that.

You agree that if the well pleaded complaint rule governs here the Tenth Circuit was wrong, don't you?

Mr. Rabon: --If the well pleaded complaint rule governs and... and the well pleaded complaint does not raise or present substantial federal questions, and I believe that's what he Court said in Franchise Tax Board and Caterpillar versus Williams.

Unidentified Justice: Well, are you saying that the state's complaint here rested on federal law?

Mr. Rabon: Yes.

I say... I say that... I say that the state's... the very right to assert the claims that the state asserts are vested in... are bottomed in federal law.

Unidentified Justice: And what federal law is that?

Mr. Rabon: Federal common law.

Unidentified Justice: But what is the substance of the federal law?

What does the federal law that you're talking about say?

Mr. Rabon: Well, in Oneida in the--

Unidentified Justice: I mean tell me just what the summarize what the federal law say that you're talking about.

Mr. Rabon: --Well, the power of Congress with regard to... with regard to whether or not an Indian tribe may be sued in the first instance is plenary.

Unidentified Justice: Well, the power of Congress to legislate in that area undoubtedly is plenary, but this doesn't mean that whenever... whenever someone sues an Indian tribe in the state court and simply sets forth a state ground of action, the Oklahoma tax law that says you're liable for sales tax, it... it becomes removable to federal court.

Mr. Rabon: Well, if the well pleaded complaint rule were to... were to apply in this particular case, we still submit that the case is completely preempted by... by federal law and the areas that are raised by... inherently in the complaint are completely preempted by federal law.

We--

Unidentified Justice: The problem is--

Mr. Rabon: --as I recall--

Unidentified Justice: --The problem is that it... that it isn't just the areas raised in the complaint that have to be preempted.

I mean, the complaint may on its face suggest a particular defense.

It has to be the claim that has to be a federal claim.

And that's what I find it hard to see in this complaint.

How is there a federal claim?

The only federal claim you're suggesting is that well, the state claim would not exist if the federal congress chose to eliminate it.

But, gee, you could say that about almost any state complaint.

Congress could preempt almost any state action in the world.

So, in a way, it's a condition to any state cause of action that Congress has chosen not to preempt it.

But we don't say that every state cause of action is thereby a federal cause of action because it's only by the good will of Congress that the state action continues to exist.

Why is that different from what you're arguing here?

Mr. Rabon: --We think that when you name an Indian tribe a federally recognized and protected Indian tribe and a state asserts the right to apply its... its laws and to... to assert coercive state civil jurisdiction over it, that the complaint inherently presents federal questions, substantial federal questions.

The state cannot... I've said this before, but we just don't see how the state can create the right in itself to assert these claims.

And in the Onelda case, the court said that you look to the underlying right, the underlying right asserted.

In this case we believe that the petition inherently asserts the right to limit aspects of the Chickasaw Nation's sovereignty.

In National Farmers Insurance Company versus Crow Tribe, the court said in that case where the complaint asserts the right to curtail or limit a tribe's or aspects of a tribe's sovereignty, that it arises out of federal law for purposes of 13... Section 1331.

And, of course, the test for 1331 and the removal test under 1441 are the same.

But, in any event, we contend that... that the complete preemption rule applies here because the... the... the Congress has completely dominated and indicated its intent to govern the field of tribal sovereign immunity and state civil jurisdiction.

With regard to the area of state civil jurisdiction the Congress has allowed the states to have jurisdiction with great care and selectivity.

In 1953 the... and incidentally, the Congress has shown that it knows how to grant the states civil jurisdiction.

In 1953 an example would be Public Law 280 and its 1968 amendments.

In Wold Engineering versus Three Tribes the... this Court described Public Law 280 as a comprehensive and detailed scheme, the primary expression of federal policy and that it preempts incompatible state action.

Oklahoma is not a Public Law 280 state.

Certainly the attempt by the Oklahoma Tax Commission to assert state court civil jurisdiction over an Indian tribe in that... in that state is incompatible with Public Law 280.

Another example of... when Congress has allowed civil jurisdiction over Indian tribes is the Termination Acts of 1954, making certain tribes subject to the laws of the states at the time they terminated those tribes' federal status.

Congress has also exhibited a... a... its domination in the area of whether or not tribal sovereign immunity is abrogated.

It has shown that it will only abrogate tribal sovereign immunity, again, with great care and very infrequently.

As it relates to the Chickasaw Nation, we know of only three times that it specifically has abrogated the Chickasaw Nation's sovereign immunity, and that would be in the Curtis Act of 1898... there was a limited abrogation there... the Five Tribes Act of 1906, where it allowed certain counterclaims and actions that were... that were pending where the tribes were... were plaintiffs.

In Public law 93-195 in 1975 when the Choctaw and Chickasaw Nations and the Cherokee Nations were allowed to sue each other to determine the respective ownerships of the Arkansas River beds, as related to the Indian tribes generally, the Indian Civil Rights Act of 1968 allows for habeas corpus relief only.

Recently in the Indian Gaming Regulatory Act of 1988 the Congress allowed certain actions arising out of the compacts that... that states and tribes might enter into to be the subject of suits against tribes.

Moreover, Congress has reemphasized its commitment to tribal sovereign immunity in the Indian Self-determination Act of 1975 where it said that there was nothing in that act should be construed as affecting, modifying, diminishing, or otherwise impairing the sovereign immunity from suit enjoyed by Indian tribes.

Another federal area in which state law is completely displaced is the treaties that the United States government has entered into with the Chickasaw Nation.

In 1832 the preamble of the... of that treaty with the Chickasaw Nation showed that the principal consideration for removal was to escape state laws which oppressed the Chickasaw Nation.

In 1834 when the Chickasaw Nation finally did agree to remove, the principal consideration that the tribe advanced in that matter was, again, to escape state laws, and the federal government promised to protect them from inroads from the whites.

In 1837 the Choc... the Chickasaws acquired their present reservation from the Choctaws.

That treaty provided that the Chickasaws would hold that reservation on the same terms and conditions as the Choctaws held it.

The Choctaws acquired that reservation under the Treaty to Dancing Rabbit Creek in 1830, and when they acquired those lands, the United States government promised them that they would not allow any state to pass laws for the tribe or its descendants.

Here the state is clearly invoking its laws against the tribe.

Unidentified Justice: Counsel, there is no reservation today, is there?

Mr. Rabon: We take the position that the reservation boundaries in Oklahoma have, with the exception of two Indian tribes that we know of, have never been abolished by Congress.

But even if they had been, Indian country within areas where the reservation boundaries had been abolished or the reservation has been diminished continues to be under federal and tribal jurisdiction.

Finally, Oklahoma's Enabling Act conditioned its becoming a state on its disclaiming any jurisdiction to limit the rights of persons or property pertaining to the Indians of said territory.

We think that the decisions of this Court, the active involvement of the Congress, and these treaty rights completely preempt the state law cause of action asserted by the State of Oklahoma here, and that this case was properly removed.

Of course, the trial court dismissed this case because there was no affirmative showing of a waiver of the tribe's sovereign immunity, but... and we think that the court was correct.

Perhaps it would have been more correctly decided had it determined what the state court's jurisdiction was for purposes of determining whether or not there was derivative jurisdiction that was necessary at the time this case was removed, prior to the 1986 amendment of the removal statute.

And had it done that, we feel that it would have determined that the state court did not have jurisdiction and that dismissal, as was mandated by Lambert Run Coal Company versus Baltimore & Ohio Railroad mandated dismissal as opposed to remand.

We think that under either theory the result was correct.

We... I would like to take issue with... with one question that counsel... one statement that counsel made that... that it is the tribe's assertion that it does not have to collect any cigarette taxes in this case.

You only have to look at the complaint.

The complaint seeks... it makes no distinction between tribal members and non-tribal members.

And as I understand the decision in Colville and Moe and Chamenuevi that this Court has only held that the tribes are required to collect those taxes as they relate to non-tribal members, certainly my client does not believe that it has a right to... to defy this Court's decision in that regard.

But that's not what the state is asking for here.

The state is asking for much broader relief.

And as you see, as you read into their... read their... their briefs and the position that they've taken that no Indian tribe in Oklahoma has any immunities left.

Unidentified Justice: Well, presumably the Oklahoma courts are competent to deal with that question, at least initially, and subject to ultimately being reviewed here?

Mr. Rabon: Yes, and if this case was improperly removed and it is remanded back to the state court, the state court would get that opportunity.

But we feel that... that because of the complete preemption doctrine that we had the prerogative and that to remove this case to federal court.

Quite frankly we removed this case to federal court because of the case cited by the Tax Commission, which was decided only about three months before this case was pass... was filed, and that is May ex rel. Oklahoma Tax Commission versus Seneca-Cayuga Tribe, where the Oklahoma Supreme Court held that the state courts had the right to regulate bingo gaming on Indian country in Oklahoma--

Unidentified Justice: Presumably the federal statute that's been enacted speaks to that question.

Mr. Rabon: --The Court also held in that case that the tribe did not have sovereign immunity from suit in spite of the fact that there was nothing in the record that indicated that the tribe had waived sovereign immunity or that Congress has waived the tribe's sovereign immunity from suit.

That case subsequently was sent back to the state court for trial and was enjoined by the Federal District Court in the Northern District of Oklahoma from proceeding further.

Unidentified Justice: Was there any appeal from that?

Mr. Rabon: That case, I believe, is on appeal to the Tenth Circuit at this time.

Unidentified Justice: Well, I can understand why you wanted to be out of the Oklahoma state courts, but just because you see an opinion of the Oklahoma state courts that you don't like and you figure well, it's useless litigating... useless litigating here, that doesn't necessarily give you a right to go into federal court.

I mean some--

Mr. Rabon: No, I'm not... I'm not contending that.

We continue to take the position that... that the issues presented when the state asserts the rights that it asserted here against an Indian tribe in state court inherently present substantial federal questions and are completely preempted.

Unidentified Justice: --It's a federal claim, is that what you're contending--

Mr. Rabon: Yes.

Unidentified Justice: --that it is a federal claim, not the issues presented, but it is a federal claim that--

Mr. Rabon: That the right, the--

Unidentified Justice: --Oklahoma was asserting a federal claim when it sought to collect state taxes is what you're telling us.

Mr. Rabon: --It's asserting a federal claim to to assert its tax laws against the tribe is what I'm saying.

Unidentified Justice: I mean, what we said in Onelda, which... which you quote to us, is that it was a federal claim that was being asserted, and that's what you have to establish here, it seems to me, that the attempt to collect state taxes is a federal claim.

That's a pretty hard thing to establish, I think.

Mr. Rabon: In Onelda, I believe the Court found that the complaint only alleged a state law cause of action in ejectment, but that the underlying right to assert that... that cause of action had its origins in federal law.

Unidentified Justice: I think what we said is that enough has been said to indicate that the complaint in this case asserts a present right to possession under federal law.

We found a federal claim being asserted there.

Mr. Rabon: Perhaps... perhaps I've misinterpreted what the Court has said there, but the way I interpreted that decision was that in that case, in spite of the fact that the complaint only alleged a state law cause of action... and that's what the Court said there, that it only alleged a state law cause of action in ejectment... the underlying right to assert that was based on federal law.

Unidentified Justice: We said elsewhere accepting the premise of the Court of Appeals that the case was essentially a possessory action, we are of the view that the complaint asserted a current right to possession conferred by federal law, wholly independent of state law.

Is that the case in which the complaint alleged a violation of the Non-Intercourse Act, the federal statute?

That was the basis for--

--I believe that's correct.

So, they're affirmatively relying on a federal statute.

Mr. Rabon: Yes.

Unidentified Justice: But you don't have a parallel to that here, I don't think?

Mr. Rabon: No, I don't.

Except in that case the Court said that there was no federal statute which made New York's statutory or decisional law applicable to an Indian tribe and, therefore, the governing rule of law would be fashioned in the mode of the federal common law, as I understand.

I think I have correctly quote that from the decision.

But we still submit that... that anytime the state sues a federally recognized Indian tribe asserting these rights that it... that's been asserted here, that it... it raises issues that are completely preempted by federal law.

I might... in closing, I would like to... to address one other statement that was made by... counsel cited to... to Mescalero Apache versus Jones.

In that case sovereign immunity from suit was not at issue, and the tribe submitted itself to the jurisdiction of the court.

If there are no further questions, I will conclude my argument at this time.

Chief Justice William H. Rehnquist: Thank you, Mr. Rabon.

Mr. Miley, do you have rebuttal?

REBUTTAL ARGUMENT OF DAVID A. MILEY ON BEHALF OF THE PETITIONER

Mr. Miley: Thank you, Mr. Chief Justice.

All I would want to say is to sum up that I believe the Caterpillar case is controlling on the well pleaded complaint rule, and this should dispose of the issues, but in the Mescalero case it was ruled there on... which was here on cert. from the state court of New Mexico... that the federal law... the federal government does not have exclusive jurisdiction over the tribe for all purposes and, therefore, the state's revenue laws can be properly applied against the tribal enterprise which is... and I believe that that case is controlling because it is indistinguishable in terms of the status of the land involved and the business being operated.

And I would... if the Court has no other questions, I'm through.

Chief Justice William H. Rehnquist: Thank you, Mr. Miley.

The case is submitted.

Attribution:

The OYEZ Project

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