Cases by Issue - Jurisdiction of Court of Claims

Keene Corp. v. United States - Oral Argument

Fri, 09 Jan 2009 14:49:25 +0000

Case:

Keene Corp. v. United States

Media File:

92-166_19930323-argument.mp3

Related Transcript:

1992_92_166_argument.xml

Transcript:

Argument of Richard G. Taranto

Chief Justice Rehnquist: We'll hear argument now in 92-166, Keene Corporation v. The United States.

Mr. Taranto.

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

This case involves the meaning of 28 U.S.C. section 1500, which says that the Court of Federal Claims shall not have jurisdiction over a claim against the United States if the plaintiff has pending in another court another case against the Government or its agents for or in respect to that claim.

The Federal circuit, expressly repudiating long-settled precedent, held that section 1500 automatically requires dismissal whenever the plaintiff had pending sometime during its suit another action growing out of the same transaction or operative facts.

Unknown Speaker: When you say, repudiating long-standing precedent, Mr. Taranto, you mean Federal circuit or Court of Claims precedent, right?

Mr. Taranto: Yes.

Yes, that's right, and it required dismissal even if the actions had to be pursued separately, and even if the other action is over.

Based on this new rule, petitioner came and had its cases dismissed after 10 years of pretrial proceedings were completed.

Denying Keene a hearing on its claims based on the Government's sale of asbestos, its requirement of asbestos in products it's purchased, and its manner of operating shipyards.

Our position is that the Federal circuit misconstrued section 1500 in two respects, and that two longstanding constructions of 1500 should be reinstated.

First, two suits are not for or in respect to the same claim where Congress has insisted that the claims in the two suits are different by demanding that they must be brought separately, and second, by its plain terms, the statute does not apply after the plaintiff no longer has pending any other suit.

Now, on the first position, I want to make four points.

The first is that it was settled law in the Court of Claims and the Federal circuit, two of the only courts, aside from this Court, that could ever address this question, for more than a quarter of a century, that when Congress has declared that two separate rights of action must be litigated in two different courts, the court should not turn around and read 1500 as saying that the two suits are really for and in respect to the same claim.

Unknown Speaker: On what general principle of law do you base this argument, Mr. Taranto?

I mean, we don't ordinarily review Court of Claims or Federal circuit precedent.

Mr. Taranto: No.

I think that... well, stare decisis in its strict terms perhaps applies only to this Court's review of its own precedent.

Nevertheless, because stare decisis is a policy-based doctrine the same--

Unknown Speaker: We wouldn't take a case here, I don't think, to hear it argued that the Ninth Circuit had failed to follow stare decisis in connection with a Ninth Circuit precedent.

Mr. Taranto: --No, I think that's right, but this, I think, presents two unique circumstances.

One is that the issue of 1500's interpretation is unique to the Federal circuit.

There can't be a lower court conflict, and as a consequence, all of the reliant's interest both of litigants like Keene and of Congress in legislating in the area, must necessarily look to established law in that circuit to guide litigants and guide Congress, and it's for that reason that we think that cases like the Casman line of cases demand special respect.

Unknown Speaker: But I... you would still say that even if there hadn't been a precedent until this one, that the court of appeals just had it wrong.

Mr. Taranto: Yes, I think that's right.

The principle--

Unknown Speaker: And since it would be the only court to construe that statute, you couldn't wait for a conflict.

Mr. Taranto: --That's right.

The reading that the Court of Claims and the Federal circuit gave to the statute for a quarter of a century in fact we think reflects the most natural reading of 1500's language.

Unknown Speaker: Are you in any position to make an argument that Congress might be deemed to have accepted that interpretation?

Was there any reenactment or amendment that might have picked it up if we accepted the theory that, given the peculiarities of claims in the Fed circuit jurisdiction, Congress might be deemed to accept that?

Mr. Taranto: Yes, we do have a version of that argument.

In 1982, Congress took a broad look at the whole set of statutes governing what was then the Court of Claims, transformed that court into a trial court, claims court and the Federal circuit, and reenacted 1500, merely changing the name of the court to which it applied.

By that time, the statute had been consistently construed in both of the ways that we suggest, and we think it is an appropriate inference that had it been construed otherwise, its quite draconian consequences would in fact have led Congress to take a second look at it.

The fact that it had been construed so as not to deprive litigants of rights is I think the best explanation for why no real issue was made of 1500 when it was reenacted in 1982.

Unknown Speaker: Well, did Congress overhaul the statutes governing the Court of Claims and the Federal circuit in 1982 other than just do what was necessary to create the new court?

Mr. Taranto: It did make a number of substantive amendments in looking through the entire range of statutes.

It added certain limited jurisdiction to the... now the claims court to provide certain kinds of equitable relief that it couldn't have provided before.

It provided a special transfer statute to ensure against precisely the kind of loss of rights for filing in the wrong court that is at issue here, and it also made a number of substantive amendments that governed other aspects of what used to be the Court of Claims and also the court of customs and--

Unknown Speaker: Amendments you say that weren't occasioned by the creation of the new court.

Mr. Taranto: --Yes, that's right.

It was a more general review in 1982 of the statutory regime governing suits against the United States, and in particular in the Court of Claims.

When the statute asks if a second suit is for and respect to the claim in a first suit, it is naturally understood, we think, as targeting repetitive litigation, situations where two suits are brought when there really should be one, but that is not the situation.

There is no repetition when two suits are brought on different legal rights that Congress has said must be litigated separately.

This is exactly the rule of claim preclusion law, which we think is the obvious place to turn to in defining when two suits should be treated as for or in respect to the same claim.

Unknown Speaker: But you wouldn't need a special statute, would you, if all Congress wanted was the application of claim preclusion law?

That would apply without any statute.

Certainly other courts throughout the country apply it without having a special statute.

Mr. Taranto: What 1500 does is apply before any judgment is reached.

Claim preclusion law only kicks in once there is a judgment in a first suit.

What 1500 does is to say a plaintiff cannot proceed in two different forums up to the time of judgment, which claim preclusion would say nothing about.

It protects the Government against that problem.

So 1500 performs a role in addition to claim preclusion law, but we never--

Unknown Speaker: But would that interpretation that you've just explained have satisfied the congressional concern with the cotton litigation that prompted this statute?

Mr. Taranto: --I think it would.

Let me say first that I think that it would be a mistake, in any event, whatever that 1868 legislative history concerning the cotton claim said, to carry that forward to the new statute in a new legal landscape to control the interpretation of this.

But even on its own terms, the only thing that one can tell from the 1868 history is that Congress wanted to relax one condition of claim preclusion law, and that is the condition of mutuality of the parties.

Nothing about the 1868 history suggested that two claims, aside from mutuality of the parties that would otherwise be the same, would be within the statute.

The cotton claims would, under the best view that we can discover of 19th Century res judicata law, in fact have been the same had they been against the same defendant.

One of the tests for establishing sameness of claims was the so-called same evidence rule.

If the evidence in one case would be enough to support the claim in the other case, the same evidence would suffice in the claims, it would be treated the same, and a common law conversion claim would under that test be the same as the statutory conversion claim which added simply the element of loyalty, because the same evidence that proved loyalty in conversion would, as with a lesser included offense, prove conversion.

Unknown Speaker: But the--

--Mr. Taranto, it seems to me that it's possible that the precedent in the Court of Claims decisions is not quite as uniform as you suggest.

The British American Tobacco case, I think the Court of Claims held that the word "claim" refers to the fact that the facts existing and operating in both cases are the same, and there's a similar holding in the Los Angeles Shipbuilding and Drydock case, and so I'd like you to explain to me whether the precedent really was as uniform as you suggest.

Mr. Taranto: I think it was when you take time into account.

Like any other body of precedent, at a certain point earlier decisions are reinterpreted and perhaps even altered.

The earlier interpretation of 1500 or its predecessor in the Court of Claims took this broader view.

What happened, then, in 1956 with the Casman case was that the court recognized that where Congress has insisted that claims be brought in two different forums, they should not be treated the same.

Unknown Speaker: But Los Angeles Shipbuilding was decided after Casman.

Mr. Taranto: I think within a year of that.

Unknown Speaker: Yes.

Mr. Taranto: But shortly after that, it became the established rule, repeated over and over again in the Court of Claims, that if a litigant was forced into two separate suits, they were not to be treated as the same, and I certainly don't know of a single instance... and I don't think the Government has cited one... where any litigant was thrown out under 1500 after Los Angeles Shipyard, which may simply have not fully appreciated Casman.

But in any event, since the early sixties, for 30 years I don't think there's a single case where that rule failed to be applied where a litigant lost rights by virtue of bringing in two separate suits claims that Congress has said had to be brought in two separate suits.

Unknown Speaker: Well, has the CA Fed up to now recognized that rule they're talking about?

Mr. Taranto: It first moved away from that rule in a predecessor of this case, the Johns-Manville case, and then clarified that it really meant--

Unknown Speaker: Well, did it ever accept it?

Mr. Taranto: --The CA Fed... it did, in I think the Boston Five Cents Savings Bank case, if I recall it right.

Unknown Speaker: When was that decided?

Mr. Taranto: That was... I don't remember exactly.

In the mid-eighties, I think.

Unknown Speaker: 1988.

Mr. Taranto: 1988.

Unknown Speaker: But by the time the CA Fed was created, the... you say the law in the Court of Claims was pretty clear.

Mr. Taranto: Yes.

The Court of Claims... the Casman decision had been cited over and over, and it had been specifically applied in 1976 in the Allied Materials case to circumstances even where money damages were sought under two different claims, so that the type of relief was not the only condition for distinguishing claims.

Unknown Speaker: Mr. Taranto, under the civil version of the same evidence rule that you were referring to a moment ago, would two suits simply based on at least a community of fact but one sounding in tort and one sounding in contract have been precluded as simultaneous suits?

Mr. Taranto: In the 19th Century, the answer is probably not.

There is always some difference in evidence, as there would be here with the tort and contract claims, if only because there are different legal elements.

In the 19th Century, that same evidence test probably wouldn't have applied, but on the other hand there would have been no real need for it, because--

Unknown Speaker: Because you had the mutuality.

Mr. Taranto: --Well, mutuality, and in the 19th Century res judicata insisted on something much closer to the legal theory as opposed to the transaction base at best.

Now, let me say that under this reading, this long-established reading of 1500, the statute performs two very limited but sensible functions, and these were in fact the functions that when the Justice Department last year opposed repeal of 1500 it told Congress it performed.

The Justice Department did not say that the provision applied to the sequencing of merely related claims.

It said one function was to bar forum shopping in those cases that are within the concurrent jurisdiction of the Court of Federal Claims and the district court.

A plaintiff... which includes all tax refund cases and Little Tucker Act cases, and perhaps and others.

The plaintiff can't just test out the two forums up to the time of judgment and see which judge is going to look more favorably upon its claim.

Unknown Speaker: Little Tucker Act is district court under 10,000, or whatever it is.

Mr. Taranto: Yes, up to $10,000, all contract claims, constitutional claims, et cetera.

The second function is to preclude simultaneous suits where there is not concurrent jurisdiction but the plaintiff has filed the case in two different forums, and there the statute simply bars the plaintiff from proceeding in the Court of Federal Claims until the district court's lack of jurisdiction has been established, as it sometimes requires some years of litigation to do.

And these functions are obviously modest, but as I say, the Justice Department explained why 1500 should be kept, when it opposed repeal to Congress by reference only to those functions and not to the much more draconian function that it suggests today of sequencing merely related suits.

Unknown Speaker: And this was after the CA Fed's change of theory.

Mr. Taranto: It was.

The final reason, then, in support of this first position is precisely the draconian consequences of the Federal circuit's new version.

The fact is that, like Keene, many litigants seeking redress against the Government must file in separate cases, whether they have tort and contract claims, or as many of the amici in this case point out, they have a statutory challenge to some Government action and also are taking challenge.

The regular and unavoidable effect of the Government's position requiring sequencing of these suits is the loss of many litigants' Tucker Act claims either through the sheer delay of postponing their adjudication perhaps for years, as in this case it would be 7 or 8 years, or even worse, through the expiration of statutes of limitations if equitable tolling is unavailable.

Let me turn--

Unknown Speaker: How many different cases did your client have pending in connection with this asbestos litigation?

Mr. Taranto: --Well, we had two cases in the Court of Claims, which were then consolidated, one involving the contract claims, one involving the takings claims.

In other courts, we had an omnibus tort claim with a--

Unknown Speaker: When you say, in other courts, would you be specific?

Mr. Taranto: --Yes.

The initial omnibus FTCA action was brought in the Southern District of New York.

After that was thrown out the same action was tried in the District of Columbia, essentially exactly the same complaint.

Unknown Speaker: Why was it thrown out of the district court in New York?

Mr. Taranto: Essentially because the administrative notice requirement of the FTCA imposes a specificity requirement that the court found Keene could not meet as to each of the underlying tens of thousands of claims against the Government.

Unknown Speaker: Did you in effect try to relitigate that in the District of Columbia?

Mr. Taranto: Yes, after filing a new series of administrative notices, which were subsequently also found to be jurisdictionally inadequate.

Unknown Speaker: So you went back and tried to cure, basically, the defect that the--

Mr. Taranto: Yes.

Unknown Speaker: --District court in New York had found.

Mr. Taranto: Yes, that's right, and the one other suit that I--

Unknown Speaker: And unsuccessfully.

Mr. Taranto: --Unsuccessfully, that's right.

Keene has never had a hearing on its tort claims because of this jurisdictional problem or because of this ruling on the contract claims.

The one other suit that I didn't mention is, briefly in one of the suits brought against Keene there was a third-party action impleading the United States and that was voluntarily dismissed in order to proceed on that issue in these other suits.

The second point, second position, is that section 1500, regardless of the scope of the claim language, has no application once the other suit in another court is over, and that's so whatever the court should do when 1500 is raised while another case is pending.

Again, I have three, I think simple points for this.

First, by its terms, the statute applies only when the plaintiff in the Court of Federal Claims has pending another suit.

It simply does not come into play, let alone require dismissal, when no other suit is pending.

Second, even the Government's version of the policy of 1500, protection against simultaneous dual related litigation, has no application once there is no dual litigation.

After any other suit outside the Court of Federal Claims is over, there is simply no dual litigation of any sort to protect against.

Unknown Speaker: But I suppose that the 1500 is couched as a jurisdictional statute, and normally you would think that means the Court of Federal Claims had no jurisdiction.

Mr. Taranto: Justice O'Connor, I think that there are two separate questions to address.

One is whether at the time when another suit is pending the jurisdiction label automatically requires dismissal.

No issue is raised as to that here.

The other issue, which is the issue here, is what happens if there was earlier in the proceeding a jurisdictional defect that is no longer present, and what this Court's decision in Newman-Green establishes, what was established even before, is that even as to a pure jurisdictional provision, the existence of an earlier jurisdictional defect does not mean that the case shouldn't go forward.

In fact, the court said the case should go forward once that defect is cured.

That's exactly what we have here, even on the assumption that 1500's jurisdiction language has to be read as making it a pure jurisdictional provision.

We have a situation where, even on the assumption that there was a jurisdictional defect earlier in the litigation, by the time the question of dismissal arose, there was no longer that jurisdictional defect, and as in Newman-Green, we think it is perfectly appropriate, and indeed it would be unfair--

Unknown Speaker: You say by the time it arose.

Does that mean... are you saying, then, by the time the Government made a motion?

Mr. Taranto: --Yes, that's right.

By the time--

Unknown Speaker: Why wouldn't it arise at the very beginning of the second lawsuit?

Mr. Taranto: --Well, I'm just saying that as a practical matter the issue was not brought to anybody's attention here for 8 years during this litigation.

Unknown Speaker: But if it's a jurisdictional matter, ordinarily that wouldn't make any difference.

That's not something that the Government can waive.

Mr. Taranto: Right, but in Newman-Green itself, had the parties raised at the outset of the litigation the fact that there was a nondiverse party, then had that defect not been cured, of course, dismissal would have been required.

What this Court said in Newman-Green, confirming many lower courts' views, is that even though there was no jurisdiction because of the nondiverse party at the day the suit was filed, and years during the litigation, once that defect was cured, the case should and can go forward.

Unknown Speaker: Mr. Taranto, I thought Newman-Green was sort of, if not a dodo bird, at least an exception.

I thought the normal rule was otherwise, that if you don't have jurisdiction at the outset, you can't patch it up later.

Do you know any other situation, other than Newman-Green, in which we've allowed absence of jurisdiction to be... jurisdiction that did not exist at the outset of the case to be remedied later?

Mr. Taranto: Justice Scalia, I don't know of any other example either way on that question.

I've been looking for other situations where the question of a jurisdictional defect that existed earlier in the proceeding but now coming to an end has been presented, and I don't know of any situation except the Newman-Green one, and there, I think the rationale does properly extend to other situations, including this one, that a certain measure of practicality is necessary, and once the jurisdictional defect is over, there's no reason to dismiss the suit.

Unknown Speaker: Do you think if I'm not a citizen of a diverse State and then later move to a diverse State the suit becomes retroactively validated?

Mr. Taranto: Well, there is--

Unknown Speaker: A diversity suit, I mean.

Mr. Taranto: --That has not been the traditional rule for measuring the time at which diversity must arise.

Unknown Speaker: Yes, I... that's all I'm saying.

I always assumed that the traditional rule looked to the outset of litigation, and that Newman-Green was noteworthy because it was an exception to that.

Mr. Taranto: Right, but I think Newman-Green confirmed what was a longstanding recognition in the lower courts that a jurisdictional defect, even if it required dismissal when it was present, did not necessarily require dismissal once the defect was over.

Unknown Speaker: Well, Mr. Taranto, you... if there's a suit pending in another court when you file a suit in the Court of Claims, and the Court of Claims dismisses it, even though at the time of the dismissal the other suit has itself been dismissed... which is the case here, isn't it?

Mr. Taranto: Yes.

Unknown Speaker: Suppose it dismisses it.

Can you then file another suit in the Court of Claims?

I would think you could.

Mr. Taranto: Yes, that's right, but then... but--

Unknown Speaker: Except for what?

Mr. Taranto: --Except--

Unknown Speaker: Statute of limitations.

Mr. Taranto: --For the statute of limitations, and the question is an open one.

Although the claims court has recently addressed it favorably, the question is an open one whether equitable tolling would be available.

Unknown Speaker: You say the Court of Claims has what?

Mr. Taranto: The claims court in a decision that came down just a couple of weeks ago held in exactly these circumstances that equitable tolling would be available.

Unknown Speaker: So if you lose the suit here, if we affirm the CA Fed, you might be able to sue again in the--

Mr. Taranto: We might.

Unknown Speaker: --Court of Claims.

Mr. Taranto: We might, although I must say it would take no doubt several years of litigation for the issue to go back to the Federal circuit to decide whether the claims court, which is now just a trial court, was correct in that particular decision.

Unknown Speaker: Mr. Taranto, the Tucker Act has a rather unusual formulation.

It says that the Court of Claims shall have jurisdiction to enter judgment in any case, rather than shall have jurisdiction over a case.

Does anything turn on that?

It does seem to help you in that it speaks toward the jurisdiction at the end of the case, but it's a little odd to talk about jurisdiction at the end of the case.

Mr. Taranto: We... I mean, I do think that it does help.

I don't want to place too much weight on it, but it does suggest that 1500 appearing amidst numerous other provisions that talk about jurisdiction to enter judgment properly can be interpreted to focus on the presence of any jurisdictional defect at the time judgment is entered, judgment... the entry of judgment often being described as the single distinguishing characteristic of what makes a court a court as opposed to anything else.

Unknown Speaker: But how then do we explain its authority at the outset?

Mr. Taranto: Well, for one thing its authority at the outset, before 1948 section 1500 didn't use the word, "jurisdiction" at all.

It was a provision about what should happen in the filing and the prosecution of a claim, and there I think the language helps us considerably, because one would not ordinarily think that a rule like that should automatically carry the rigid dismissal result as a matter of remedy.

There would still be an open question about what the remedy is for the violation of a filing rule, and it's that flexibility as to remedy that in fact the Court of Claims itself regularly applied, starting in the 1960's, time and time again to merely require a stay of the case, or a suspension of the case, and that rule says two things: 1) what is at issue here, which is that the case goes forward once the defect is no longer present.

The other thing that it says, which is not present here, is that even at the time the defect is present, dismissal is not required, mere suspension will do, and I should note that in the Pennsylvania Railroad case, that is exactly what this Court did.

It reversed a Court of Claims dismissal of the case and ordered the Court of Claims merely to suspend the proceeding while another case in district court was proceeding.

Unknown Speaker: Mr. Taranto, wasn't the original language of this... I can't find it in the briefs... wasn't it bring or prosecute?

Mr. Taranto: Yes, that's right.

Unknown Speaker: And doesn't that cut against the interpretation that you're giving.

Mr. Taranto: No, I don't think so.

I think--

Unknown Speaker: I mean, it was changed but without any indication that the change was meant to be a substantive one.

Mr. Taranto: --Right.

I think all that that language does is make clear that there is an impropriety in the original filing, or the prosecution.

Two questions would remain.

One is merely suspending the case, does that mean it's still being prosecuted if there are no litigation burdens being imposed on the Government, and the other question is, what would be the remedy for a filing violation?

As to both, I think, the case would still be proper, that mere suspension would be required.

Unknown Speaker: All the same, you'd have to say, though, that the statute was violated at some point, but you'd just say, bygones are bygones.

Mr. Taranto: Yes, if--

Unknown Speaker: It was violated when it was brought, but it's no longer being brought, it's only being prosecuted, and that's okay.

Mr. Taranto: --If the filing took place at a time when the statutory condition was met, then the statute was violated at that time.

Let me just refer, finally, to the arguments in our briefs for both nonretroactivity and equitable tolling in the event this Court adopts the Federal circuit's interpretation, both of which rest on the fundamental unfairness of overruling settled law more than a decade into this litigation and depriving Keene of any day in court on its claims against the Government.

If the Court has no further questions, I'll reserve the balance of my time.

Unknown Speaker: Very well, Mr. Taranto.

Mr. Wallace, we'll hear from you.

Argument of Lawrence G. Wallace

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

The text of section 1500 speaks in the language of subject matter jurisdiction.

It unmistakably excludes a certain category of cases from the subject matter jurisdiction of the Court of Federal Claims.

That court's sole function is to hear claims against the United States for monetary awards and occasionally certain ancillary relief.

These are claims against the sovereign, and just as waivers of sovereign immunity are to be strictly construed, an express exclusion from the waiver of sovereign immunity that Congress has enacted should be fairly construed to accomplish its purpose of restricting the waiver of sovereign immunity.

So much of the argument that has been made on behalf of the petitioner in this case that claims that Congress has authorized might be foreclosed by this provision overlooks the fact that this provision is an exclusion on the waiver of sovereign immunity, and to the extent this provision applies, the claims are not authorized against the United States.

From the beginning in 1868, when the predecessor statute was enacted, the central purpose was clear, and that was to prevent simultaneous litigation of related claims.

The cotton claimants were unable to bring the two categories of claims the Congress focused on in the same court.

That's the common sense of it.

Petitioner has theorized about whether it could have brought... whether those claimants could have brought the cases in the same court if the claims against the Federal officers could have been brought against the United States, but there was no possibility of doing that at that time.

The Federal Tort Claims Act was not enacted until 1946.

So from the beginning it was recognized that the paradigm class of cases that the statute was designed to apply to were cases in which related claims had to be brought in two different courts, and the purpose of the statute was--

Unknown Speaker: Well, Mr. Wallace, you say related... brought in two different courts.

Wasn't the reason that the cotton claimants sued the officials away from Washington not so much that Congress said they couldn't sue in the Court of Claims, but that venue requirements, if you were going to sue a local official who converted the cotton, you would have to sue where that official was found?

Mr. Wallace: --Well, that certainly was the practical reason why most of those cases were brought outside of Washington, but if they had been brought in Washington, it could not have been in the Court of Claims, which would not have had jurisdiction over suits against the officers.

In those days, the officers had to be sued in their individual capacity for having committed a tort while they were supposedly conducting their official duties.

Unknown Speaker: So you say, even if there hadn't been the venue problem, there would have been a jurisdictional problem.

Mr. Wallace: Exactly so.

They would have had to be brought in the district court here, rather than in the Court of Claims, so from its outset it was recognized that it applied to force claimants to choose between--

Unknown Speaker: Let me be sure I understand--

Mr. Wallace: --Two different claims... related claims.

Unknown Speaker: --I just want to be sure I understand why they had to be brought in different suits.

If recovery was going to take the form of recovery against the officer individually, it would have to be brought in the district court, but the amount of money recovered would be the same in either event, would it not?

Mr. Wallace: That is correct, Mr. Justice.

Unknown Speaker: So it's just a question of really a formal procedural difference between the two suits.

They're really sued on the same basic set of facts.

Mr. Wallace: Well, it was... they were being sued on the same basic set of facts, but the judgment--

Unknown Speaker: And would have gotten precisely the same relief in terms of dollars, at least.

The judgment would read differently, because in one case it would read against the individual and in the other against the United States.

Mr. Wallace: --That's correct.

It would be paid by someone different.

Unknown Speaker: Wouldn't it have depended... you could have gotten a judgment, I suppose, against an insolvent official, and you wouldn't have gotten any money as a result of it, whereas you get a judgment against the Government, and hopefully it's not insolvent.

[Laughter]

Mr. Wallace: At least for purposes of paying judgments, that's quite correct, Mr. Chief Justice.

The one significant change that was made in the statute was made to carry this function forward after the enactment of the Federal Tort Claims Act in 1946, in which these suits, the tort claims that formally had to be made against officers could now be made against the United States, and so in the 1948 addition of the Judicial Code, as the revisers redrafted this, they added suits against the United States in any other court to the original language that referred only to suits against officers in any other court, so the substance was being carried forward.

In fact, the revisers' note said this was nothing but a change in phraseology, but the substance of precluding putting the Government to simultaneous defense of the tort suit in the district court and the claim in the then Court of Claims was carried forward.

The plaintiff could not force that choice upon the Government.

Now, in the rehearing petition that the Government filed in this case in the Federal circuit, I think the Government articulated two important, telling points that I believe led the court in the Federal circuit to reexamine its series of precedents in this matter.

The first point that I want to recount to the Court has to do with the purpose of the rule, and why the rule applied to the situation that Keene had presented to the Court, and as the Government put it in the rehearing petition, the rule propounded by the panel whereby if the claimant dismissed its district court case before the Court of Federal Claims ruled on the motion to dismiss, then it would have been all right for the two suits to go forward simultaneously, one of the alternative grounds proposed by petitioner today.

What we said in the rehearing petition was, the rule propounded by the panel would permit a claimant to tie up Government resources in two courts simultaneously for an indefinite period of time while the claimant continues to assess its relative chances of recovery in one forum or the other.

As long as the claimant bails out of the district court before the claims court actually rules on the section 1500 motion, the claimant can do, as plaintiffs did here, precisely what Congress intended to preclude.

Now, in this particular case, the suit that was initially pending in the district court was a third-party complaint against the United States involving just one of these asbestos claims, but we have to be aware that even though the suit in the... later brought in the Court of Federal Claims against the Government was an omnibus suit involving many similar claims, we have to be aware that modern rules of collateral estoppel would allow an individual suit of that sort to be used as a stalking horse, and if it looked as if that suit would succeed, it could go forward and then be used for its possible collateral estoppel effect against the Government under this Court's decision in United States against Stauffer Chemical Company.

Unknown Speaker: Well, of course, the theory that it would tie up Government resources in two suits doesn't hold water particularly.

Your latter point of collateral estoppel, but I would suppose that if there are two suits going on in two different courts over roughly the same set of facts, one of the courts is going to stay and let the other court go forward--

Mr. Wallace: That could happen if both courts are aware of it.

Unknown Speaker: --So that one suit will be quiescent and the other one won't.

Mr. Wallace: Once there was an awareness--

Unknown Speaker: I would assume the Government would want to stay one of them.

Mr. Wallace: --Well, the Government is not always aware of the overlap of these claims promptly, and this... you know, even though there may be other remedies that the Government could turn to now, and there certainly are arguments that have been put to Congress and that will continue to be put to Congress about whether section 1500 should be repealed or revised, the fact is Congress proposed a remedy of barring initially, it said, the plaintiff from filing or prosecuting in the Court of Claims, and now it says that the Court of Claims shall not have jurisdiction if there is a suit pending on a related claim in any other court.

Unknown Speaker: If your view prevails, may the Government collaterally attack final judgments in the Court of Claims?

Mr. Wallace: Well--

Unknown Speaker: Based on this new theory.

Mr. Wallace: --That possibility has been raised in some briefs amicus curiae.

We have not thus far attempted to do that.

It would depend on the particular situation in a case, and whether it would come within the Federal circuit's rules for collateral attacks within 2 years of the judgment.

Unknown Speaker: Well, I take it that a judgment that lacks subject matter jurisdiction is void, and if that issue has at least not been litigated or raised by the parties, it's open to you to attack it.

Mr. Wallace: But there are rules of repose, and under the Federal circuit's rules, that kind of challenge has to be raised within 2 years of the judgment, it's my understanding.

I can't say that I've focused in detail on that question.

I do think--

Unknown Speaker: You certainly do not negate the possibility, I take it.

Mr. Wallace: --I could not do that, Mr. Justice.

That remains for determination in future litigation.

Unknown Speaker: Have you got to the second reason you gave the Federal circuit?

Mr. Wallace: Well, the second point in the rehearing petition was that the rule adopted by the panel in focusing on the time that the motion was ruled on was logically inconsistent with one of the exceptions that the old Court of Claims had developed to section 1500, the so-called Tecon exception, which focused exclusively on the time of filing complaints and said that so long as the complaint is filed first in the... what was then the claims court, and then is filed in the district court, it's all right for both cases to go ahead simultaneously.

It's only if another suit was already pending in a district court when the claim was filed in the old Court of Claims that 1500 would be applied, and our point was that there was a logical inconsistency between these two doctrines, and we could not say that either of them was consistent with the language or purpose of section 1500 and therefore we agreed with the dissenting opinion of Judge Mayer on the panel that the court might be well advised to review its precedents under 1500 altogether, because they had strayed so far from the language and purpose of the statute.

Unknown Speaker: Section 1500, Mr. Wallace, doesn't affect claims pending in any court other than the Court of Claims, does it?

Mr. Wallace: That is correct, Your Honor.

Unknown Speaker: In other words, one could have pending several actions in different district courts throughout the country, and they would be in no way affected by section 1500.

Mr. Wallace: It is an exclusion of jurisdiction only in the Court of Federal Claims, that is what it in terms does.

It provides an exception to any jurisdiction the Court of Federal Claims otherwise would have if these related claims are pending.

Unknown Speaker: Mr. Wallace, at the time that Keene 1 was filed, the only suit then pending was the single action, which you said... the counterclaim that you said could be... or the cross-claim that you said could be used as a stalking horse, right?

Mr. Wallace: Well--

Unknown Speaker: That involved one--

Mr. Wallace: --Possibly.

Unknown Speaker: --That involved one single action--

Mr. Wallace: That is correct.

Unknown Speaker: --Right.

Now, would that have precluded suit in the claims court on the other 999, or 9,999 actions?

Mr. Wallace: That is both our position and the ruling of the Court of Federal Claims in this case, which held that Keene's suit was barred and did not come within any of the established exceptions.

Unknown Speaker: Well, it doesn't involve the same cause of action, even remotely.

It's a totally different cause of action.

Mr. Wallace: It arises from a common nucleus of operative effect, even though it's only a particle of that nucleus.

Unknown Speaker: Common nucleus?

I don't feel it arises out of a common nucleus of operative fact at all.

The Government did one thing in one contract, and it happened to do the same thing in a totally different contract.

Why is that a--

Mr. Wallace: That particular one was among the hundreds that were brought before the Court of Federal Claims.

Unknown Speaker: --Well, it seems to me... it's a common legal issue, but I don't see how it's the same within the language of the statute.

Mr. Wallace: It's a common legal issue between the same parties, and it also is a common issue with respect to the same facts, and if you can break away individual ones into other courts, you're in a situation where the Government could be subjected to collateral estoppel effect.

That's exactly what happened in the Stauffer Chemical case, where the company had first sued to quash a warrant to inspect its facility in Wyoming and had prevailed in the 10th Circuit, and then when the Government attempted to enforce a similar warrant with private contractors to enforce a facility of the same company in Tennessee, this Court held that the company, because it was the same parties, the company was entitled to collateral estoppel benefit of that judgment.

So the fact that it is not a co-extensive claim initially really doesn't change that.

Of course--

Unknown Speaker: Collateral estoppel goes issue by issue.

You can have a lot of issues involved in a single claim, so I don't see how the fact that you'd be collaterally estopped as to certain issues in one claim necessarily means that for purposes of this statute it's the same claim.

Mr. Wallace: --Because it's a claim in respect to.

It's... what the statute says is that the Court of Federal Claims shall not have jurisdiction of any claim for or in respect to which the plaintiff has pending in any other court any suit or process.

Unknown Speaker: You say if it involves any issue that's involved in that... if the other suit involves any issue that is involved in that claim, that would be collateral estoppel as to that claim it is in--

Mr. Wallace: It is in respect to, because we have to worry about defending against it, because it could be used against us in the claim in the Court of Federal Claims were it not for the bar, the jurisdictional bar.

Now, it happens that in this case shortly after filing the initial suit in the Court of Federal Claims, the petitioners then filed their omnibus tort action in New York, so to the extent the court... the Federal circuit was correct in repudiating the Tecon rule now, that issue would wash out of the case in any event.

Unknown Speaker: --Mr. Wallace, I'm a little puzzled by the collateral estoppel argument, because it seems to me that would cut both ways, that if a... you might prevail in the other suit and get the benefit of it, also.

I thought the justification for the statute was something beyond collateral estoppel.

It was the burden of defending multiple cases whether or not... and that collateral estoppel would not be a sufficient protection against that burden of simultaneous litigation.

Mr. Wallace: Well, that is true.

I'm using the collateral estoppel point to show why it is in respect to the same claim that's pending in the Court of Federal Claims even though the one is just a particle of the nucleus of operative fact that--

Unknown Speaker: Is that--

Mr. Wallace: --In an omnibus suit.

Unknown Speaker: --I understand what you're... was that... is that theory of what the words, "in respect to" mean been expressed in any cases?

It seems a rather strange use of the language, very candidly, even though I understand the point you're making.

Mr. Wallace: Well, it has not been expressed in any case that I'm aware of.

This case is unusual factually--

Unknown Speaker: I see.

Mr. Wallace: --Because the two claims are not just an individual's particular claim against the Government brought in two courts, but in the one case it was an individual claim and in the other it's an omnibus bringing together of hundreds of claims, including that one, so the facts as they happen to arise in this case were peculiar, but I do think it significant that while petitioner is... concern and complains that the court of appeals has reexamined some precedents that existed, and they were not precedents of this Court, as the Chief Justice rightly has pointed out, they were only precedents of the old Court of Claims, that both the claims court--

Unknown Speaker: No, but they were precedents, I suppose.

They had nationwide effect, and they were precedents on which the business community might reasonably rely for a long period of time.

Mr. Wallace: --That is correct, but we do not believe that any of them properly applied to Keene's case to begin with.

That was the ruling of the Court of Federal Claims in this case.

That is also the understanding of those precedents by the Federal circuit expressed in the Johns-Manville case that preceded this one.

Petitioner takes a generous, and we think an unwarrantedly generous view of one line of these exceptions called the Casman exception, which had generally been understood to apply when the kind of relief sought in the court other than the Court of Federal Claims was different in nature from a monetary award.

Unknown Speaker: What you're arguing now is that they may not prevail even under the rule they advocate, but that also suggests that maybe the Federal circuit didn't have to go so far to defeat this particular claim.

Mr. Wallace: Well, I think it did not.

It could have affirmed the judgment of the Court of Federal Claims on the narrower grounds that that court used, but Keene and the other parties that were before the Federal circuit that did not pursue their cases to this Court, were arguing for a broadening of some of the established exceptions, and I think it was within the proper functioning of the Federal circuit for them to consider whether, before broadening any of these exceptions, the exceptions were sound to begin with, and this has been hardly a new question.

If I may refer the Court to the leading article on the subject, what is still the leading article on the subject, which was published in the Georgetown Law Journal and it's cited in the briefs on both sides, back in March of 1967, shortly after each of the major three lines of exceptions had been established, the author... the editors of the Georgetown Law Review summarized the author's thesis as follows, if the Court will indulge me for a moment, because it's the final sentence of this summary that is the most telling for our purposes, and I'm speaking of this article by David Schwartz that is cited--

Unknown Speaker: This has greater authority than the Court of Claims decisions, I guess.

[Laughter]

Mr. Wallace: --No, but I think that it shows that the problems with these exceptions were well-known both to the judges and to practitioners and had caused considerable disuse of the statute, but if I may just quote the editor's summary,

"After a careful discussion of the historical background and judicial construction of section 1500, Mr. Schwartz concludes that the statute no longer serves the purposes for which it was enacted. "

"He argues that the tortured constructions made of the statute in efforts to reach equitable results in spite of its wording have resulted in such confusion that it is no longer possible for the practitioner to ascertain what the statute means. "

"In light of these developments, Mr. Schwartz urges the repeal of the section and substitution of a rule of res judicata. "

That is rather close to the principal submission being made by the petitioner to this Court, although obviously the author of the article at least thought that it would require repeal of the statute to reach the result that is being advocated to this Court, and that was the issue that was considered in the recent 1992 hearings in which Senator Heflin's bill to repeal the statute was not adopted by the committee.

There was advocacy of its repeal as well as the statement opposing repeal by the Department of Justice that my colleague adverted to.

Unknown Speaker: Did it ever get out of committee?

Mr. Wallace: Not the repeal provision.

All that got out of committee was changing the language again to reflect the new name of the Court of Federal Claims, if I can keep up with this.

Now, it is also significant that several of the briefs amicus curiae that are nominally supporting the petitioner in this case say relatively little about why the petitioner should prevail, and their chief point is that the Court of Federal... that the Federal circuit needlessly reached the question of whether the Casman exception should be repudiated, because this is not a case within the Casman exception.

And that is the view that the Federal circuit had in the Johns-Manville case as well, and these amici are concerned about the repudiation of the Casman exception.

They did not understand the Casman exception to cut as broadly as petitioner claims it cut.

They understood it the way we in the Federal circuit understood it, to apply only if a different form of relief were being sought, injunctive relief, for example, in the district court, while monetary damages were being sought in the Court of Federal Claims, and here it was essentially the same monetary award that was being sought in both courts.

I just want to say a word about equitable tolling, which we do not think would be appropriate in this case because petitioner, with notice of this statute, deliberately decided to pursue its monetary claims in three different district courts as well as in the Court of Federal Claims.

Unknown Speaker: Well, you say with notice of the statute, and you also say with notice of the interpretation that the Court of Claims had given to the statute which you say would not have brought this within any of the exceptions.

Mr. Wallace: Well, that's right.

They cite, basically, as we point out in our brief, only one aberrational order of the Federal circuit in support of their broader view that the Casman exception really meant that if you had to litigate in two separate courts it was all right to litigate both suits, but that is what the situation of the cotton claimants was, and that was not our understanding, the Federal circuit's understanding, or the understanding of various amici, of the scope of the Casman exception.

My time has expired.

Unknown Speaker: Thank you, Mr. Wallace.

Mr. Taranto, you have 2 minutes remaining.

Rebuttal of Richard G. Taranto

Mr. Taranto: Thank you, Mr. Chief Justice.

I want to make two points, one about reliance interests, and one about the effect of the Federal circuit's interpretation.

The first is that Keene certainly relied on what was a clear rule, whatever the type of relief, in separately filing its tort and contract actions.

So did the Government.

The Government in 1980 initially made a motion under 1500 and then, for tactical reasons, according to its own attorney, withdrew the motion.

The second point: a stay takes care of any Government interest in avoiding or securing the benefits of collateral estoppel, and there can't be any claim that the Government has no way of becoming aware of other suits.

Even if its own internal mechanisms don't provide that awareness, all it need do after the filing of an action is submit an interrogatory and ask if any other actions are proceeding.

So concerns about multiple overlapping litigation... not merely litigation of exactly the same claim, but overlapping related litigation that might involve certain similar issues, are simply not what justifies Federal--

Unknown Speaker: Mr. Taranto, would you comment on what I understand Mr. Wallace's argument to be, that you really don't come within the exception, the particular exception that makes the strongest case for saying Congress said you have to sue in two different forums because you are not seeking purely equitable relief in another forum and damages in this forum?

Mr. Taranto: --Let me make two points.

First, on the has pending question, that's a separate line of authority under which it was absolutely clear and without any kind of dispute that once the other suit was over, the Court of Claims action proceeds.

We win our case under that exception without regard to the scope of claim.

As to the scope of claim, Casman enunciated a principle that said if different types of relief are sought, they're not the same claim because the cases have to be brought in different forums.

It then extended that principle to its natural scope.

Whenever two different claims had to be brought in different forums, they were not the same, and I don't know of a single case in which it was restricted to claims involving different types of relief.

Chief Justice Rehnquist: Thank you, Mr. Taranto.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

United States v. Erika, Inc. - Oral Argument

Thu, 19 Feb 2009 07:43:21 +0000

Case:

United States v. Erika, Inc.

Media File:

80-1594_19820301-argument.mp3

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF EDWIN S. KNEEDLER, ESQ., ON BEHALF OF THE PETITIONER

Chief Justice Burger: We will hear arguments next in United States against Erika.

Mr. Kneedler, you may proceed whenever you are ready.

Mr. Kneedler: Thank you, Mr. Chief Justice, and may it please the Court, this case is here on writ of certiorari to the United States Court of Claims.

The question presented is whether the court of claims has jurisdiction under the Tucker Act of a suit to recover on a claim for benefits under Part B of the Medicare program.

Unidentified Justice: Tell me, Mr. Kneedler, do we reach this if we affirm the last case?

We still reach this issue, do we, even if we affirm the last case?

Mr. Kneedler: Yes.

I think the questions of... the question of judicial review and administrative review by the Secretary are two quite different questions.

The structure and the administration of the Part B program were discussed at some length in the previous argument, and I will not go through all of that now.

I would just like to briefly summarize at the outset.

As Mr. Geller pointed out this morning, the Medicare program is divided into two parts.

Part A provides--

Unidentified Justice: Mr. Kneedler, may I ask one--

Mr. Kneedler: --Yes.

Unidentified Justice: --May I ask a preliminary question, like Justice Brennan did, the converse of his question?

Supposing we reversed here and held there was a remedy for this provider.

Would that also mean there would be a remedy for the Part B claimant in the other case in the court of claims?

In other words, if we reversed you, would that mean there would be a judicial remedy in the other case, the one we just had argued?

Mr. Kneedler: Well, I guess that would depend on the... on the--

Unidentified Justice: I mean, if we affirmed.

I am sorry.

If we affirmed and held there is a remedy.

Mr. Kneedler: --I guess that would depend on the... on the scope that the Court found of the court of claims review.

As Mr. Sohnen pointed out this morning, if the question of bias goes to the question of whether the facts might be found in a particular way, it is unclear under the court of claims decision in this case how closely it would look into the facts in a particular case.

Unidentified Justice: But let me rephrase it.

If we found there was a remedy for a provider, would it necessarily follow there would also be a remedy for the insured?

Mr. Kneedler: Oh, I'm sorry.

I misunderstood your question.

Yes.

Under... under the Part B program, the individual beneficiary can either submit his claim himself or he can assign it to the doctor or other person who furnished the services, but the procedural rights of the two are the same.

The Act and the implementing regulations make clear that the doctor or other furnishers' procedural rights derive entirely from those of the beneficiary, and in fact the Act provides that when the doctor is paid on a particular claim, that the claim is really on behalf of the beneficiary.

So, for purposes of judicial review, as for purposes of the administrative review involved in the earlier case, the rights are the same.

Unidentified Justice: Thank you.

Mr. Kneedler: As I mentioned, the Part A program provides insurance for hospital and related post-hospital services.

Part B, involved in this case, provides insurance for doctor services, medical supplies, ex-rays, laboratory tests.

Under Part B, 80 percent of the reasonable charge for these services is paid by Medicare.

As the court of claims described it in this case, the Medicare Part B program is vast and complex.

There are many millions of claims submitted annually by or on behalf of 27 million beneficiaries, and largely for... because of the scope of the program, Congress provided that the claims would be administered by private insurance carriers.

Now, as I mentioned, claims can be submitted when a person finds or believes that he has received services that are covered by the Act, the claim can be submitted either on his own behalf or by the physician, but as I mentioned, this has no effect on the jurisdictional question in this case, but when the claim is first submitted to the carrier, if the claimant, either the beneficiary or the assignee, is dissatisfied with the carrier's determination of the amount, if any, that should be paid on that particular claim, he can seek the fair hearing by the carrier that was discussed in the previous case.

However, the Act does not provide for judicial review of that benefit amount determination.

This is in contrast to the scheme under Part A, the hospital insurance program.

Under Part A, Congress has expressly provided for a right of judicial review when a request for payment for hospital services is denied, and in that case the review is not in the court of claims, as the court of claims held in this case, but it is pursuant to Section 405(g) of Title 42, which is the standard judicial review provision of the Social Security Act.

This provision is consistent with the fact that the Medicare Act, which is simply Title 18 of the Social Security Act, and Congress incorporated the standard judicial review procedure under Part A for those purposes.

The Respondent in this case is a distributor of medical supplies used by patients who are undergoing kidney maintenance dialysis in their homes.

Many of these patients, customers of Respondent, are beneficiaries under the Part B Medicare program.

Respondent would mail the medical supplies, often in the forms of kits containing all the necessary supplies for home dialysis, to patients around the country, and when the patients were enrolled under Part B, they would in return assign their right to be reimbursed for 80 percent of the reasonable charge for these supplies back to Respondent.

Respondent would then collect these assigned claims and submit them to the Prudential Insurance Company, which is the carrier designated for the processing of the claims received by Respondent.

The period involved in this case in particular is the years... are the years 1974 through 1976.

Respondent became dissatisfied over a period of time with the amount that it was receiving in reimbursement for the supplies that were furnished to the patients, and Respondent requested that Prudential recalculate the reasonable charge on which the reimbursement would be made, and requested that this be done both retroactively for charges that had already been paid and prospectively for the remainder of the particular fiscal year.

Prudential did choose to make a prospective adjustment for one particular product because of exceptional circumstances affecting the price of that product, but for other items, the carrier declined to make an adjustment, principally because of a provision in the Act which limits the amount of reimbursement to the prevailing for the particular service in the locality during the preceding calendar year, so the Act has a built-in limit or ceiling on the amount that can be... that can be paid out.

Prudential's determinations in this regard were sustained after the fair hearing by the carrier, and Respondent then brought this action in the court of claims.

Again, Respondent alleged that the amount that Prudential had paid on its assigned claims was insufficient, and it sought to recover from the United States a money judgment equivalent to the amount of these alleged underpayments.

There is no issue in this case of whether the particular supplies were covered by Part B.

This is simply a question of the amount that would be paid for those services.

The United States argued in the court of claims that the court was without jurisdiction, because the text and legislative history of the Medicare Act demonstrated that Congress intended to foreclose judicial review of individual benefit determinations under Part B.

The government also argued that Section 405 (h) of the... of Title 42 as incorporated into the Medicare Act precluded judicial review of these claims.

The court of claims, however, rejected these arguments.

In that's... in that court's view, judicial review must be available in the court of claims of Medicare claims pursuant to the Tucker Act absent clear and convincing evidence of the Congressional intent to bar judicial review in a Tucker Act suit.

The court acknowledged that Congress had expressly provided for judicial review under Part A, but not under Part B, but the Court declined to view this omission as a foreclosure of judicial review.

In the court of claims' analysis, the express provision for judicial review under Part A simply demonstrated that Congress wanted those particular provisions followed, but in other cases, such as in Part B, where Congress declined to provide for judicial review, that review would be available under what the court of claims termed general jurisdictional provisions, such as the Tucker Act.

The court also rejected the argument based on Section 405(h) of the Social Security Act, observing that it had previously declined to extend this Court's decision in Weinberger versus Salfi, concerning the meaning of 405(h) to Medicare cases in the court of claims.

On the merits, the court of claims remanded to Prudential for a recomputation of the prevailing charge level in the preceding years, and also remanded for Prudential to reconsider whether to grant a retroactive adjustment for the cost of the particular product that Prudential had granted a prospective adjustment in the reasonable charge for.

The court of claims rejected as insubstantial Respondent's constitutional challenge to the... to the means of reimbursing it subject to a ceiling based on the previous year's prevailing charge limitations.

The United State petitioned for certiorari in this Court only on the jurisdictional question.

Neither party has requested the Court to review the merits of the court of claims decision.

The position of the United States in this case is that the jurisdictional holding of the court of claims is inconsistent with the decisions of this Court concerning the scope of the court of claims' jurisdiction under the Tucker Act.

The decision below is also directly contrary to the text of the Medicare Act itself, and to the clearly expressed Congressional intent, both when the Medicare Act was enacted in 1965 and when it was amended in 1972, to bar judicial review of individual reimbursement disputes on Medicare claims in order to avoid deluging the courts with these sorts of claims.

Unidentified Justice: Well, those are quite different questions, I suppose, aren't they?

I mean, you could lose on your second--

Mr. Kneedler: That's correct.

In this--

Unidentified Justice: --and still win on the first.

Mr. Kneedler: --That's correct.

The first... the first ground concerns the established principles governing Tucker Act jurisdiction in the court of claims, and as... as to that we submit that the court of claims was plainly wrong in concluding that judicial review in the form of a suit under the Tucker Act must be presumed to exist in the court of claims absent clear and convincing evidence to the contrary.

In fact, the rule is precisely opposite, as this Court's recent decisions in Testan and Mitchell make clear.

In those cases, the Court has reiterated the established rule that the United States as the sovereign is immune from suit, except as Congress consents to suit, and that waiver of sovereign immunity and consent to suit be implied but must be unequivocally expressed.

The Tucker Act, to which the court of claims referred, is simply a jurisdictional statute.

It confers jurisdiction on the court of claims to consider individuals' suits only when some other statute confers a right to recover a money judgment against the United States.

Unidentified Justice: And waive sovereign immunity?

Mr. Kneedler: And waive sovereign immunity.

Thus, in this case, Respondent had... had a cause of action against the United States, and the court of claims therefore had jurisdiction only if the Medicare Act contains the necessary unequivocally expressed waiver of sovereign immunity, and a grant or... or put another way, a grant of a right to recover, substantive right to recover money damages against the United States when the Medicare Act is violated or no followed allegedly by a carrier.

Unidentified Justice: Mr. Kneedler, can I interrupt again?

Is everyone agreed that the carrier should be treated as though it is an agent of the Secretary for purposes... and that there could be no private action a state court, for example, against the carrier?

Mr. Kneedler: Yes.

We cite in our reply brief a number of lower court decisions that have held that.

There have been... It happens not all that infrequently that an individual claimant will sue a carrier, and the standard procedure for the United States is to seek to have the case removed to federal court, and dismissed on... on the theory that the carrier's immunity is the same as the Secretary's immunity.

Unidentified Justice: And so for purposes of our analysis, it is the government's position that the carrier really is the Secretary within the meaning of all the relevant statutes.

Mr. Kneedler: That's right, for... particularly for purposes of Section 405(h).

That's correct.

Now, returning to the--

Unidentified Justice: Mr. Kneedler?

Mr. Kneedler: --Yes.

Unidentified Justice: Under your view, would... are there any limitations to control a carrier's discretion?

Would... if the... if the carrier just fails to fulfill his obligations, what is the injured party to do?

Mr. Kneedler: Well, the most important protection is the Secretary's oversight of the... of the carrier's performance.

This was discussed at some length in the argument this morning and also in our brief in McClure.

There are a number of ways in which the Secretary monitors the carrier's performance under the... under the contracts, including a review of the hearings that are conducted, and annual contract review.

Unidentified Justice: Is there any right of a beneficiary to take action against the Secretary if the Secretary fails in the duty of oversight?

Mr. Kneedler: There is no... There is no provision in the... in the Act for that to be done as an initial matter.

The overall conduct of the contractual relationship between the Secretary and the carrier would be principally a matter between the two parties, I should think, so the... and there is no indication in the record in this case or... that I am aware of of substantial breakdowns in that sort of... in that sort of contractual relationship.

Now, as I mentioned, under the Tucker Act, in order for the court of claims to have jurisdiction, it is necessary to find the waiver of sovereign immunity.

Respondent concedes that there is nothing on the face of the Medicare Act and nothing in the legislative history indicating specifically that Congress intended to remove the sovereign immunity of the United States in the Medicare Act.

Now, this should be dispositive of the case, because of the line of this Court's decisions concerning Tucker Act jurisdiction that I discussed before, but I think this is particularly so when we consider the nature of the Part B Medicare program.

A court should not lightly infer that Congress would have exposed the executive and judicial branches to the possibility of suit without regard even to the amount in controversy every time a carrier is alleged to have made an error in the particular computation of the amount due on a particular claim or the application of a regulation or instruction to a particular claim.

These determinations generally involve a relatively small amount of money, often involve the exercise of medical judgment, and in addition, the reimbursible reasonable charge for a particular service may vary from locality to locality, and in fact, it was precisely for this reason that Congress chose to rely on the expertise of the carriers who service the particular areas to determine the reasonable charge rates.

But it is not necessary here to rely only on the nature of the Part B program and Respondent's concession that there is nothing specific in the Medicare Act consenting to suit, for in this case the text and the legislative history of Part B demonstrate convincingly that Congress intended to foreclose review of the determination of the amount of benefits due in a particular case.

Indeed, it is difficult to conceive how Congress could have expressed its intent any more clearly.

First, the text of the Medicare Act makes clear that Congress did not intend to expose the United States to suit in these circumstances.

Of particular significance, we submit, is Section 1395(ff) of Title 42.

This is the provision in the Medicare title of the Social Security Act that deals with the circumstances under which an individual beneficiary is entitled to judicial review of matters under the Medicare program.

Section 1395(ff) provides for judicial review under Part A, the hospital program, both with respect to the individual's entitlement to participate in the program at all, in other words, his initial enrollment, and in addition, in certain circumstances with respect to individual claims for reimbursement for hospital services, although the Act provides for judicial review only where the amount in controversy is $1,000 or more.

Under Part B of the Medicare program, however, 1395(ff) provides for judicial review at the behest of the beneficiary only with respect to his initial enrollment in the Part B program, whether he is entitled to enroll, and whether there is any factual question about whether he has enrolled.

1395(ff) does not contain a provision for judicial review of benefit determinations, and we regard this as quite significant, because that is the only section that deals with a beneficiary's right to judicial review.

Therefore, the clear import of Congress's provision of judicial review in one circumstance, one-half of the program and not the other, would appear to be that Congress didn't intend for judicial review under Part B.

Unidentified Justice: Well, that point has nothing to do with the court of claims or waiver of sovereign immunity.

It is just a question of... an ordinary question of reviewability of an administrative decision.

Mr. Kneedler: That's correct, although I--

Unidentified Justice: And isn't... in that context, isn't the presumption normally in favor of reviewability, if that is all you are talking about?

Mr. Kneedler: --Yes, if this were a standard APA type judicial review of agency action, that would be so, but there is another feature of the Medicare Act which runs up against that presumption, and that is Section 405(h), but while this case specifically concerns the court of claims' Tucker Act jurisdiction, we submit that the provisions that Congress has... or Congress's failure to provide some other method of judicial review is equally relevant, because again the standard provision for judicial review of determinations under the Social Security Act, whether it is under the old age and survivor portion or under Part B of Medicare, or SSI, is through Section 405(g) of the Social Security Act, standard review in the district court, and an action filed within 60 days after the individual determination by the Secretary that is being challenged.

Now, there is no reason to think that... and incidentally, I should add that the court of claims has held that it is without jurisdiction over individual social security claims in cases that we have cited in our brief, because Congress has established this separate statutory--

Unidentified Justice: Well, if the court of claims is right, why couldn't anyone just, except for sovereign immunity, you could just get review in the district court, if they are right about reviewability.

Mr. Kneedler: --Well, the... if there would be review anywhere, it would ordinarily be the district court.

Unidentified Justice: Yes.

Mr. Kneedler: That's correct, but Congress has separately addressed that problem by barring review there, but the court of claims has inappropriately applied the presumption in favor of judicial review to the... to the court of claims in which the... the opposite principles apply that a right of action does not exist unless Congress has affirmatively granted it.

Now, it does, going back for a moment to the fact that Congress has provided for judicial review in other circumstances under the Social Security Act in Section 405(g), there is no reason to think that Congress would have somehow thought that that particular form of review is inappropriate for Part B Medicare claims, and decided that somehow the court of claims would be a better forum for those particular disputes.

In fact, one would assume that exactly the contrary would be true, because these are relatively small claims for which Congress would more reasonably have wanted to have review in the district courts, not concentrated in the court of claims.

Now, Respondent has suggested that the failure of Congress to provide for judicial review in 1395(ff), which contains the judicial review provisions of the Medicare Act, is not significant because individual reimbursement disputes are handled under another section of the Medicare Act, 1395(u), which is the section dealing with the carriers' obligations.

The difficulty with that argument is that Congress didn't provide for judicial review of a carrier's decision under that section, either.

So, in the only two sections that Respondent has identified as being relevant, there is an absence of any provision for judicial review, and we think that this is particularly significant again in light of Section 405(h) of the Social Security Act.

The second sentence of Section 405(h) provides that no findings of fact or decision of the Secretary shall be reviewed by any tribunal except as specifically provided in the Act, and as incorporated in the Medicare Act, that would mean except as specifically provided in the Medicare Act, and as I have mentioned, there is no such provision.

Now, as Justice Stevens asked, it is our position that the carrier for these purposes and for purposes of Section 405(h) and the manifest Congressional purpose underlying it, that the preclusion of judicial review by any other tribunal, and that would include the court of claims, would apply equally to Part B claims as it would apply to Part A claims.

If there were any doubt lingering after examination of the text of the Medicare Act regarding Congress's intent to foreclose judicial review, we think that would be dispelled by an examination of the legislative history of both the original 1965 Act and the 1972 amendments to the Act.

We have set forth that legislative history at Pages 27 through 30 of our opening brief, and at Pages 7 through 9 of our reply brief.

Of particular significance is the passage in the Senate report which outlines the different means of review of determinations under Part A and Part B.

The Senate report points out that there is a right to a hearing by the Secretary and judicial review under Part A where there is at least $1,000 in controversy, but under Part B, the Senate report points out that the carriers would review beneficiary complaints regarding the amount of benefits, and

"the bill does not provide for judicial review of a determination concerning the amount of benefits under Part B where claims will probably be for substantially smaller amounts than under Part A.."

Congress had made a legislative judgment that in the generality of cases, the sorts of claims that would arise under Part B were relatively trivial amounts, that it was inappropriate to burden the courts with reviewing that.

But Congress just didn't do this in 1965, it revisited the statute in 1972 and revisited the judicial review provisions because some lower courts... court decisions had carved out what appeared to be an unintended loophole allowing beneficiaries under Part A and Part B to obtain judicial review of essentially coverage questions as to whether a particular service was covered by the statute, without regard to the amount of controversy under Part A, and without regard to the absence of any judicial review generally under Part B, and this was... the introduction and passage of this is discussed on Page 30 of our brief.

Senator Bennett, who introduced the revisions to 1395(ff), pointed out that it was the intention of the... of Congress in 1965 to keep these relatively small claims out of court when it enacted the 1965 Act.

The conference reported adopted Senator Bennett's language, and the conference report states, the Senate amendment added a new section to the House bill which would make clear

"that there is no authorization for an appeal to the Secretary or for judicial review on matters solely involving amounts of benefits under Part B.."

Now, as I mentioned earlier, it is difficult to conceive of how Congress could have expressed its intent any more clearly.

Unidentified Justice: Well, it could have--

Mr. Kneedler: Well, it--

Unidentified Justice: --made it express in the Act, Mr. Kneedler.

Mr. Kneedler: --I suppose, but it did--

Unidentified Justice: Then you wouldn't be here.

Mr. Kneedler: --It is... it is expressed in the Act in our view in Section 405(h) of the... in Section 405(h) of the Social Security Act, the preclusion of judicial review is expressed.

Unidentified Justice: You are just arguing that it can't be implied.

Mr. Kneedler: Certainly as to Tucker Act jurisdiction, that would be contrary to the established rule and this Court's decisions.

Unidentified Justice: Do you have to do any more than that, in your view?

Mr. Kneedler: Not in this case.

If there are no further questions at this time, I would like to reserve the balance of my time.

Chief Justice Burger: Mr. Oleskey.

ORAL ARGUMENT OF STEPHEN H. OLESKEY, ESQ., ON BEHALF OF THE RESPONDENT

Mr. Oleskey: Mr. Chief Justice, and may it please the Court, I think there is some agreement between the government and Erika on some of the issues that were discussed by Mr. Kneedler and also earlier by the Solicitor General in the McClure case.

Those points of agreement, I think, add up to acknowledging Erika's central proposition to this Court today, which is that under these circumstances where, as was earlier conceded, a unique or sui generis system has been evolved to deal with 27 million covered beneficiaries in a voluntary program, where $11 a month, going to $12.20 soon, I understand, is paid in premiums, is delegated fully and finally with no judicial recourse anywhere to a private insurance carrier.

And it is our proposition today that due process, meaning some review by some court, is fundamental in this circumstance, and given the particular context in which Erika's claim a rose, namely, a claim by assignment in this case in the hundreds of thousands of dollars for Part B benefit claims, money, that the appropriate forum to review at least the constitutional and statutory aspects of that claim is the United States Court of Claims under the Tucker Act.

Unidentified Justice: Well, would you... would you say it would be unconstitutional for the... for the law to have precluded review if the system had been wholly... if the claim system and the review system had been carried out by government officials, by the Secretary's people itself?

Mr. Oleskey: Well--

Unidentified Justice: Would you have to be able to get into court?

Mr. Oleskey: --I would say in that case that you would go to the test, Mr. Justice White, that the Court articulated in Mathews and Eldridge, and balance the interest if there was an unequivocal indication that, I think as you asked earlier, there bad been no intent to provide any review.

The starting point in that analysis has to be the inquiry as to whether the intent has bean expressed to wholly deny judicial review.

In this case, we are in... we are in, in my judgment, at least, a stronger position in insisting that due process requires judicial review, because you don't even have an agency of the government which has been presumed at more fairly, at least in many cases, making the review through an ALJ, where you have a private insurance carrier with a built-in bias interest that was pointed out in McClure making a total and final determination if the government is right.

But the specific answer to your question is, you would have to look at whether Congress had clearly and unequivocally intended to deny any right of review from the administrative decision in the government, and then see on the balancing test under Mathews and Eldridge whether in this Court's judgment that was still an appropriate action for Congress to take.

The only instance that I have been able to locate in the cases that the government cited where there hasn't been a specific provision for such a review would be in the veterans' benefit cases, for example, Johnson and Robinson, although that case didn't go off on at such, which seems to have been the review issue recognized by Congress as a special area, because they view pensions as a special area, and there is legislative history in that area which you cited in Johnson and Robison where Senator George in 1940 says, in substance, we just have always seen pensions as different, and you don't get judicial review because we want a uniform system, which today would be treated again, I think, by this Court on a Mathews and Eldridge balancing test, but the fact is--

Unidentified Justice: Well, how do you get into court in the first place if Congress says there simply is to be no judicial review of these decisions?

Mr. Oleskey: --Well, that is the point at which the government and Erika in this case, Mr. Justice Rehnquist, as well as, I think, eight of the nine circuits that have considered the issue disagree.

The government refers in its brief and again today to Erika's concession that there is no review provided in the Tucker Act for money claims.

That is not the concession in our brief, read carefully and fairly.

It is not the concession which we make here today.

Unidentified Justice: I was asking a hypothetical question.

I didn't assume that you had conceded the point.

What if Congress says in the authorizing statute there is to be no judicial review in any court of the United States?

Mr. Oleskey: Well, I think that is pretty much the question I have tried to answer to Mr. Justice White, and my view would be, if it is clearly and unequivocally expressed and you apply the Mathews and Eldridge balancing test of private interest, government interest--

Unidentified Justice: Well, how do you get to Mathews and Eldridge if Congress says there shall be no judicial review?

Mr. Oleskey: --Well, this is the question that the circuits have come up against, and every one of them has said--

Unidentified Justice: What is your answer?

Mr. Oleskey: --My answer is that where the protective property right, which the government has conceded today again, is involved, you can't take it away without some right of review in a court, at least a property right of this nature, which we say is contractual, unlike the right in Salfi under the Social Security Act--

Unidentified Justice: So you would say that it wouldn't be a suit against the United States at all.

Mr. Oleskey: --No.

Unidentified Justice: It would be a suit against an officer who is an ex parte Young officer.

Mr. Oleskey: Well, we would say--

Unidentified Justice: And that you could... it would be a review... It would be review of an erroneous official decision.

Mr. Oleskey: --We would say--

Unidentified Justice: Contrary to the law.

Mr. Oleskey: --We would say in some cases that the mandamus statute may be properly invoked against the Secretary if his... if his action is egregious enough and if there is no money claim which can otherwise be presented in the court of claims.

This case, or the implications of this case are surely broader than the issue which is before you here, but it happens that the case is so framed because Erika did have a claim for money, and the court of claims had said, starting in 1976, in the Whitecliff case, that it would take jurisdiction of such cases because it did not feel it was precluded either by Salfi or 405(h) in these limited circumstances from examining constitutional or statutory violations of the Medicare Act in the context of examining or deliberating upon money claims made by the carrier below.

Unidentified Justice: Mr. Oleskey, you emphasize the point that you rely on a contractual claim here, whereas Salfi involve a claim that Congress could revoke.

Now, do you claim that the beneficiary here has a contractual claim as well as your having sort of third party benefit?

Mr. Oleskey: That's right.

We say that we stand in the beneficiary's shoes.

Unidentified Justice: And why does the beneficiary here have a greater contractual claim than a social security claimant?

Mr. Oleskey: Well, I would say principally, Mr. Justice Stevens, because the beneficiary here, rather than simply having benefitted as someone whose wages were taken involuntarily over the course of his working life under the social security system, has voluntary agreed with the government to make an extra payment monthly, which as I say is now $11, in order to have the benefit of Part B coverage.

He has stepped forward and agreed to enter into an undertaking that is different in kind and amount that anybody enters into in any other benefit program, including social security.

In return for that, he is entitled to the assurance that the claims will be paid in accordance with the statute and the regulation, and ultimately that comes down to whether or not either the beneficiary or the carrier in this... the provider who was supplied by assignment is going to be paid in accordance with this reasonable charge language in the statute.

One of the problems here, as the court of claims saw, was that the statute on its face was not being honored by the carrier in the fair hearing.

The constitutional claim that we raise which was a denial of just compensation under the due process clause, was denied, but the court of claims, as its decision makes clear, found fundamentally that the statute on its face as applied by the carrier had not been honored.

There was for Erika here as for other... as for other suppliers in other instances no other place to go in this circumstance, if the government is right that the court of claims is foreclosed.

Although the government in its brief has attempted to mitigate or downplay the implications of its position, it has-argued consistently, to my knowledge, since at least 1976 in every circuit and in the court of claims that Congress intended that there being no review of any type of benefits denial under Part B, no matter how egregious the denial... the action by the carrier, including the affirmation in the fair hearing.

The answer to the question that was posed earlier, I think, which was that the Secretary himself could be expected to be the final authority who would ensure that at in effect due process was done is illusory, and not really accurate.

There is no more reason to believe that the Secretary is going to deal ultimately in a due process sense fully and fairly with law questions under the statute and certainly under the Constitution, the latter being beyond his authority anyway, than the... than the hearing officer will, and that is the vice of the system.

The McClure Joint Appendix makes it clear that the hearing officer, and we would say the ALJ if Judge Orrick's decision was going to be sustained, are in exactly the same position, and that Joint Appendix, at 21 and 51 respectively, points out that the authority of the hearing officer is limited to the extent that he must comply with all provisions of Title 18 of the Act, all regulations, all HCFA rulings, general instructions and other guides issued by HCFA or the Medicare Bureau.

The hearing officer does not have the prerogative of overruling the provisions of the law or interpreting them in a way different than that of the Medicare Bureau when he is in disagreement with their intent, nor may he use hearing decisions as a vehicle for commenting upon the legality, constitutionality, or otherwise of the provisions of the program.

It goes on to say that his authority is definitively restricted by these parameters.

So, if the Secretary, as my brother has argued, is overlapping and fully to be seen, which in fact he is not, since you don't get a review to the Secretary under the government's position at all, nor do you get an appeal to the Secretary, but to the extent they find the Secretary in his functions overlapping with the hearing officer, the manual itself, which is before you in the Joint Appendix, makes it clear that in effect whatever the interpretation is that HCFA, the child of HHS, puts on the statute or the regulations is going to be binding both on the hearing officer and on the Secretary in this supposed watchdog function.

In effect the question, I think, becomes the old one of who is watching the watchdog where there is no judicial recourse, when the watchdog is supposed to be watching the carrier, with all the interest that you heard earlier.

Well, the government's answer, fairly put, here is, no one is watching their watchdog, the Secretary of HHS, and that is the vice, if they mean their concession today, which I am sure they do, namely, that due process requires some opportunity for a review by a fair tribunal when property is about to be taken, and the government has conceded here and in other cases before this at lower levels that this interest under Part B benefits is a property interest.

To address the second aspect of where we find the waiver of sovereign immunity besides the contractual relationship which we say Erika enjoys both as a third party beneficiary and in its own right, that is in a reading of the Medicare statute itself.

Now, in Testan, this Court said, and in other cases which the government and we have cited, that sovereign immunity waiver can be found in the Tucker Act by reference to a substantive right, either a contract right, which I argue is present here in several respects, or in a statute fairly read.

The government continues to confuse in my view the notion that you have to look to that outside statute with its substantive rights in effect to fill the Tucker Act jurisdictional vessel, as if that statute itself need state explicitly, yes, you may sue the United States.

I don't think that is what Testan or any of the other decisions of this Court in fact stand for.

They stand for the proposition, as you said there, that you have to find the substantive right to money damages or compensation in the other statute, not the right to sue.

Indeed, were it otherwise, the Tucker Act, which is a general grant to sue the government under various circumstances, as the Court is aware, wouldn't have any meaning, because you would have to go ahead on every statute and say, as the Congress, and, by the way, the Tucker Act may be invoked if things go awry under this statute and you have a money claim against the United States.

The fact is that the Congress has known when it wanted to very clearly how to limit Tucker Act jurisdiction when it would otherwise be found by reference to some other statute conferring a substantive right, either by contract, as here, or by virtue of the statute itself, as here.

For example, I believe it is 28 United States Code 1500 to 1502, provide three very explicit limitations on the jurisdiction of the court of claims.

Those are that you can't sue in the court of claims where you have brought a suit in some other court in substance on the same ground; you can't sue for pension rights... that same theme that seems to be a special area of the Congress... and you can't sue for rights arising under treaties with foreign nations.

So that Congress has known very clearly when it wanted to limit Tucker Act jurisdiction, which the court of claims has been asserting here broadly since 1976 how to do it.

In addition, there are Acts like--

Unidentified Justice: Well, Testan and Hopkins, and cases like that, where we have held the court of claims overreached itself under the Tucker Act, certainly weren't barred by those three examples that you gave of limitations on court of claims jurisdiction.

Mr. Oleskey: --That's correct, but in Testan, for example, when you examine the two statutes which the Petitioners had pointed to for the substantive rights, there being no contract claim, unlike this case, you found that neither the Back Pay Act nor the Classification Act conferred a substantive right for money damages for the misclassification that had gone on.

By contrast, here, under the Medicare statute, we are looking at a statutory scheme, an insurance policy, as I think you yourself described this, Mr. Justice Rehnquist, in Salfi, which provides for payments in accordance with a policy term, which are the statute and the regulations.

Unidentified Justice: But Salfi, of course, was described as an insurance policy, but clearly there is no contractual right under Fleming against Nestor.

Mr. Oleskey: That's correct, and I tried to recognize that by addressing the contractual nature of the relationship here, and how I believe it differs from that of a social security beneficiary as discussed in Salfi.

In addition, to follow up on the concern, in cases like the veterans' statutes, in Robison, specifically, when you were discussing what Congress had done there, you pointed properly to explicit statutory bars, not silence, which the government insists on reading as a concession here, but explicit statutory bar which say, the decision of the administrator shall be final, it shall not be reviewed in any tribunal anywhere under any circumstances.

Unidentified Justice: Well, what about Senator Bennett's statement in connection with the 1972 amendments, where they found some of the lower courts were allowing the thing to be circumvented, which very, very frequently happens?

Mr. Oleskey: Senator Bennett and the other decisions which... the other language which the government cites in its legislative history record indicates clearly a Congressional concern that the courts not be flooded with administrative... pure administrative review decisions under Part B, thousands of little decisions.

As the government has argued here today, however, the decisions in fact are fairly few in number that are not resolved in some respect or other to the claimant or assignee's benefit ultimately by the time the fair hearing is over.

Of course, the government would also like to have it both ways, because they have argued all the way through in this case that if you allow the court of claims to assert its own jurisdiction as it sees it here, the floodgates are open and that court will be flooded with thousands of claims.

Well, the $1,000 limit that obviously prevails is one answer, and the specialized nature of the court of claims jurisdiction, including the money requirement, the claim against the United States requirement, and the fact there are no jury trials, and the fact that you have to come to Washington, D.C., which is expensive for most claimants, as was established earlier, all answer that argument.

The fact is, to return to my earlier point, when the Congress has wanted to say explicitly no review, even in the risk of the constitutional dilemma which the Court has rightly posed today, it has known how to say it.

It is significant in addition that although... and although it is not cited by the government or by us in our brief, in the Omnibus Reconciliation Budget Acts of the last two years, there have been extensive amendments made to the Medicare an Medicaid legislation.

In neither instance was anything done to address this issue either before the court of claims decision, but in the five years after the Whitecliff decision, or in the face of the Court's decision last year in Whitecliff... in this case.

Unidentified Justice: Well, if we... if we construe the Act together with such history as the government contends, then must we, because you present the issue, reach a constitutional issue?

Is the constitutional issue pressed by you?

Mr. Oleskey: I... the constitutional issue does not have to be met, because we say--

Unidentified Justice: Well, I know, but suppose we agree with the government that the Act, properly construed, precludes review in the court of claims, that Congress intended not to provide the review.

Then, are you... are you presenting as an appellee the constitutional issue?

Mr. Oleskey: --Well, I understand well this Court's concern that you not address constitutional conflict like that if you need not.

I think you would have to... you would have to agree with the government that Congress explicitly and unequivocally intended--

Unidentified Justice: Yes.

Suppose we do.

Mr. Oleskey: --Then I think you have a constitutional problem, yes.

Unidentified Justice: Well, have you presented it as an appellee?

Mr. Oleskey: Yes, we have.

That is at... that is in the brief, Mr. Justice White, starting at Pages 28 on.

42 USC 405(b) does not preclude court of claims jurisdiction over Part B.

The United States position unnecessarily raises serious constitutional questions.

Unidentified Justice: Is that the most you say about it?

Mr. Oleskey: Well, I made the point earlier, I hope, that where a property right is involved, where there is this concededly unparalleled allegation to a private entity, here, an insurance company, sometimes Blue Cross-Blue Shield, to make final and irrevocable decisions about the disposition of that property, if you buy the... if you accept the government's position, I think there is a constitutional issue about whether Congress acted properly.

I don't think you have to accept their position, for the reasons I have suggested.

The best statement of the dilemma that I could find, I sat yesterday--

Unidentified Justice: So you are saying... apparently your submission is that even if all the claims machinery was inside... was in the hands of the Secretary's own people, and he had given them a fair hearing, that unless judicial review is provided, we have a constitutional issue.

Mr. Oleskey: --Well, I say, if the Secretary has the mechanism, which he doesn't here, it is all in the carrier, there is no right of appeal to the Secretary, and no judicial review from that point, then you go back and look at your language about the clear and unequivocal intent of Congress to withdraw jurisdiction, and if you find that you still have to apply the Mathews and Eldridge three-pronged test balancing those interests, but that is not this case.

It isn't even close to this case, Because the government has made it clear that there is no right to go to the Secretary--

Unidentified Justice: Yes.

Mr. Oleskey: --in any respect on a Part B benefit.

Unidentified Justice: Yes, but what if we... what if we agree with the government in the other case, that that is not a biased procedure or anything of the kind, and it is a full and fair hearing?

It is just as good as though it were done by the Secretary himself.

Mr. Oleskey: If you agree with the government in McClure that the district court should be reversed, you still have the problem of decisions as to the constitutionality of the Act or regulations or... or regulations under the Act which are beyond the power of the Secretary himself to deal with, because he is the Secretary.

That position was... was summed up in my judgment very eloquently by Justice Brandeis in the St. Joseph Stockyard case, which I discovered yesterday, feeling that someone here would want to know penultimately where that due process claim is ultimately bottomed, and just briefly, he said,

"When dealing with constitutional rights, as distinguished from privileges accorded by the government."

--of course, we say that a statutory claim here is something less than a constitutional right but something more than a privilege accorded by the government...

"there must be the opportunity of presenting in an appropriate proceeding at some time to some court every question of law raised, whatever the nature of the right invoked or the status of him who claims it."

That is the difference really between an Article III tribunal and the matters which an Article III court like this one or the court of claims may hear and matters which a legislative court, so-called, an Article I court may hear, and typically the Secretary has been held, I think, in repeated decisions of this Court, whether of this department or any other, not to be competent to pass on the constitutionality by definition of his own actions.

The court of claims has said--

Unidentified Justice: Yes, but Mr. Oleskey, those are cases involving regulation rather than contracting, the government as a contracting party.

You contend that the Tucker Act was constitutionally mandated, I guess, that the United States would be without power to enter into a contract without giving the other side to the bargain judicial review of the government's performance.

Mr. Oleskey: --Well, the Tucker Act is an explicit decision by Congress, which is obviously exemplified in other areas, too, that would--

Unidentified Justice: We are just confining ourselves to the constitutional question.

Would it be constitutional for Congress to enter into a contract and authorize somebody on behalf of the government to enter into a contract with a private party and say, there shall be no judicial remedy against, the United States in the event there is a breach?

Mr. Oleskey: --I would say, given the nature of the contractual and statutory rights involved here, if I have fairly defined them, the answer is, no, it wouldn't be constitutional, but you don't have--

Unidentified Justice: What about my case?

Just a simple, special statute says, in buying a battleship, you can enter into a contract with the shipbuilding company, there will be no contractual right against the United States on that contract.

Mr. Oleskey: --Well, I see a difference there, because in buying a battleship there is some--

Unidentified Justice: Well, whether there is a difference or not, do you doubt the constitutionality of such a statute?

Mr. Oleskey: --Well, I can't answer the question fairly, Mr. Justice Stevens, as posed that way, but I think there is a freedom of contract involved in dealing in that situation which may be held by this Court not to be capable of being vindicated by any court, but here, you have beneficiaries who have agreed to pay their premiums monthly in order to receive payment or compensation from the government determined by a reasonable charge mechanism, which is defined in the statute.

That is a very different economic and legal relationship, in my judgment, than that which is suggested--

Unidentified Justice: Why?

Why?

Why is it different from my case?

Mr. Oleskey: --Because there is more volition or voluntariness involved in the dealing in that case.

You don't have to go ahead and deal with the government to buy the battleship.

Unidentified Justice: But I thought you stressed the fact that this was voluntary as opposed to social security.

Mr. Oleskey: It is voluntary, Mr. Justice Rehnquist, but in the final analysis, as everyone recognizes, for the medical protection that is involved, and given the objective of Congress, which was to assure starting in 1965 insurance against catastrophic medical expenses, there is no option available for most people other than the very wealthy.

Unidentified Justice: Well, so you say then it is voluntary or it is not voluntary?

Mr. Oleskey: I say it is a voluntary act, but it has to be seen against the goals of Congress and the need which is being met, which... which makes it in a practical sense mixed, a mixture of actions, but--

Unidentified Justice: As far as Erika was concerned, though, it presumably knew that the carrier would determine what reasonable charges are, and in that sense it got exactly what it expected the statute would get.

Mr. Oleskey: --No, it didn't, because what it bargained for in its relationship through its assignors was a reasonable charge determination in accordance with the statute.

What the court of claims has determined was that by taking Erika's catalogues, which gave one price for one point in time from 12 to 24 months earlier than the period for which compensation or reimbursement was being made, Prudential had fundamentally violated the statute.

We wouldn't have a complaint, I quite agree with you, as Erika if the reimbursement had been made wholly in accordance with the statute, but it wasn't.

Unidentified Justice: Well, I am aware of the claim, but it just seems to me that Erika realized when it undertook to enter into the relationship that these questions were going to be answered by the carrier, and took that risk.

Mr. Oleskey: Well, it took a risk if the questions weren't... if the claims weren't paid accurately that some day a court might decide there was no recourse--

Unidentified Justice: That's right.

Mr. Oleskey: --but you have to read the statutes with hindsight to Erika as mandating no recourse rather than merely as being silent in terms of judicial review through the district courts for good reason to come up with that conclusion.

I don't think it's fair in hindsight to say that Erika was totally on warning in dealing with the government that some day the argument would be made here and accepted by this Court--

Unidentified Justice: Well, Mr. Oleskey, what about the... what about the language on Page 27 and 28 of the government's brief on the legislative history?

Shouldn't that have put you on notice?

Mr. Oleskey: --It puts... it puts you on notice, Mr. Justice Stevens, that you are not going to get review in the district court as Part A beneficiaries for both entitlement and benefits and Part B beneficiaries are entitled.

It doesn't tell you that when you have been able to reduce the issue to the discrete one of an amount of money being claimed, that there is no way you can go, given the existence of the Tucker Act, and what we say is the fair import of the Medicare legislation, to provide reasonable charge compensation either to the beneficiary or to the carrier or supplier as the case may be under assignment.

So, it did put you on notice particularly with the government's position consistently that you couldn't go to the district court--

Unidentified Justice: Just one word, counsel.

Mr. Oleskey: --Yes, sir.

Unidentified Justice: Do you still say this is a contract case?

Mr. Oleskey: I say that it is enough of a contract case--

Unidentified Justice: Well, is it a contract case?

Mr. Oleskey: --Yes, it is, Mr. Justice Marshall.

Unidentified Justice: You still say that.

Counsel, there are a number of Acts, and one comes to mind particularly, the International Claims Act, which affirmatively and explicitly provides that the decision of the International Claims Commission will be final, binding, and there would be no judicial review, so that eliminated the first question you have here.

Do you suggest that that kind of an Act proposes a constitutional question of the right of Congress to deny judicial review?

Mr. Oleskey: No, because if I understand your question, there was there either apparently an Article I tribunal at least which is available to adjudicate the rights of the parties.

Here there is not even an Article I tribunal available, if the government is right.

Unidentified Justice: Offhand, I don't know whether the International Claims Commission and that type of commission is an Article I, and they dealt with claims in the post-war period running into millions if not billions of dollars.

Mr. Oleskey: Well, that... the--

Unidentified Justice: But no review was allowed.

The Congress appears to have been particularly concerned about rights in that instance, because I noted in looking at the United States Code that they had withdrawn explicitly Tucker Act jurisdiction from the court of claims over such claims.

Again, that wasn't done here.

Why isn't Justice Stevens absolutely correct in suggesting that any time you have a contract with the United States, and you have performed, and you have what anybody would say is a... is a justifiable contract claim which you can say is a property right, there certainly is an expectation of being paid, why wouldn't you say that it would be unconstitutional for the United States to claim sovereign immunity in those cases?

Mr. Oleskey: --I don't think I can better answer the question than by pointing to the nature of the bargaining relationship which I think exists in that hypothetical on the one hand and between the 27 million--

Unidentified Justice: Well, the United States promises to pay upon performance.

Mr. Oleskey: --Yes.

Unidentified Justice: And the contractor has performed, he says.

Mr. Oleskey: Well, typically, of courage, that would be the type of case which would lie within the court of claims jurisdiction under the Tucker Act.

Unidentified Justice: Yes, only the United States just happens to say that in this line of contracts, there will be no Tucker Act jurisdiction.

We are asserting our sovereign immunity.

Now, why... wouldn't that be unconstitutional?

Mr. Oleskey: Well, if on the balancing test you found that the property interest was not substantial enough in the party contracting with Congress--

Unidentified Justice: Well, you are saying then that you would have to apply some kind of a due process test to see whether sovereign immunity was constitutional or not.

Mr. Oleskey: --Well, sovereign immunity is the sovereign's inherent right to limit its suit.

All we are saying is that where, as here, it is fairly inferred either from the statute or from a contractual relationship or both that there is some recourse for this limited claim, that you need not reach a constitutional issue of the magnitude that the Court has been posing to me.

We don't think that is this case.

Thank you.

Chief Justice Burger: Very well.

Do you have anything further, Mr. Kneedler?

ORAL ARGUMENT OF EDWIN S. KNEEDLER, ESQ., ON BEHALF OF THE PETITIONER -- REBUTTAL

Mr. Kneedler: Yes, Mr. Chief Justice.

If I could add a few things, first, with respect to the contract claim, I would like to point out that Respondent did not assert a contract with the United States as the basis of Tucker Act jurisdiction in this case.

The jurisdictional provision of the petition in the court of claims referred to--

Unidentified Justice: But Mr. Kneedler, isn't the quote right that there is a difference between this claim, where there is a voluntary decision by the beneficiary, and a Social Security Act claim, whereas this would be contractual and the other would not?

Mr. Kneedler: --I think not, Mr. Justice Stevens, for several reasons.

First of all, about 70 percent of the benefits paid out under the Part B program are paid out... are contributions from the federal treasury.

Only about 30 percent are paid by the individual.

Unidentified Justice: Well, but what about the 30 percent?

Mr. Kneedler: Well, but there is no reason to think that Congress expected when it was enacting the Part B program with large... in large measure funded by... out of the general treasury that somehow Part B claims took on a different character than other sorts of social security benefits.

Unidentified Justice: Is he right that the beneficiary has to make a decision as to whether or not to participate, which is not true of social security?

Mr. Kneedler: No, but I think... I think whether--

Unidentified Justice: That is right?

I am just--

Mr. Kneedler: --Oh, that's true.

No, that is... that is true, but all the means is that Congress has simply made a person's eligibility to participate in the program voluntary, and in fact under the Social Security Act the payment of taxes may be--

Unidentified Justice: --Well, would you contend that Fleming against Nestor would apply, that Congress, after collecting the money, could constitutionally say, we have decided not to... we just decided to welsh?

Mr. Kneedler: --Well, I--

Unidentified Justice: We just call the program off.

Would you say that... At least the Nestor case doesn't hold that, does it?

It would not apply to these--

Mr. Kneedler: --I'm not... I'm not so sure that it wouldn't, because Congress did not... as I say, there is nothing on the face of this to suggest that Congress believed it was entering into a contractual relationship.

It simply means that the payment is voluntary.

The receipt of social security benefits is voluntary in the sense that a person doesn't have to file an application for them, and it seems to me that whether or not a person voluntarily participates is not the point.

But I think the more central point here is that even assuming that there is a contract, one provision of that contract, as Respondent characterizes it, derives from the Act itself.

Congress offers an insurance program, the beneficiary accepts it.

Well, one of the provisions of that contract would necessarily be the preclusion of review that is contained in the very same statute that Respondent says creates a contract.

So that the contract argument here simply does not advance their argument.

Unidentified Justice: --But you, in order to win, you don't have to take the extreme position that the government could simply just say, we are not going to pay the--

Mr. Kneedler: No, that is not... that is not involved in this--

Unidentified Justice: --But your position is that they have an adequate mechanism for determining whether or not there is any obligation in a particular case.

Mr. Kneedler: --Yes.

Unidentified Justice: And you have also... you say that he has also notified him in advance that--

Mr. Kneedler: Yes, absolutely, it is on the face of the Act.

Unidentified Justice: --that, by the way, friend, we are not waiving sovereign immunity.

Mr. Kneedler: Yes, and also the acceptance of assignments by Respondent was entirely voluntary here.

Respondent could have instead allowed the patients to submit their Part B claims to the carrier.

The other point I wanted to mention with respect to the constitutional question that Respondent suggests is involved here, the only constitutional question this Court has suggested might arise in a case involving judicial review is if there is preclusion of judicial review of a constitutional question, and even then the Court hasn't said that that would be unconstitutional, but simply that it would raise a constitutional question.

Well, that issue simply isn't involved here.

The court of claims rejected Respondent's constitutional objections to the method of reimbursement in this case.

Respondent has not sought review of that decision, and it is simply not involved here.

All that is involved is Respondent's objection to the manner in which the carrier calculated the claims as a matter of administrative procedure, and this Court has never suggested that that would be unconstitutional, and in fact the veterans' program, for example, that involved in Johnson v. Robison, there is no... it is quite plain, and it was an assumption of this Court's decision in Johnson v. Robison that the ordinary xx under the Veterans Act is not subject to xx review, and that is all that... that is xx that is involved in this case.

Thank you xx--

Chief Justice Burger: Thank xx The case is submitted.

Attribution:

The Oyez Project

Featured:

Underwriters Assur. Co. v. N.C. Guaranty Assn. - Oral Argument

Fri, 09 Jan 2009 14:47:32 +0000

Case:

Underwriters Assur. Co. v. N.C. Guaranty Assn.

Media File:

80-1496_19811109-argument.mp3

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF THEODORE R. BOEHM, ESQ., ON BEHALF OF THE PETITIONER

Chief Justice Burger: We will hear arguments first this morning in Number 80-1496, Underwriters National Assurance Company against the North Carolina Life and Accident Association.

I think we will wait just a moment, counsel, for our friends to go and sign the register.

0....

You may proceed whenever you are ready.

Mr. Boehm: Mr. Chief Justice, and may it please the Court, this case raises the question whether the Indiana judgments relating to the rehabilitation of UNAC, as the insurance company involved in this case is colloquially called, are entitled to full faith and credit in North Carolina as a result of the procedures that were implemented.

There are two judgments of the Indiana Court that UNAC submits are entitled to full faith and credit, and preclude relitigation of the issues that the Respondents seek to raise.

The history of this proceeding started in 1974, when the Indiana Department of Insurance, pursuant to a statutory mandate to take over the operations of a failing insurance company organized under Indiana law, did just that.

As a result, pursuant to the Indiana statute, the Indiana Insurance Commissioner, as rehabilitator, became in possession of the business and assets of UNAC.

That is the statutory language.

Subsequent to that time, a notice was sent out by the Court.

The first notice that went out in 1975 was a Rule 23(B)(3) notice with which this Court is fully familiar, because Indiana trial procedure is exactly the same as federal trial procedure in this respect, and just about exactly at the same time that the Indiana Commissioner took over UNAC, UNAC was sued in two class actions, one in state court in Illinois and one in federal court in Virginia.

The state court in Illinois case was removed to federal court in Illinois, and each case was then stayed pursuant initially to an injunction issued by the Indiana court and then ultimately by agreement.

The class plaintiffs in those two lawsuits then intervened in the Indiana proceeding, and those class plaintiffs were ultimately certified as class plaintiffs on behalf of all policyholders.

The claims they were asserting were essentially that UNAC had defrauded the policyholders into entering into the policyholder relationship.

So, the first thing that went out was a Rule 23(B)(3) notice with respect to those claims.

It also explicitly told the policyholders that whether or not you opt out of the class pursuant to Rule 23(B)(3), you may ultimately be bound by a plan of rehabilitation in your capacity as a policyholder.

We don't know at this time whether there will be a plan of rehabilitation, but if there is one, you are in court in Indiana in your policyholder capacity, irrespective of whether you want these plaintiffs to represent you in prosecuting these fraud claims.

So, there are two jurisdictional hooks, if you will, operating on this situation.

No North Carolina policyholder opted out.

As a result, all of the North Carolina policyholders were in court in Indiana, both as class plaintiffs and as policyholders.

Unidentified Justice: If one had opted out, would we have a different situation?

Mr. Boehm: Well, we would have a different situation with respect to one issue, but not as to the fundamental issue that UNAC relies on, which is that qua policyholders, the policyholders are bound by the plan of rehabilitation, which is entitled to full faith and credit in all states once entered as a judicial decree.

There is a second, if you will, fall-back position that UNAC has that they are also bound as non-opting out plaintiffs by a settlement of their class claims as well, but that raises another whole complex of issues as to the nature of a multi-state Rule 23(B)(3) claim, and how the plaintiffs relate to the state of jurisdiction.

There are cases that hold, and they are cited in our brief... the Kansas Supreme Court Shutts case is the leading one, that holds that a plaintiff who is a member of a class is in court and can be bound even though he is not a resident of the state and has no other jurisdictional connection with the state, but that issue is only reached in this case if you should hold, which we submit would be incorrect, that UNAC's plan of rehabilitation cannot bind the policyholders as such.

Unidentified Justice: Mr. Boehm, in one of the two Indiana actions, some of the North Carolina parties' action intervened, did they not?

Mr. Boehm: Yes, sir.

At that point in my narrative, that happened.

The North Carolina Guaranty Association intervened at the point after the class was certified, and after the time for opting out had expired, but before any plan of rehabilitation had been implemented.

The North Carolina Guaranty Association, as you know, is here in its capacity as assignee of the policyholders' claims by operation of the North Carolina statutory framework, which makes them liable to make good on the policyholders but also gives them whatever rights it gives the company.

Unidentified Justice: Mr. Boehm, is that the group that has an appeal pending in the Indiana courts?

Mr. Boehm: Yes.

Unidentified Justice: From which of the judgments, the rehabilitation--

Mr. Boehm: The second.

Unidentified Justice: --The second?

Mr. Boehm: The second.

Unidentified Justice: And that is the basic one, is it?

Mr. Boehm: That is really the supplemental.

Unidentified Justice: Supplemental.

Mr. Boehm: Yes, sir.

Unidentified Justice: What is the status of that appeal now?

Mr. Boehm: It is pending.

Oral argument was held a few months ago, and the court took it under submission and indicated that it would stay proceedings pending a resolution of this Court's proceeding.

Unidentified Justice: Until this Court decides.

Mr. Boehm: They are waiting for you, is what it boils down to.

Unidentified Justice: But there was never any appeal from the 1976--

Mr. Boehm: That is correct, and that is the key point, or key point.

That 1976 judgment that implemented the plan of rehabilitation is binding, and the time for appeal has run, and it is entitled to full faith and credit.

Now, when the North Carolina Guaranty Association, subsequent to the plan's implementation, and subsequent to its becoming a binding final judgment, instituted a lawsuit in North Carolina.

At that point, UNAC went back into court under the continuing jurisdiction provisions of the rehabilitation decree and said essentially, court, what do we do?

We have been sued in North Carolina, we think we shouldn't be continuing to honor the service agreement that we've got with the Guaranty Association, if they are claiming they are entitled to something beyond what they get under the rehabilitation plan.

The Indiana court then held another hearing at which the North Carolina Guaranty Association appeared and argued and was heard and presented its arguments.

Essentially, the issue presented by that hearing was, is the first judgment conclusive, and the Indiana court said, yes, I decided this once before, and I am deciding it again, and I had jurisdiction then and I have it now, and that is the end of the matter.

Now, that is what is on appeal, that second order.

Unidentified Justice: --Mr. Boehm, did that occur after the proceeding in North Carolina?

Mr. Boehm: It occurred before any judgment was entered in North Carolina.

It was after the complaint was filed and before any judgment or summary judgment motion was entered.

Unidentified Justice: So which takes precedence--

Mr. Boehm: The Indiana court.

Unidentified Justice: --on the litigation of the jurisdictional question?

Mr. Boehm: The Indiana court clearly under settled rules of res judicata.

The first judgment wins, I think, under settled rules of both Indiana and federal procedure.

Unidentified Justice: Is it your position that the question of subject matter jurisdiction was fully litigated in the Indiana court?

Mr. Boehm: Yes, although I am frank to say, Justice O'Connor, I don't know what subject matter jurisdiction means in this context.

Subject matter jurisdiction in the federal context means, is there a federal question, is there diversity.

In the state context, we had a court here of general jurisdiction in Indiana, and it had jurisdiction to adjudicate any dispute, any dispute that is cognizable by an Indiana court, and this is one of them.

The only question is, did it have personal jurisdiction, we submit, over the parties, and it clearly did as to the North Carolina Guaranty Association.

Unidentified Justice: Mr. Boehm, does the Indiana statutory scheme provide for judicial review of the administrative proceedings leading to rehabilitation?

Mr. Boehm: Oh, yes.

Indeed, it is a judicial decree, Your Honor.

All the--

Unidentified Justice: Yes.

The ultimate rehabilitation decree is a judicial decree.

Mr. Boehm: --Yes, sir, it is a judgment of a court of general jurisdiction.

Indeed, all the administrative proceeding is, it is not an administrative proceeding at all.

The administrator is a party to the proceeding, and he proposes a plan of rehabilitation.

You then send out a notice to everybody in the world who might be affected by it, which included, by the way, the state insurance commissioners of all 50 states as well as policyholders, creditors, agents, all manner of people.

You then hold a hearing at which everybody--

Unidentified Justice: Including the custodian of this North Carolina fund?

Mr. Boehm: --Well, it is argued that the Commissioner of Insurance is the custodian.

Now, apparently under Indiana... under North Carolina law the deposit is made with the Insurance Commissioner, who then registers it in the name of the treasurer, but it is the Insurance Commissioner who receives the deposit and to whom UNAC gave it.

Now, if he turned around and holds it in street name, if you will, that is his business, is our view.

It is the Insurance Commissioner who is the arm of the state of North Carolina that is involved here, and he was given notice.

Unidentified Justice: Is this not in effect a streamlined statutory receivership, much like an old-fashioned receivership?

Mr. Boehm: Yes, sir, that is exactly what it is, I think, in common sense terms.

Unidentified Justice: It merely is tailored to fit the particular industry here.

Mr. Boehm: That is right, and the reason, of course, that you have a statutory proceeding is that the bankruptcy laws don't apply to insurance.

Otherwise, you really wouldn't need this... this relatively unusual state law creature.

Unidentified Justice: Did the Insurance Commissioner of North Carolina take any part in the Indiana case?

Mr. Boehm: No.

Unidentified Justice: You said he did receive notice.

Mr. Boehm: Yes.

Unidentified Justice: And I think you said the treasurer of North Carolina, in whose name the bonds were registered, took no part either.

Mr. Boehm: That's correct.

Unidentified Justice: And both of those officers are parties to this case.

Mr. Boehm: That's correct.

They are parties defendant, by the way.

The plaintiffs sued them along with UNAC for whatever interest they may have.

They then filed a cross claim that in effect asked for no relief.

It is our view that they are nominal parties at best.

Unidentified Justice: Well, Mr. Boehm, I gather, of course, the Indiana court took the position that this fund, whatever you want to call it, the deposit was before it.

Mr. Boehm: Not exactly, sir.

Unidentified Justice: Right.

Justice Brennan, what was before it was the beneficial interest of UNAC in the fund.

In other words, this... the Indiana courts did not adjudicate the trust, if you want to use the parlance of the North Carolina parties, was invalid.

It adjudicated, to use the trust analogy, that the beneficiaries had assigned their interest to UNAC in exchange for ongoing insurance.

And is that the holding of the Indiana rehabilitation court?

Mr. Boehm: I think that is a fair characterization of it in those terms.

Unidentified Justice: How did it say the deposit or the interest in the deposit got before it?

Mr. Boehm: It said that all parties before it are before... the policyholders are before it, and that whatever claims they have against any asset of UNAC, which includes UNAC's beneficial interest in the trust, are hereby compromised and dismissed.

Unidentified Justice: Was that resisted?

Was that issue contested in the Indiana court?

Mr. Boehm: No.

Unidentified Justice: Of course, as you said, the North Carolina authorities never appeared.

Mr. Boehm: Well, the policyholders appeared and the North Carolina Guaranty Association appeared, and the Commissioner--

Unidentified Justice: But neither resisted the--

Mr. Boehm: --That's correct.

Unidentified Justice: --the insistence that the equitable interest belonged--

Mr. Boehm: There was no argument about that deposit or any deposit in any other state.

The only issue about deposits that caused problems were those outside the United States, where there was a real question, and the plan explicitly dealt with the problem that we don't have a full faith and credit clause that binds--

Unidentified Justice: --Well, didn't the policyholders appear only through the association?

I mean, no policyholders were there in person.

Mr. Boehm: --Oh, roughly 40 policyholders were there in person.

Unidentified Justice: Through their attorneys?

Mr. Boehm: But none of them were North Carolina... yes.

Unidentified Justice: Well, but no North Carolina policyholder was there--

Mr. Boehm: That's correct.

Unidentified Justice: --except to the extent that they had assigned their claims by operation of law to the association.

Mr. Boehm: Well, they were there in the metaphysical sense, Justice White.

Unidentified Justice: Well, only through the association.

Mr. Boehm: No, they were there... if nobody had ever intervened in this proceeding, the policyholders--

Unidentified Justice: I know, that is your fall-back position.

Mr. Boehm: --No, no, that is not our fall-back position, if I may respectfully--

Unidentified Justice: Well, you say you were there only because they were parties to a class action.

Mr. Boehm: --No, that's the fall-back position.

They are also there because they are policyholders of the company, and if no policyholder had intervened, we still could have had a valid rehabilitation, simply by sending them notice.

Unidentified Justice: Well, you ought to be glad you don't have to argue that.

Mr. Boehm: Well--

Unidentified Justice: Because you certainly can argue that they were there through the association.

Mr. Boehm: --Oh, yes, we have that position, which is a good position and a winning position.

But if that had not happened--

Unidentified Justice: You only need to win on one, don't you?

Mr. Boehm: --Sure.

We're got three, really.

Unidentified Justice: Does that position depend on North Carolina law?

Mr. Boehm: No.

No, it depends on Indiana law.

Unidentified Justice: Indiana decides as to who has possession of that money in North Carolina?

Mr. Boehm: No, sir.

Indiana decides--

Unidentified Justice: Well, that is what I am talking about.

Mr. Boehm: --Indiana does not decide that it had that pot, nor did Indiana decide that if the North Carolina policyholder had wished to assert a claim against that pot in North Carolina it couldn't have done so.

They could have done so.

A North Carolina claim either in North Carolina--

Unidentified Justice: I just don't see how Indiana courts got jurisdiction over the money in North Carolina.

Mr. Boehm: --They didn't.

They got jurisdiction over the claim of UNAC to that--

Unidentified Justice: Well, how can they get... is that a North Carolina claim?

Mr. Boehm: --Well, it's in Indiana, where UNAC is, just like all of the assets are.

In fact--

Unidentified Justice: Is that determined by North Carolina law?

Mr. Boehm: --No, it is determined by Indiana law.

Unidentified Justice: Well, how can Indiana law apply to North Carolina?

Mr. Boehm: It doesn't, except in the sense that--

Unidentified Justice: Isn't that what you are trying to do?

Mr. Boehm: --Well, no.

All we are saying is that every policy--

Unidentified Justice: Well, suppose when this case is over and you win, and North Carolina says, come and get it.

Mr. Boehm: --We are... it is on deposit in North Carolina.

If we default--

Unidentified Justice: How could you get it?

Mr. Boehm: --We can't.

I mean, it is on deposit pursuant to this arrangement--

Unidentified Justice: Well, what am I talking about then if the money is not involved?

Mr. Boehm: --Well, the money continues to remain in North Carolina in--

Unidentified Justice: Is the money what is involved in this case?

Mr. Boehm: --Well, I guess it is fair to say we are all here because--

Unidentified Justice: If not, where do we get jurisdiction?

Mr. Boehm: --I beg your pardon, sir?

Unidentified Justice: If not, where do we get jurisdiction?

Mr. Boehm: Where does this Court get jurisdiction?

Or where does Indiana court?

I am not sure I understand the question, sir.

Unidentified Justice: If money is not what is involved, how does this Court get jurisdiction?

Mr. Boehm: Well, the dispute to the rights to the money are involved.

What North Carolina is saying is that it can liquidate that sum and pay it over to the Guaranty Association.

Unidentified Justice: And you say it isn't in dispute as to money and money.

Mr. Boehm: Yes, and we are saying they can't do that--

Unidentified Justice: Okay.

All right.

Mr. Boehm: --because the Indiana court adjudicated all that and it is res judicata.

Unidentified Justice: May I ask, Mr. Boehm, I gather... or is it your position that because you had those... or Indiana courts, rather, had the Guaranty Association before it, it had that jurisdiction.

Even if it had no jurisdiction over the fund itself, nevertheless the Indiana court may enforce its order requiring that the fund be part of the assets.

Is that it?

Mr. Boehm: Yes, sir.

That is a position.

That is actually another fall-back position.

The basic position is that a rehabilitation works even if nobody appears in Indiana court, that all you need to do to adjust the rights of the Indiana policyholders and all policyholders in the United States is send them a notice and say, here is our plan of reorganization, just like a bankruptcy court does, and to the extent that you are a policyholder of this company, unless you appear and object, your rights are going to be adjusted by this plan, and if you can't do that, you can't rehabilitate an insurance company.

Unidentified Justice: Do you think you have some old receivership cases that said that the receivership court could adjudicate the claims to assets outside the state if no one who has... who had any claim to those assets appeared in the receivership court?

That is what you are essentially saying.

Mr. Boehm: Well, I--

Unidentified Justice: That this rehabilitation proceeding could adjudicate claims to property in North Carolina even though the people who also had claims to that property never appeared in the receivership proceeding?

That seems to be your basic position.

Mr. Boehm: --I am not sure.

Unidentified Justice: And yet... I don't know.

Must you win on this ground?

Mr. Boehm: No.

No, we can win on the ground that Justice Brennan articulated, and that--

Unidentified Justice: Well, then you can win on the ground that the policyholders are there through the association.

Mr. Boehm: --Sure.

That only works for North Carolina.

Unidentified Justice: And that they... and that they had a chance to litigate everything they wanted to.

Mr. Boehm: That's correct.

Unidentified Justice: On behalf of the shareholder.

Mr. Boehm: That's correct.

That would determine this case as to the North Carolina policyholders.

Unidentified Justice: But even if the policyholders weren't there, doesn't the full faith and credit clause, assuming that there was jurisdiction in the Indiana courts, require North Carolina to recognize the Indiana decree?

Mr. Boehm: Absolutely.

Unidentified Justice: Well, yes, that is if it is bound by the jurisdictional holding, but who is bound by a jurisdictional determination if he hasn't had a chance to litigate it?

Mr. Boehm: Well, Your Honor--

Unidentified Justice: And who litigated it in Indiana?

Mr. Boehm: --The North Carolina Guaranty Association did, the second time.

Unidentified Justice: Right.

Mr. Boehm: The first time--

Unidentified Justice: There is it, and there are the shareholders, the policyholders, and they are there litigating jurisdiction, or at least they had a chance to.

Mr. Boehm: --I don't disagree for a moment that that is dispositive of this case, but there is another, more fundamental point.

Unidentified Justice: If the question of jurisdiction had never come up in the Indiana court and the policyholders weren't there, they had never had a chance to litigate it except from way back in North Carolina, just the recitation of having jurisdiction would be--

Mr. Boehm: No, but the policyholders--

Unidentified Justice: --Would it, or not?

Mr. Boehm: --Well--

Unidentified Justice: It has to be litigated.

Mr. Boehm: --I don't accept the premise that the policyholders weren't there.

The policyholders--

Unidentified Justice: No, I said assume they weren't there through the Association.

Mr. Boehm: --All right.

I am saying they were there--

Unidentified Justice: I know that.

I want you to assume that they were not there.

Mr. Boehm: --No, but I am saying, they were there other than through the Association.

They were there at least to the extent of their claims against UNAC.

There is an in rem jurisdiction--

Unidentified Justice: But not with respect to their claims against property in North Carolina.

Mr. Boehm: --Well, they assigned those claims.

That was what the deal was.

They took on--

Unidentified Justice: Well, I don't think you can have it both ways.

Either they were there through the Association or they weren't.

Mr. Boehm: --Well, they were there through the Association; they were also there in their capacity as class plaintiffs and in their capacity as policyholders.

In other words, they were there in three capacities, in our submission.

Unidentified Justice: Well, you certainly have a simple claim at the front end of your--

Mr. Boehm: Oh, I agree.

Unidentified Justice: --It may be right or wrong, but I don't know why we have to try to settle all of your problems that you have all around the United States.

What would be the situation if this were in a bankruptcy framework, traditional bankruptcy?

Mr. Boehm: There would be no question that a nationwide notice to all creditors everywhere would bind everyone, I think.

That would be, of course, as a matter of federal law.

Now, I am not a bankruptcy expert, but I am quite confident that is correct, that a reorganization under the bankruptcy laws works nationwide.

Unidentified Justice: Mr. Boehm, let's assume for the moment that there was a creditor in North Carolina, your insurance company, and that that creditor had, let's say had a mortgage on North Carolina property or he had a North Carolina judgment that gave him a lien on North Carolina property.

Is it your position that the Indiana court, without the presence of either the rece or the creditor could have wiped it out or adjusted it, taken the property away and given him a general claim?

Just by sending him notice and say, show up or else?

Mr. Boehm: I think ultimately that would be our position, yes, that that is what it means to say that the Indiana statute has... that the Indiana commissioner assumes title to whatever beneficial interest the company has.

Unidentified Justice: Do you think an old-fashioned receiver could do that?

Mr. Boehm: No, I think that the Indiana statute gives the insurance rehabilitator, because of the unique nature of insurance, that power.

In that sense, the receivership analogy breaks down, I think.

Unidentified Justice: Yes.

That is where it... the Indiana law can take away the rights of the North Carolina policyholders.

Mr. Boehm: Well, that is just the--

Unidentified Justice: You see, that is my problem.

Mr. Boehm: --That is the deal the policyholder makes when he contracts with an Indiana insurance company.

Unidentified Justice: He shouldn't buy insurance in an out of state company if he doesn't want to take that risk.

Is that your position?

Mr. Boehm: That is exactly what it amounts to.

And indeed, consider what the situation is if that is not the law, if we can't bind all creditors everywhere.

How do you rehabilitate an insurance company.

Unidentified Justice: Yes, but why does your company want to sell in North Carolina if it doesn't accept the North Carolina law requiring it to make deposits?

Mr. Boehm: Oh, it does.

It does.

And if a North Carolina policyholder had said, I don't want my rights under the rehabilitation plan, I want my rights under the deposit, he gets them, plain and simple.

The problem is, that didn't happen in regard to--

Unidentified Justice: How did he say that?

Mr. Boehm: --We sent him an elaborate plan, 40 pages long, that says in six places--

Unidentified Justice: And you take his assent from silence?

Mr. Boehm: --Well, that's correct.

Unidentified Justice: Yes.

Mr. Boehm: That's correct.

Unidentified Justice: That's like in default, if you don't answer a complaint in a lawsuit, you--

Mr. Boehm: Yes.

Unidentified Justice: --you assent to whatever default judgment may be entered, do you not.

Mr. Boehm: That's right, and you assent to that proceeding by entering into a contract with the Indiana company.

Unidentified Justice: That isn't so in an ordinary contract suit, if the defendant happens to be out of state.

Mr. Boehm: Of course it is not, but you don't have a statute that says, in the event your insurance company becomes insolvent, the Insurance Commissioner in his state of domicile is going to take him over and may adjust your rights vis-a-vis him.

Unidentified Justice: Mr. Boehm, do you make anything of McCarren-Ferguson in respect of the authority of the Indiana Insurance Commissioner?

Mr. Boehm: The only point we make of McCarren-Ferguson is that it evidences a Congressional policy to support state regulatory schemes, and to that extent it supports the notion that the Indiana Commissioner can do exactly--

Unidentified Justice: That still doesn't eliminate the full faith and credit federal constitutional question we have here.

Mr. Boehm: --It does not, I don't believe, although it could be viewed as a Congressional policy in part implementing the delegation of Congress to legislate under full faith and credit to support these state schemes, and indeed, what the Indiana Commissioner did here is what every rehabilitator does in every multi-state rehabilitation, and there is no alternative.

If they cannot adjust all these things, where are we?

How do--

Unidentified Justice: There is no federal tribunal.

Mr. Boehm: --There is no federal tribunal, and there is only one state that seeks to do this.

This is completely unlike the Delaware Stott sequestration situation, where the jurisdiction that is asserted is different from the claim that is being adjusted.

Here, the only jurisdiction that is being asserted is over the very claim that is in dispute.

Unidentified Justice: Mr. Boehm, could you help me with a simple factual question here?

Would you tell me what happens to the $100,000 bond in North Carolina if you win and what happens if you lose?

Mr. Boehm: If we win--

Unidentified Justice: In terms of what happens to policyholders and to your opponent.

Mr. Boehm: --If we win, it stays there.

Unidentified Justice: I understand the bond stays there, but what happens to... how much difference does it make in terms of dollars to policyholders?

What is happening to the policyholders?

There are only about a dozen of them, I think.

Mr. Boehm: The policyholders have no interest in this litigation.

The policyholders have assigned their claims to the North Carolina Guaranty Association.

Unidentified Justice: All right, so that if your opponent is... it is the Guaranty Association that gets the benefit of your defeat, if at all.

Mr. Boehm: Yes.

Unidentified Justice: Now, just exactly what does it get?

Does that help it pay premiums, or help it pay claims?

Mr. Boehm: It just gets the money, and it puts it in its general asset, and it is that much richer, so that it can... I mean, it is going to pay the claims whether or not it gets the money from us.

It is solvent.

It is an association of insurers with over 600 members, all the big insurance companies that do business in North Carolina.

Unidentified Justice: And it does business in states other than North Carolina?

Mr. Boehm: No.

Unidentified Justice: It does not?

Mr. Boehm: There is a separate one created under the statute of every state that has one.

The oddity here is, the Guaranty Associations are a relatively recent national phenomenon.

Unidentified Justice: But am I correct in believing that the policy... the 17 or 18 policyholders in North Carolina have no interest in the outcome of this litigation?

Mr. Boehm: They have absolutely none.

They have assigned whatever claim they have against UNAC or any of its assets to the Guaranty Association, and in exchange--

Unidentified Justice: And what additional burden has the Indiana rehabilitation proceeding put on the Guaranty Association?

What obligation do they have that they did not otherwise have?

Mr. Boehm: --They have to make up the difference between what the policyholders will get under the restructured policy and what they had under the original policy as written.

In other words, essentially what caused the rehabilitation to take place was, the company was writing Cadillac policies at Volkswagen prices.

The Guaranty Association has to now deliver that Cadillac, and gets the Volkswagen income, if that is--

Unidentified Justice: They are basically a reinsurer.

Mr. Boehm: --It puts them in that posture, yes.

Unidentified Justice: Mr. Boehm, before the Guaranty Fund was created, the policyholders would have had a very serious interest in the outcome of this case, wouldn't they?

Mr. Boehm: Yes.

Well, assuming they... yes, and they could have then elected to assert a claim against the deposit.

Now, there is one point that needs to be made.

They have no practical need... I mean, this is a little deposit.

It is a $100,000 face bond.

It may be $50,000.

One judgment that the Indiana Commissioner had to make was, does it make any sense at all to have little mini-liquidations going around all over the nation over essentially immaterial amounts of money?

The legal profession would be the only beneficiary of that doctrine.

No policyholder would end up better over a squabble over how to handle that $50,000.

I mean, that is the practicality of this thing.

And only because we've got a solvent entity that can pursue this claim do we find ourselves in Court here today, that has an interest that it seeks to assert.

May I save the rest of my time?

Unidentified Justice: Mr. Boehm, is the position on the North Carolina officials in this litigation different from anyone else?

Mr. Boehm: Well, I think... yes.

They have no interest, first.

Second, they were given the same notice anybody else has, and by the way, the North Carolina Uniform Insurance Liquidation Act expressly gives the Commissioner the election to seek to foreclose the deposit in that state if it wants to, if he determines... if he determines that it makes economic sense to do so.

He didn't do that.

The plan went through, became a binding judgment, and now, after the fact, the Guaranty Association, having litigated this twice, wants to relitigate.

Unidentified Justice: Well, Mr. Boehm, the treasurer did not receive notice.

Is that correct?

Mr. Boehm: Yes, he... of the second provision, but not the first.

Unidentified Justice: And in any event--

Mr. Boehm: But he is the custodian.

Unidentified Justice: --it is your position that his interest is not such that he requires notice?

Mr. Boehm: That's right.

Unidentified Justice: That is, the state--

Mr. Boehm: The state of North Carolina's arm that is in charge of this situation is the Insurance Commissioner, not the treasurer.

He is just a registered holder.

He has no interest in the thing other than doing what the Commissioner tells him to do.

May I save the rest of my time for rebuttal?

Chief Justice Burger: Mr. Patterson?

ORAL ARGUMENT OF WILLIAM S. PATTERSON, ESQ., ON BEHALF OF THE RESPONDENTS

Mr. Patterson: Mr. Chief Justice, and may it please the Court, as a condition to its doing business in North Carolina, UNAC agreed to transfer title to securities to a trust located in North Carolina, and subject to North Carolina trustees.

UNAC agreed that the sole purpose of this trustee, of this trust would be for the protection of North Carolina policyholders in the event that UNAC should default on any of its obligations, whether by reason of insolvency or otherwise.

UNAC subsequently became insolvent.

The final order of rehabilitation in the Indiana court allowed UNAC to substantially diminish its policy obligations owed to policyholders in return for UNAC being allowed to continue to do business.

During the entire pendency of the rehabilitation proceeding, there was not one single notice to the policyholders of the existence of this deposit or their special statutory rights in the deposit.

UNAC... or the rehabilitation proceeding in Indiana was conducted as if the deposit did not exist.

No one, least of all the policyholders, had any idea that UNAC was... or that the rehabilitation proceeding was attempting to assert jurisdiction over this deposit.

Unidentified Justice: Mr. Patterson, your client knew about it, didn't it?

Mr. Patterson: Our client was aware of the deposit, Justice Stevens, but it had absolutely no reason to believe that UNAC was attempting to assert jurisdiction over it.

This was--

Unidentified Justice: Didn't they schedule it as an asset in their balance sheet, whatever it was?

Mr. Patterson: --The deposit was scheduled, and I think this is discussed at some length in the briefs, because of this discrepancy, the deposit was listed in the balance sheet of the convention blanks that UNAC filed with the North Carolina Department of Insurance and with the other Departments of Insurance.

However, the deposit in that convention blank was listed as a general asset of the insolvent insurer, which is patently incorrect.

I don't think UNAC would object to that description of the listing as being... as being just as incorrect as it could possibly be.

If one were to look at this convention blank, the only assumption that he could draw is that this was a general asset of the insolvent insurer, which is just not the truth.

It was a... not only was it not a general asset, it was an asset to which UNAC did not even hold title.

It had been transferred to a trust.

The terms of the trust are the terms of the Uniform Insurance Liquidation Act in North Carolina.

They quite explicitly say that in the event that there is a default, the deposit will be used for the benefit of the North Carolina policyholders.

Unidentified Justice: Mr. Patterson, is it your position that the proposed final plan for rehabilitation and the first final judgment did not in any way indicate to the North Carolina Guaranty Association that UNAC was assuming and the Indiana court was assuming that it had control in effect over that deposit?

Mr. Patterson: That is correct, Justice O'Connor, and it is consistent with... with the many cases at the state court level that have been decided with regard to deposits.

Indeed, there are two cases in North Carolina, one a federal court case interpreting North Carolina law, and the second a very recent North Carolina Supreme Court case that specifically says that these deposits are a trust, and they are not an asset of the insolvent insurer, and they are not subject to the jurisdiction of the domiciliary insolvency proceeding.

So, consistent with North Carolina law, the Guaranty Association certainly had no basis on which to conclude that UNAC was going to assert jurisdiction in this deposit.

Unidentified Justice: But North Carolina can't determine for itself, can it, whether or not Indiana has jurisdiction over a particular rece or a particular set of facts, or a particular case?

That remains for the Fourteenth Amendment and the International Shoe and that type of case?

Mr. Patterson: That's correct, Justice Rehnquist.

It can't determine for itself, but I think under Durfee v. Duke, it is certainly entitled to determine whether jurisdiction was fully and fairly considered in the proceeding in the other state, which is exactly what happened in the subsequent North Carolina proceeding.

The court looked at the Indiana proceeding.

There was absolutely no mention of the deposit.

There was no notice to the policyholders of either the deposit or the statutory rights in it.

The court looked to the entire record and saw absolutely no mention of this deposit within the insolvency proceeding.

Indeed, the closest mention of any... of the interplay of an insolvency proceeding with this sort of deposit occurs in the brief that UNAC's current counsel submitted to the rehabilitation court in support of rehabilitation.

In that brief, counsel quotes from Couch on Insurance, a very well recognized treatise that acknowledges... a passage that acknowledges that a rehabilitation proceeding does not have priority over... or does not have control over assets in another jurisdiction when there are special statutes in that jurisdiction pertaining to this asset.

Unidentified Justice: But isn't at least the second Indiana judgment, remaining unreversed as it is, an official act or entry subject to the full faith and credit clause even though it may not be final in Indiana?

Mr. Patterson: Well, Justice Rehnquist, that proposition is a little bit hard to swallow if you look at it from the North Carolina side.

North Carolina first challenges the jurisdiction of Indiana to determine the right of the proceeding.

The Guaranty Association initiated a proceeding in North Carolina saying that the Indiana proceeding lacked jurisdiction over the deposit.

All right.

Under, I think the cases that this Court has handed down dealing with collateral attack, it is fairly obvious that a court can come up with the wrong conclusion as to jurisdiction, but if it appears that jurisdiction was fully and fairly considered, it can't be attacked.

All right.

Now, what we have here is a situation where the Court didn't come up with any conclusion, didn't fully and fairly consider jurisdiction as to the deposit at all in its first proceeding.

Then, when it is about... when a proceeding is filed in another state, starting a collateral attack as to jurisdiction, and one, I think, that UNAC could truly lose, UNAC initiates another proceeding in Indiana and says, all right, we missed... we neglected to fully and fairly consider jurisdiction in the original proceeding, but we will fully and fairly consider it now, and that will relate back to the rehabilitation proceeding.

In other words, the--

Unidentified Justice: Isn't the assumption that a judicial decree of any state or federal court presumptively had jurisdiction, and it is up to the person attacking it to show that it did not have jurisdiction?

Mr. Patterson: --That is correct, and I think that is exactly what happened in North Carolina when the rehabilitation proceeding was collaterally attacked in North Carolina.

It was very clear that the Indiana proceedings seemed to have swept this asset in by mistake, as much as anything.

It was just totally unaware of the nature of the asset, of the fact that it was subject to statutes in North Carolina.

What UNAC seems to be arguing is almost... could best be termed jurisdiction by mistake rather than jurisdiction by necessity or anything else.

We just think jurisdiction would not lie in this situation, and the North Carolina court is free to conclude that, after looking at the record and determining whether jurisdiction had been fully and fairly considered.

Unidentified Justice: Well, I gather, Mr. Patterson, that is that the nature of this trust was such that that deposit could never be an asset of UNAC in the rehabilitation proceeding unless what?

Mr. Patterson: Justice Brennan, I don't think it could be an asset in the proceeding in any event.

I think North Carolina--

Unidentified Justice: It is just not property of UNAC at all?

Mr. Patterson: --No.

UNAC had--

Unidentified Justice: Well, is that really fair?

Supposing all the policyholders... there are only 17 policyholders in North Carolina?

Supposing they all accepted a liquidation of their claims.

They had a choice of either to keep the policies in effect at a different basis or liquidate.

Isn't that right?

Mr. Patterson: --That's right.

Unidentified Justice: Supposing they liquidated, and the total cost of liquidation were less than the face value of this bond.

Is it not true that the remainder of the bond would have reverted to the general assets of the company?

Mr. Patterson: Ultimately, but I think we have a situation there where all of the--

Unidentified Justice: Assume they cease doing business.

Mr. Patterson: --Right.

They are at best a contingent beneficiary of this trust.

To the extent that they honor their policy obligations, then their contingent interest in the trust would be activated, and title would revert to the Indiana company.

Unidentified Justice: Well, don't you agree that the Association was the assignee of the policyholders' interests?

Mr. Patterson: Yes--

Unidentified Justice: Under North Carolina law?

Mr. Patterson: --Yes, Justice Rehnquist.

Unidentified Justice: And don't you agree that the Association did appear in the Indiana proceeding?

Mr. Patterson: There is no doubt about that.

Unidentified Justice: And didn't the plan that it either agreed to or was subject to there, didn't it define the extent of its interests?

Mr. Patterson: Of the Guaranty Association's interest?

Unidentified Justice: Yes.

Mr. Patterson: Yes, it--

Unidentified Justice: And didn't the Guaranty Association accept that?

Mr. Patterson: --Yes.

Unidentified Justice: And that was the extent of it?

Mr. Patterson: That's correct.

Unidentified Justice: So any policyholder's interest in this fund, the Association had.

Mr. Patterson: That's correct.

Unidentified Justice: And they accepted something else in exchange for it.

Mr. Patterson: The policyholders accepted something else?

Unidentified Justice: No, the policyholders are out, aren't they?

Mr. Patterson: Yes.

Well, the policyholders have been made whole by the Guaranty Association.

Unidentified Justice: Exactly, so we can just forget about them.

Their only interest, if they have any, is in the association.

Mr. Patterson: That's correct.

Unidentified Justice: And the Association accepted a plan which defined fully the extent of its interests.

Mr. Patterson: Yes, but if you will look at the definition of the Guaranty Association's interest in that plan, the definition of the Guaranty Association's interest is that it has the... it has the same rights that the policyholders that it made whole would have.

So, by virtue of subrogation, it stands on--

Unidentified Justice: Well, I know, but they... suppose it had been just as express as it could possibly be in the plan that not only... they would put a footnote, and you also, Mr. Association, release any claim you have to the fund in North Carolina.

Suppose the plan had just said that, in just plain black and white, and they accepted it.

Do you think the association would be permitted under those circumstances nevertheless to say, we still own the fund in North Carolina?

Mr. Patterson: --I think it would be inequitable to do so, but probably--

Unidentified Justice: I am talking about the law.

And in those circumstances, in those circumstances it is claimed that the judgment of the Indiana Court is entitled to full faith and credit, because the Association certainly had a chance to say, we have a claim to this fund, but they didn't say that.

Mr. Patterson: --I think the first--

Unidentified Justice: They gave up any claim they had.

They accepted the plan in full satisfaction of any claim they had, didn't they?

Mr. Patterson: --Well, the first issue that would have to be answered is whether the Indiana court had any right to adjudicate rights at all in this deposit.

Unidentified Justice: Well, I think that gets back to what you answered me earlier, doesn't it, Mr. Patterson, that this fund simply never can be and never was under any circumstances part of the assets of UNAC.

Mr. Patterson: It is not an asset of UNAC--

Unidentified Justice: It never was, I think, is your position.

Mr. Patterson: --The Guaranty Association's position is that no matter what the Indiana rehabilitation proceedings said about this asset, it simply lacked jurisdiction to deal with the asset.

Unidentified Justice: Even though the people who own the claims to the fund, who were the beneficiaries of the fund, the policyholders, had given their interest to the Association, you say the Association was powerless to surrender its interest in the fund in Indiana litigation?

That sounds strange.

Mr. Patterson: I don't think the Indiana court had any jurisdiction to require it to do anything with the deposit.

The deposit was clearly a North Carolina asset.

Unidentified Justice: What if the Association had employed a driver to drive an automobile to St. Louis to attend an insurance convention, and drove through Indiana, and was involved in an accident, and Indiana sought to exert long arm jurisdiction over the Association.

Would you say that the assets of the fund were not available to satisfy any judgment if a long arm jurisdiction were proffered--

Mr. Patterson: Any judgment against Indiana?

Unidentified Justice: --Any judgment against the North Carolina Association.

Mr. Patterson: I am afraid I don't understand the question, Justice Rehnquist.

Unidentified Justice: Well, you are saying somehow that this fund can never be reached, no matter what the North Carolina Association does, and I am suggesting to you that if the North Carolina Association engages in perhaps ventures that it may not be empowered to do under state law, of those ventures have an effect in another state, and the other state can get jurisdiction over the Association by a long arm statute, the fund may be an asset which can be used to satisfy a judgment rendered in those proceedings.

Mr. Patterson: Against the Guaranty Association?

Unidentified Justice: Yes.

Mr. Patterson: Would this be based on an assumption that the Guaranty Association had become a... been assigned some sort of beneficial interest in the trust?

Unidentified Justice: Well, perhaps I am laboring under a misapprehension, Just what is this trust?

Mr. Patterson: Well, the trust is for the sole benefit and protection of North Carolina policyholders.

The Guaranty Association has absolutely no right to this trust until there has been a default by some insurance company, UNAC here.

At that point, the Guaranty Association would pay the policyholders of UNAC the amount of the fault, and could then move against the deposit, which is where the policyholders would have gone absent the Guaranty Association.

The North Carolina statutory scheme is such that the policyholders really have two sources to make them whole.

First, they have the Guaranty Association, which is statutorily required to step in.

If the Guaranty Association weren't there, they would still have this deposit that the policyholders could have gone to.

The statutory scheme intermeshes, and what happens is, if the Guaranty Association pays the policyholders off then and only then does the Guaranty Association become subrogated to the policyholders' rights in such a way that it can move against the deposit.

Unidentified Justice: Would you say that in effect North Carolina is a law unto itself regardless of the full faith and credit clause with respect to this particular matter?

Mr. Patterson: I think again the full faith... the application of the full faith and credit clause has to do... gets back to jurisdiction.

If the Indiana court lacked jurisdiction to adjudicate rights in the deposit, which North Carolina says it does, then yes, the full faith and credit clause is not applicable.

I think the initial question, though, should be, how did Indiana get around applying the full faith and credit clause as to the North Carolina statute, which specified the policyholder rights in this deposit?

Unidentified Justice: Well, if the North Carolina... if the Indiana court did purport to do that, and did it wrongly, wasn't the North Carolina Association's remedy by appeal through the Indiana courts rather than collateral attack?

Mr. Patterson: I think it would have been had Indiana or had the rehabilitator given anyone even the slightest hint that it purported to be dealing with this deposit.

Until... It was over a year after the rehabilitation proceeding closed that UNAC first contended that rights in the deposit were cut off by this rehabilitation proceeding.

Unidentified Justice: Mr. Patterson--

--What is the issue--

--Excuse me.

Go ahead.

What is the issue before the Indiana Supreme Court on the Guaranty Association's appeal?

Mr. Patterson: The issues there are basically the same as they are here.

The question is, did--

Unidentified Justice: They are arguing you had absolutely no jurisdiction over this particular deposit, just as you are arguing here.

Mr. Patterson: --That's correct.

Unidentified Justice: Mr. Patterson, let me ask you a question about how the fund may be used.

As I understand it, the rehabilitation proceeding has modified the rights of the policyholders so that, to take an example, a claim for a $1,000 injury before the rehabilitation proceeding might now only be worth $700.

All right.

Now, if such a claim is made arising out of an incident that occurs after the plan had been approved, would it be your view that the policyholder just has the $700 entitlement, in my hypothetical example?

And doesn't that in turn mean that the likelihood that the fund may be exhausted has changed because the obligations that it might have to satisfy have been reduced?

So, inevitably, has not the possibility that that fund will be used in certain ways have been changed by what happened in Indiana?

Mr. Patterson: I think it could be in some insolvency... there could be a rehabilitation proceeding that would reduce rights in that way.

Unidentified Justice: Well, they did... in this case, I thought everyone agreed that the rights of the North Carolina policyholders are less than they were before, which in turn means that their right to recover from the fund is different.

In the event that... say your client is bankrupt.

Now they would get from the state the $100,000 on deposit in North Carolina, they would only get $700 instead of $1,000.

Mr. Patterson: That's correct.

Unidentified Justice: So that isn't it inevitably true--

--But they get that from the Association.

Mr. Patterson: But at the same time, the Association has a continuing obligation to make the policyholders whole.

Unidentified Justice: And as long as the Association can do it, there will be no need to resort to the bond.

Mr. Patterson: Well, that's correct, but the Association--

Unidentified Justice: So the bond is only important to the policyholders in the event that the reinsurer is also insolvent.

Mr. Patterson: --Well, the Guaranty Association is not a reinsurer, and I don't think it should be analogized to one.

The Guaranty Association is a statutory organization--

Unidentified Justice: Well, only in the event that it can't perform its statutory duty, then.

Mr. Patterson: --Yes.

Unidentified Justice: Then you would need to resort to the bond, and you would have a lesser claim against the bond because the policyholders there have received... have a different bargain than they had before the Indiana proceeding went forward.

You don't challenge the power of the Indiana court to modify the kind of claim the policyholder can make against that bond.

Mr. Patterson: No.

I think it is well settled that a rehabilitation proceeding in one jurisdiction can alter contractual policy rights and rights against the general assets of an insurer, and in such a way that it will affect policyholders in other jurisdictions.

That is well settled.

But what is not at all settled is how deposits fit into this scheme.

Deposits have been... and there is a great deal of state law, and there is a very interesting quote from this Court as to the status of deposits, and as to the fact that it is a special asset, and not subject to reach by anyone but the persons for whose benefit the deposit was made.

This Court, in Blake v. McClung, at 172 257, and this is quoted, I believe, at Page 59... Page 29--

Unidentified Justice: That was decided while Poll and Virginia was still law?

Mr. Patterson: --Pardon?

Unidentified Justice: Decided while Poll and Virginia was still law?

Mr. Patterson: Yes, I suppose it would have been.

It would have been 1898, I believe.

I think the theory behind this has certainly been carried through into certainly more recent decisions.

This Court stated,

"Insurance funds set apart in advance for the benefit of hung policyholders of a foreign insurance company doing business in the state on a trust fund of a specific kind to be administered for the exclusive benefit of certain persons, policyholders in other states know that those particular funds are segregated from the mass of property owned by the company, and that they cannot look to them to the prejudice of those for whose special benefit they were deposited."

That is exactly the theory and status that North Carolina has afforded to these deposits, that it is a trust fund, that it is no longer owned by the insolvent.

North Carolina has gathered jurisdiction into itself to deal with this deposit.

It is part of a statutory scheme.

Their interest... the state interest, of course, is to regulate foreign insurers and protect North Carolina policyholders who are doing business against foreign insurers.

Unidentified Justice: Mr. Patterson, is it your position that the Indiana court could not at any time litigate the question of the subject matter jurisdiction insofar as the deposit is concerned?

Mr. Patterson: That's correct, Justice O'Connor.

Unidentified Justice: The Indiana court in your view could not even deal with the question in its courts of jurisdiction.

Is that your position?

Mr. Patterson: That's correct, Justice O'Connor, since it wasn't an asset of the insolvent insurer, it wasn't an asset before the rehabilitation court.

Unidentified Justice: Even though you would concede that the Indiana court had general jurisdiction over the rehabilitation proceeding and over all of the policyholders for whose benefit the North Carolina fund was held?

Mr. Patterson: That's correct.

A lot has been said here about the general jurisdictional proposition that a rehabilitation court in one state can adjudicate rights of individuals residing in another state even though those individuals are not necessarily before the court.

I don't think the parties disagree with that at all.

Unidentified Justice: Would you agree that the Indiana court in the second proceeding did at least attempt to litigate this very question?

Mr. Patterson: I think it attempted to litigate it.

I think it fell short of the mark.

Unidentified Justice: And did that judgment become entered before the North Carolina judgment was entered?

Mr. Patterson: It did become entered before... it was entered before the North Carolina judgment.

The question again would be, can the Indiana rehabilitation court go back and redo its prior mistake and relate that back to the insolvency proceeding.

Secondly, in attempting to do so, did it fully and fairly consider jurisdiction the second time?

We think not.

I think if--

Unidentified Justice: But you are saying even if it tried to, it couldn't ever.

Mr. Patterson: --That's correct.

Unidentified Justice: Is that right?

Mr. Patterson: That's correct.

Unidentified Justice: How can a rehabilitation proceeding in these complicated insurance matters ever do the job if the court asserting jurisdiction can't deal with these questions of the deposits?

Mr. Patterson: Well, we... I think the appropriate move here would have been to have initiated... if UNAC wanted to attempt to adjudicate these rights prior to its final order of rehabilitation, then an ancillary proceeding in North Carolina would have been appropriate.

This would not have been a burden on UNAC, who did business in, I believe, 40 some states.

Unidentified Justice: All right, and there were other states with similar special fund deposits.

Correct?

Mr. Patterson: Only four, Justice O'Connor.

Unidentified Justice: And they did not make similar claims such as North Carolin?

Mr. Patterson: Again, they are, were then and probably are to this day completely unaware that UNAC has asserted that its order cut off rights in this... in the deposit made in their state--

I think in addition to the question of subject matter jurisdiction, for lack of a better term, there are certainly other jurisdictional claims here.

The notice issue, I think, is quite significant.

Could the Indiana rehabilitation proceeding assert jurisdiction over the... this would be in a situation in which it might otherwise have jurisdiction, would it have had jurisdiction because of its... would it have lost jurisdiction or failed to assert jurisdiction because of its failure to give any notice of the existence of these deposits to the policyholders--

Unidentified Justice: Well, Mr. Patterson, you refer to subject matter jurisdiction of a trial court of general jurisdiction of a state.

Don't they have subject matter jurisdiction of all matters that are brought before them, unless excluded by the law of the state in which they sit?

Mr. Patterson: --Well, Indiana law, I think, is fairly clear that to adjudicate rights in the trust, it must have either the trust assets or the trustee before it.

Here it had neither.

Unidentified Justice: Well, supposing that the Indiana court made a wrong decision.

It still is entitled to full faith and credit unless it had no jurisdiction.

Mr. Patterson: Well, assuming it fully and fairly considered jurisdiction, I think that is correct.

The issue here would be... in a collateral procedure, I think the relevant inquiry is, was jurisdiction fully and fairly considered, not whether the Indiana court actually had jurisdiction.

Conceivably, Indiana could have fully and fairly considered jurisdiction and incorrectly asserted it, and North Carolina would have been foreclosed, but that is not what happened here.

There was no consideration of jurisdiction at all.

Unidentified Justice: Mr. Patterson, may I ask you another factual question?

Who got the interest on this bond, the $100,000?

Mr. Patterson: The interest on the bond is currently being accumulated by the trustee.

Unidentified Justice: What happened between 1973 and the beginning of the rehabilitation?

Mr. Patterson: At that point, the interest was being collected and paid over to UNAC.

However, it was... UNAC or the Department of Insurance had the right to stop these payments at any time, and did so.

Unidentified Justice: Right.

And then after the rehabilitation proceeding started, what happened to the interest then?

Was it accumulated right away, or was it continued to be paid for a period?

Mr. Patterson: It was... I think it started being accumulated... well, within a few years--

Unidentified Justice: Within a few years?

Mr. Patterson: --I think it was actually within few years by virtue of oversight.

It was just--

Unidentified Justice: Well, what happened during the oversight period?

Where did it go then?

Did it go to the rehabilitation trustee?

Mr. Patterson: --Yes.

Unidentified Justice: Mr. Patterson, did the Guaranty Association file a claim in the proceeding in Indiana, and if so, what did it claim?

Did it file a claim as a contingent creditor?

Mr. Patterson: It didn't file a claim per se.

What happened is, the original draft of the plan of rehabilitation contemplated certain future recoveries by the rehabilitation court.

I think UNAC had several outstanding suits at that time, so there was a possibility of future recovery.

The rehabilitation proceeding did not... said that any of these future recoveries would go to the policyholder regardless of whether the Guaranty Association had taken their place.

The Guaranty Association came in and said, if we are going to make the policyholder whole, then any of these future benefits should flow back to the Guaranty Association.

That was its only claim in the... in the rehabilitation proceeding.

Unidentified Justice: May I ask one other question about the interest?

What is your position as to the proper disposition of that interest today?

Mr. Patterson: Well, I think if the... the trustee would certainly be empowered to accumulate it for the benefit of the policyholders.

This would be particularly--

Unidentified Justice: Not what he is empowered to do.

What is your position as to what he should do?

Mr. Patterson: --I think he should continue to accumulate the interest.

Unidentified Justice: He should accumulate the interest indefinitely, even if there are no claims on the fund.

Mr. Patterson: If there were no claims, I don't think there is that much justification for doing it, but--

Unidentified Justice: But then who should get it, in your view?

Mr. Patterson: --Justice Stevens, if past practice of the department were followed, the interest would begin to be paid again to UNAC.

Unidentified Justice: To the insurance company.

Mr. Patterson: In addition to being an income... or a contingent beneficiary, I suppose it would be fair to also characterize UNAC as a contingent income beneficiary as well as a contingent remaindermen in the trust.

Thank you.

Chief Justice Burger: Mr. Boehm, do you have anything further?

ORAL ARGUMENT OF THEODORE R. BOEHM, ESQ., ON BEHALF OF THE PETITIONER -- REBUTTAL

Mr. Boehm: We don't accept the trust analogy.

It is a pledge.

The asset is UNAC's, always is, always was, still is.

It is pledged to secure against the default, and in the event of default, and only then can the North Carolina Commissioner arrest the interest payments and do the other things that he is purporting to do here.

There is no default.

UNAC and the policyholders reached an agreement whereby UNAC would offer ongoing insurance and the policyholders accepted it.

Unidentified Justice: Can't North Carolina tell you to redeposit the $100,000 tomorrow?

Mr. Boehm: Oh, we agree.

It is there.

It is in the deposit, and we can't withdraw it unless we stop writing the insurance on North Carolina insureds, but it is there to secure a future default should we go in the tank again.

Unidentified Justice: I don't see what... it seems to me it is going to be there no matter who wins.

That is what puzzles me.

Mr. Boehm: Well, they are seeking to liquidate.

The remedy they request is that it be paid over to the Guaranty Association.

Unidentified Justice: And then you would have to make another deposit, if you wanted to write insurance in North Carolina.

Mr. Boehm: That is correct, I suppose.

Unidentified Justice: Yes.

Mr. Boehm: Although the basic--

Unidentified Justice: That is what is really at stake, isn't it?

Mr. Boehm: --Yes.

Yes.

I suppose that is correct.

We haven't anticipated that point, but the logic of what you say seems correct, and we would have to make another deposit, although I expect we would as a practical matter stop writing insurance in that state.

Unidentified Justice: Well, there was a time when some insurance companies declined to do business in certain states, notably Texas, for reasons of that kind.

Is that not so?

Mr. Boehm: Oh, yes, and that is, again, the basic point of this case from our point of view is that this is an insurance case, and it is a regulated industry that has a state statutory framework that tells the state Commissioner in the state of domicile to do what the Indiana Commissioner did here, and purports to make it stick nationwide.

Unidentified Justice: Mr. Boehm, I just didn't really have a clear enough grasp of the facts here.

Is the reason they claim they are entitled to the $100,000 because there has been that much in defaults subsequent to this plan?

Mr. Boehm: No, there is no claim that UNAC is in default of any post-rehabilitation obligation.

UNAC is honoring its policies as restructured today.

Unidentified Justice: And so they are claiming it on account of default pre-rehabilitation--

Mr. Boehm: Yes, yes.

Unidentified Justice: --defaults, but I thought the policyholders had accepted the new plan, so I don't understand what... what are the defaults on which they want this--

Mr. Boehm: Your confusion is the same as ours, Your Honor.

We think it is as simple as day that the policyholders accepted the restructured policy, we are not in default, and the money is there in its pledged state, if you would, to secure future defaults.

Unidentified Justice: --Mr. Boehm, I thought the funds were to be used to pay the increased premium charges that arose out of the rehabilitation.

Mr. Boehm: That is going to be paid regardless of the disposition of this case.

As a matter of the North Carolina Guaranty Association's statutory obligation to the policyholders, it has to make up the additional benefits to the policyholders in... UNAC... as between UNAC and the policyholders, the policies are written down.

Now, it is hard to explain this in a few words, because there is disability income insurance, and what in effect they did is change them from non-cancellable, which means you can't raise the premium, to guaranteed renewable, which means we keep insuring these people.

We can't terminate them.

Unidentified Justice: And the premiums have gone up.

Mr. Boehm: The premiums have gone up, and--

Unidentified Justice: And isn't the North Carolina Guaranty Association hoping to reach the deposit to repay itself--

Mr. Boehm: --Yes.

Unidentified Justice: --for the increased cost of the premiums?

Mr. Boehm: Yes.

Yes, it--

Unidentified Justice: Isn't that what we are talking about?

Mr. Boehm: --Yes, as I understand it--

Unidentified Justice: That is part of the--

--and the benefits have gone down.

There are two changes, basically.

And so it is a rather complicated actuarial proposition.

Mr. Boehm, don't other states have laws similar to North Carolina's--

Mr. Boehm: --Yes.

Unidentified Justice: --concerning these deposits?

Mr. Boehm: Yes.

Unidentified Justice: Are they identical in fact?

Mr. Boehm: I can't represent that, but I believe--

Unidentified Justice: Do most states have laws that are similar?

Mr. Boehm: --Oh, I think so.

It is a question of administrative discretion whether they require a deposit before they will admit a company, but I think most states have a procedure for getting a deposit from a company that they regard as suspect.

And in many cases you end up with the situation we have here, where the amount of the deposit is really miniscule, not enough to warrant the very proceeding that your question focuses on.

Consider what would have happened if every policyholder were perfectly delighted with the plan of rehabilitation and nobody wanted to litigate or anything.

Nonetheless, the Respondent's view would force a mini-liquidation or rehabilitation in eight states where there was nobody who was upset about it, because there would be no way to make the thing a binding adjudication in one form even though nobody was upset about anything.

Unidentified Justice: Has the North Carolina court yet held that if you lose in this proceeding, that your opponent is entitled to use the bond to reimburse itself for the increased premium?

Mr. Boehm: Yes, I think that is what the trial court held.

Unidentified Justice: Yes, and you think the appellate court approved of that?

Mr. Boehm: I think so.

I find the appellate court opinion a little opaque.

Unidentified Justice: Well, frankly, I didn't get that out of the appellate court opinion.

That is one reason--

Mr. Boehm: Well, I may be prejudiced... I mean, my view of the appellate court opinion may be colored by what went on in the trial court that I am aware of.

That is what the trial court ordered, and--

Unidentified Justice: --Well, was that order affirmed by the appellate court?

Mr. Boehm: --I think so.

The word "affirmed" ends up at the end of the opinion.

Unidentified Justice: Well, that is usually what it means, then, doesn't it?

Mr. Boehm: I am trying to parse the logic of that opinion.

Unidentified Justice: We often say around here it is judgments we review not opinions.

Mr. Boehm: Yes, sir.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

United States v. Testan - Oral Argument

Thu, 23 Aug 2012 18:29:42 +0000

Case:

United States v. Testan

Media File:

74-753_19751112-argument.mp3

Related Transcript:

74-753_19751112-argument

Transcript:

Argument of John P. Rupp

Chief Justice Mr. Chief Justice Burger : We will hear arguments next in United States against Testan and Zarrilli.

Mr. Rupp you may proceed.

Mr. John P. Rupp: Mr. Chief Justice and may I please the Court.

This case is here on the Government’s petition for writ of certiorari to review a decision by the Court of Claims.

Two questions were presented in the petition.

First, whether the Court of Claims had jurisdiction over this case and second, whether in determining the correctness of respondent's classifications, the Classification Act requires that there positions be compared with the positions held by employees in another Federal Agency.

The relevant facts are both few and largely undisputed.

Respondents were employed as trail attorneys by the Defense Supply Agency of the Defense Personnel Support Center in Philadelphia.

There positions are subject to the Classification Act and under that Act, they were at all relevant times classified at civil service grade GS-13.

On December 9, 1969, they submitted requests to their employing agency seeking reclassification to civil service grade GS-14.

In support of those requests, they argued that they were entitled to reclassification at GS-14 under standards, the general standard promulgated by the Civil Service Commission.

And secondly, that their positions were identical to positions occupied by attorneys employed by the Air Force Logistics Command in Dayton, Ohio, positions that were classified one grade higher than their own.

After an audit by a position classification specialist, respondents' employing agency informed them that they were properly classified at GS-13.

On appeal, the Civil Service Commission endorsed that conclusion, made the same finding and denied respondents request for a classification.

The Commission also ruled and informed respondents that the comparisons that they had requested did not constitute a proper method of classification under the Classification Act.

Respondents then filed the present suit in the Court of Claims, seeking an order directing their reclassification to GS-14 as of the date of the first administrative denial of their requests and backpay accrued from that date.

The Court of Claims in a four to three decision ruled that it had jurisdiction over the case under the Tucker Act and on the merits that the Civil Service Commission had been arbitrary and capricious in not making the comparisons that respondents had requested, the Court therefore, remanded the case to the Civil Service Commission with instructions to undertake the requested comparisons and to report the results to the Court.

Justice Harry A. Blackmun: Do you know by any chance whether there had been many requests for comparisons since the Testan case was decided by the Court of Claims?

Mr. John P. Rupp: I know of one.

Justice Harry A. Blackmun: Just one?

Mr. John P. Rupp: There -- I know of one that resulted in a decision.

There is case decided by the District of -- District Court in the District of Columbia Chapter in which the Court held the comparisons were not required, were not appropriate.

I did not know and I may have misconceived your question initially.

I did not know whether many such requests have been made directly to the Civil Service Commission and then had not been pursued after they have been denied.

I do know that the Civil Service Commission’s policy is uniformly to deny such requests.

As noted in our reply brief the central and in our judgment dispositive issue presented by this case is whether any federal statute or statutes gives respondents a substantive right to recover from the United States money damages for the period of a wrongful civil service classification.

In assuming jurisdiction in this case, the Court of Claims conceded that the classification process involves substantial discretion, a concession which I think flows naturally from this case decision in the Ramsbeck case.

The Court of Claims also conceded that it was without power to direct respondents for classification.

The Court reasoned, however, that if respondents found administratively to be entitled to reclassification, that determination could create a right to money damages or right to reclassification which the Court could then force by way of a money judgment.

Well, I think it’s fair to say that the Court of Claims dealt at best equivocally with the issue of its jurisdiction.

The Court appeared to assume first that a substantive right to the recovery of money damages against the United States could appropriately be found by implication.

And second, that the history of the relationship between the Federal Government and its employees, evidence is an intent on Congress’ part to permit the recovery of money damages for the period of wrongful Civil Service Classification.

We submit that both of these assumptions which are together essential to what holding at the Court of Claims had jurisdiction over this case, so that the cause of action was stated are incorrect.

It is settled of course that the jurisdiction of the Court of Claims under the Tucker Act is limited to cases in which the claimants seek actual presently due money damages, claims founded upon the Constitution, any federal statute, etcetera.

To that extent then we acknowledge that Congress has waived in the Tucker Act a portion of the sovereign immunity or the historic immunity of the United States to suit.

But its essential I think to recognize that the Tucker Act is not itself create any substantive rights to the recovery of money damages from the United States.

Whether the claimants such as respondents are entitled to the recovery of money damages depends in our view, upon the existences of the statute or combination of statutes, a substantive provision of some sort in a statute expressly and unequivocally waiving the immunity of the United States to the recovery of money damages from the Public Treasury.

It is not sufficient for these purposes in our view nor indeed is it even relevant that the existence of such a substantive right might be thought responsive to a particular conception of public policy.

The settled rule followed in countless cases, many of which are cited in our main brief at pages six through eight, prohibits Courts from implying authority to collect upon the Public Treasury which is precisely what the Court of Claims did here and what respondents would have them do.

Respondents' contention to the contrary apparently precedes from their view as the Tucker Act, of the Tucker Act as constituting not only a grant of jurisdiction to the Court of Claims over particular types of cases, that is those involving claims from money damages, but also is creating substantive rights to money damages whenever the provisions of any Federal statute have been violated.

We submit that those are separate issues and that they must be analyzed separately.

An example, in the Federal Tort Claims Act, it is quite clear that Congress there waived a portion of the historic immunity of the United States to suit.

It incorporated the Law of the Place and gave to private parties a substantive right to proceed against the United States for certain types of tortuous activities.

It did not, however, waive the immunity of the United States to suits in the Court to such suits in the Court of Claims.

Respondents' failure to appreciate the distinction between substantive rights and a grant of jurisdiction leads them to the a conclusion that would render meaningless, the multitude of federal statutes in which Congress has expressly created a right to money damages in particular and clearly defines circumstances in favor of private parties.

Respondents' view would render the Back Pay Act, certainly superfluous as would it render a meaningless -- a number of other statutory provisions, for example, the provision in the Equal Employment Opportunity Act of 1972, 42 U.S.C. 2000 (e) (5) (g) which --

Justice William H. Rehnquist: Of course if you read, if you read the Wickersham case, Mr. Rupp, you wonder if the Back Pay Act was not superfluous?

Mr. John P. Rupp: Well, the Wickersham case, it is important to recognize I think that the context in which the Wickersham case was decided.

Prior to the passage of the Civil Service Act 1883, this Court held in several cases that federal employees who were discharged or not promoted stated no cause of action, were not entitled to judicial redress, notwithstanding the cause or reasons, the grounds for their suspension.

Justice William H. Rehnquist: Keim and those case?

Mr. John P. Rupp: Keim and Hennan are the principal cases, I suppose.

With the passage of the Civil Service Act of 1883, which was measurably strengthened by the Lloyd-LaFollette Act in 1912, this Court, beginning with the United States versus Wickersham, and other Courts recognized that federal -- and that Congress intended that federal employees should not be separated from their position wrongfully, that they were entitled to the privileges and emoluments of the position to which they were appointed until they were wrongfully separated.

That is what those statutes meant, separation for cause and not otherwise.

At the same time, however, the Courts have continued to recognize that people are not entitled to receive the salary of the position to which they have never been appointed.

Justice William H. Rehnquist: But really, all the Back Pay Act does is say if you are wrongfully denied your emoluments, you’re entitled to backpay, I would have thought -- I thought that was established by Wickersham?

Mr. John P. Rupp: Well, to some extent it was.

It certainly covered a -- some kinds of cases and maybe the kinds of cases that will arise in the majority kind of cases.

Although the Back Pay Act extended protections to classes of employees who had not been there to -- for protected by judicial decision.

If you look at the legislative history particularly of the Back Pay Act amendments passed in 1966, Congress thought it was filling in the gaps left by the Back Pay Act of 1948, which the legislative history indicated was tied to Section 7101 of the Lloyd-LaFollette Act and judicial decision.

At the time they passed those amendments in 1966, they gave a rather careful consideration to the costs of the coverage that they were providing for.

Now, if the violation of any federal statute, including the Classification Act gave rise to a cause of action for backpay, it would have been a hold if you liked to pass the Back Pay Act or any number of other federal statutes such as the --

Justice Harry A. Blackmun: The Civil Service Commission is in fact paying different wages for the same work.

What is the remedy of people such as these respondents?

Mr. John P. Rupp: Well, there are two, I suppose and they are or perhaps more properly stated they are part of the same process.

The first thing they may do is file a request for reclassification with their employing agency.

A position classifications specialist is then obligated to look at their positions to perform an audit of their positions and attempt to determine whether their positions have been properly classified.

At that -- if the decision by the employing agency which draws upon the audit is not satisfactory to the employees, they have the right to appeal to the Civil Service Commission.

Justice Harry A. Blackmun: Totally prospective?

Mr. John P. Rupp: Yes and I want to make that clear.

We are not here saying simply that these employees are entitled to backpay.

We are saying as well that they are not entitled to retroactive reclassification.

Justice Harry A. Blackmun: What is the second route?

Mr. John P. Rupp: Well again it is part of the same route.

Once the employees have exhausted their administrative remedies, I suppose that there might be cases in which they could file suit in the District Court seeking perspective equitable relief.

Although I do not see any basis, any jurisdictional basis for such a suit other than the Mandamus Act 28, 1361 and I concede as well that the scope of review on mandamus is restrictive.

Justice William H. Rehnquist: Certainly, it does not cover discretionary decisions then?

Mr. John P. Rupp: No, it does not.

The claim that the --

Justice Harry A. Blackmun: Maybe there just is no review.

I mean.

That would not be an appropriate remedy?

Mr. John P. Rupp: Well, if you have a case in which the Civil Service Commission says for the future we will not promote anyone with blue eyes or anyone who is black, I have little doubt that the District Court would entertain a suit under the mandamus action and would overturn that determination.

If however it is --

Justice William H. Rehnquist: There you would have 1331 jurisdiction?

Mr. John P. Rupp: And 1331, yes, that is right.

In a case in which there were a decision within the discretion of the employing agency in the Civil Service Commission going to the duties and responsibilities performed and whether under the relevant standards those duties and responsibilities merited --

Chief Justice Mr. Chief Justice Burger : (Inaudible)

Mr. John P. Rupp: Thank you.

Chief Justice Mr. Chief Justice Burger : Mr. Rupp, you have about 15 minutes left.

Mr. John P. Rupp: Mr. Chief Justice and may it please the Court.

The principal point of my argument this morning was that it is inappropriate to imply authority to collect from the Public Treasury of the United States.

To complete that discussion let me only make a couple of additional points.

The first is that the principles that are discussed this morning do not govern Fifth Amendment taking cases in the citation by respondents and amici in this case to those cases appears to us consequently to have been misplaced.

The Fifth Amendment by its very terms is as this Court recognize in the Rail Reorganization Act Cases, a self executing waiver of sovereign immunity.

It would mean nothing if it did not meant that.

This Court has recognized that, beginning with the Cosby Case, and that view was reaffirmed in the Rail Reorganization Act Cases.

The Fifth Amendment is not implicated in this case and those cases do not govern here.

The second and the last point I would like to make in that regard is that neither is this a case like Bivens or Bell versus Hood where the immunity of the United States is not directly implicated.

The issue in those cases, fundamentally, in those cases is fundamentally is whether the activities complained of the basis for the suit in those cases were Acts of the Sovereign with respect to which the defendants there were entitled to claim sovereign immunity.

Although that issue may not be finally be disposed of, it seems relatively clear that if the person or a Federal employee is acting unconstitutionally or beyond the scope of his or her statutory authority, those allegations are not made here.

Justice William H. Rehnquist: Must the United States be the only defendant in the Court of Claims?

Mr. John P. Rupp: Yes.

This Court has so held.

The importance of the Court of Claims, to the Court of Claims assumption of jurisdiction in this case of its being able to imply a cause of action against the United States stems precisely from the fact that there is no federal statute expressly and unequivocally waiving or implying a substantive right in favor of individual federal employees to collect from the Public Treasury for the period of an assuredly wrongful Civil Service Classification.

Indeed the respondents in the amici had appeared to concede that there is no such substantive provision is explicitly so providing in the Classification Act, and in fact when the scheme provided for in the Classification Act, the classification process provided for in that Act is viewed as a whole, it seems to me apparent that Congress did not intend that classifications would operate either retroactively or that reclassification might provide a predicate for the recovery of backpay.

For example, the Classification Acts provides in a number of provisions that the classification certificates issued by employing agencies in the first instance and on occasion in the event of review by the Civil Service Commission are to be binding on payroll, certifying and other officials with authority to disperse monies from the Public Treasury.

There is no provision in the Classification Act, warning either at retroactive reclassification or the award of backpay.

Neither, I should note, is there any suggestion, however, tenuous in the legislative history of the Classification Act supporting the claim made by respondents in this case.

That omission it seems to me is particularly significant in light of the long standing rule that federal employees are entitled to receive only the salaries of the positions to which they were appointed, notwithstanding the fact that they may have performed duties of another higher paying position.

Furthermore, although the Classification Act has been in effect for approximately 50 years, although significantly amended in 1948, but in its essential and effect for over 50 years, we have been able to locate only one of the case in which the Court of Claims or any other Court, we know of no other Court, that so held by implication as the Court of Claims did here.

The only other case in which the Court of Claims appeared to assume in dicta and again without reaching the issue that the Classification Act might provide a warrant for a retroactive reclassification or the award of backpays, the case Bookman (ph) versus the United States.

Prior to the decision in Bookman, the Court of Claims had consistently and repeatedly held that federal employees were only entitled to the salaries of the positions to which they were appointed.

They so held in cases such as Bear versus the United States, Price versus the United State and Coleman versus United States and as recently as 1968, none of those cases were cited or discussed in the Court’s opinion in this case.

In the series of decisions extending over 40 years, beginning shortly after passage of the Classification Act, the Comptroller General of the United States has taken the same position, that is that reclassifications may operate perspectively only and that federal employees may not recover back pay for the period of a wrongful classification.

The only exception to this general rule that has been recognized has been for administrative errors, attributable to the failure of the subordinate to implement a valid classification decision made by the employing agency or the Civil Service Commission.

Justice William H. Rehnquist: It is not often that the Justice Department relies on the Comptroller General to support its views, is it not?

Mr. John P. Rupp: No, that may be true.

Although the Court of Claims in this case expressly disclaimed the erroneous on the Back Pay Act, let me make a couple points in that regard.

Again the Back Pay Act is not explicitly provided for the payment of money damages for the period of a wrongful classification.

The Back Pay Act authorizes the award of backpay and “to an employee subjected to an unjustified or unwarranted personnel action that has resulted in the withdrawal or reduction” of all or part of his compensation.

That language does not cover the situation with which we have been presented here which does not involve the withdrawal or the reduction of compensation, but in assuredly wrongful failure to increase compensation.

If there is any ambiguity in that language, and I think there is none, the legislative history of the Back Pay Act makes unmistakably clear that Congress meant that act to apply only to wrongful suspensions, demotions, removals and other unwarranted and unjustified personnel actions resulting from the reassignments or a transfer from full or part-time work.

The Back Pay Act originally grew out of the Lloyd-LaFollette Act of 1912 which governed dismissals and suspensions.

As amended in 1966, the Congress filled in a number of gaps in the Act, but did not provide for the recovery of backpay for persons wrongfully classified.

The Court of Claims prior to this case has held as well that the Back Pay Act does not provide a predicate for the recovery by federal employees of backpay for the period of wrongful classifications.

For it would have ruled otherwise other than it did in this case then it would have required to overrule a long line of its own decision, including Desmond versus United States, Dianish versus United States and Gaines versus the United States.

Even if a substantive right to the recovery of money damages against the United States for the period of a wrongful classification could appropriately be found by implication and as I’ve argued this morning and in our briefs that it cannot be.

I think that, we believe that the Court of Claims would no less assuredly have been without jurisdiction over this case.

We have discussed in some detail the history of the relationship between the federal government and its employees.

In our briefs, we discussed it a bit further this morning.

The fact is that when Congress was considering the Classification Act and the Back Pay Act, the prevailing rule was that wrongfully classified Civil Service employees were not entitled to the recovery of backpay.

Congress could have provided in either the Classification Act or the Back Pay Act, for such recovery, it did not.

It seems to me that it is persuasive evidence of Congress' intent not permit the recovery of backpay such as that sought by respondents in this case in the circumstances presented in their compliant.

One final point on the jurisdictional or cause of action aspect of this case, that is the argument made by the amici that our position in this case would leave respondents wholly without remedy for wrongful classifications.

As their discussion of the substantive provisions of the Classification Act reveals, I think, Congress created in the Classification Act an elaborate set of administrative safeguards to ensure that the goals of the Act would be met in practice, including the goal of equal pay for substantially equal work.

We have also acknowledged that a suit could be brought in District Courts seeking perspective classification, although that remedy, the scope of that remedy is of course a limited one.

To the extent that persons wrongfully classified or assuredly wrongfully classified are without backpay for the period of that wrongful classification is a matter in our view to be left to Congress.

They have resolved this far not to provide backpay under the circumstances.

With respect to the merits of the contention that the Civil Commission was arbitrary and capricious in refusing to compare respondents’ positions with the positions held by employees in another federal agency, let me say only that that kind of position to position comparison was very substantially the kind of classification scheme which Congress rejected in 1923 when it enacted the Classification Act.

They are inseparable in our view, practical difficulties associated with the suggestion that the Civil Service Commission has a duty to compare positions under any circumstances.

The Court of Claims attempted to deal with these difficulties in part by suggesting that its holding was limited to circumstances which the complaining employees and employees referred to, had a large nexus of duties performed in common.

Justice Byron R. White: If we agree with you in your first point, we do not reach this issue?

Mr. John P. Rupp: That is correct.

Justice Byron R. White: But we would have to if we did not?

Mr. John P. Rupp: If you hold that the Court of Claims had jurisdiction in this case, you would have to reach point two.

We believe the case is over as soon as you have looked at jurisdiction.

The entire thrust of the Classification Act is to require the classification of positions by reference to generally applicable standards repeatedly in the Classification Act.

The Civil Service Commission is required to promulgate generally applicable standards.

Employing agencies are obligated to look at those classification standards in making classifications, in reviewing the appropriateness of classifications.

The Civil Service Commission is required again to scrutinize the classification decisions reached by employing agencies in light of the General Classification Standards.

One of the great problems that would be presented with the Civil Service Commission to have a duty to perform comparisons of the type requested by respondents is that the employing agency in the first instance would not have access to the kind of information it would need to make such comparisons.

You would then have the decision made by -- a classification decision made by an employing agency not taking into account the full range of considerations made appropriate by the Court of Claims' decision in this case.

Not only then would federal civil service employees have the prospect of to bite it said very largely the same apple, they would also have the prospect of review by a body obligated to take into account considerations that could not have been taken into account by the employing agency.

We believe that there is a very great likelihood that that would stimulate appeals in a large number of cases in which appeals were not warranted.

Chief Justice Mr. Chief Justice Burger : I suppose one of the considerations among many others would be the budget, would it not?

Mr. John P. Rupp: Well, yes, that is right and --

Chief Justice Mr. Chief Justice Burger : If there was a sudden judicial order somewhere to move all of the class of 13s to grade 15, you would have quite a problem?

Mr. John P. Rupp: Well, that is a problem.

There is a further problem then --

Chief Justice Mr. Chief Justice Burger : There would be even more important problems over the budget?

Mr. John P. Rupp: Well, there is the problem that you suggest and we referred to that in our brief and another related problem is that the Civil Service Commission could not necessarily assume that the position appointed to by the complaining employees was properly classified.

I suppose it would have prima facie, be entitled to prima facie considerations of proper classification, but to do the kind of job that the Court of Claims appeared to require in this case would require the Civil Service Commission not only to make the comparison that it had been requested, but to validate the classification of the positions being pointed out.

At least in theory that is going to double the work of the Civil Service Commission.

Justice William H. Rehnquist: I did not mean to interrupt.

If a plaintiff files a complaint in the Court of Claims and says that the Back Pay Act and the Classification Act together, give me a claim for money damages against the United States and goes on to detail particulars.

The Court of Claims decides that neither of those Acts does give a claim for money damages against United States.

Does the Court of Claims dismiss for one of jurisdiction or for failure to stay the claim on which relief could be granted?

Mr. John P. Rupp: They do both.

Justice William H. Rehnquist: I thought they had to do one or the other?

Mr. John P. Rupp: Well, in theory, of course they should do one or the other.

Decisions from the Court of Claims --

Justice William H. Rehnquist: I do not mean as a practice, but I mean, what should they do, largely under your argument?

Mr. John P. Rupp: Well, their support for either preposition; I think the Proper Courts to dismiss for failure to state a cause of action.

Although there is support for the contrary, particularly given the implications of sovereign immunity.

Justice Potter Stewart: But it says a jurisdiction is only to award monetary damages even though another Court might have a jurisdiction over a cause of action as to something else.

Would not it proper dismissal be for one of jurisdiction or perhaps it is not worth assuming?

Mr. John P. Rupp: Well, it may not be.

I think Mr. Justice Blackmun’s opinion in Gnotta would lead to that conclusion.

I think the contrary of argument could be made with some reasonableness.

It is without significance here.

Chief Justice Mr. Chief Justice Burger : Congress’ determination that there was no cause of action stated in that Court would be essentially the same as jurisdictional determination, would it not?

Mr. John P. Rupp: That is correct and they would be obligated to do precisely the same having reached that conclusion.

Chief Justice Mr. Chief Justice Burger : Very well.

Justice Harry A. Blackmun: Mr. Rupp before you sit down, I ask this purely out of curiosity that Judge Consee (ph) did not sit on the case below, did he, and Senior Judge Larmour (ph) did.

I just wondered why that juxtaposition through such a word.

It is not important, but I just wondered if you happened to know?

Mr. John P. Rupp: I do not know.

I am sorry.

Chief Justice Mr. Chief Justice Burger : Mr. McDermott.

Argument of Edwin J. Mcdermott

Mr. Edwin J. Mcdermott: Mr. Chief Justice and may I please the Court.

The contentions of the petitioner are that the respondents are correctly classified as GS-13.

Now, the issue depends upon the Civil Service Commission’s, General Attorney series and upon the equal pay for equal work statute.

Now --

Chief Justice Mr. Chief Justice Burger : You are starting with their second intention, are you not?

Mr. Edwin J. Mcdermott: Well, so far it is first --

Chief Justice Mr. Chief Justice Burger : You can come back to jurisdiction (Voice Overlap)

Mr. Edwin J. Mcdermott: So far as jurisdiction is concerned, the Tucker Act gives the Court jurisdiction and we submit that it absolutely waives sovereign immunity insofar as it goes.

Now, that provides that the Court of Claims who have jurisdiction to enter judgment upon any claim against the United States founded either upon the Constitution or any act of Congress or any regulation of the Executive Department or upon any express or implying contract with the Unites States or for liquidated or un-liquidated damages in case it is not sounding in tort.

Now, we submit that our case is based upon one that Classification Act and also upon the equal pay for equal work at.

Now, the Court of Claims below in the per curiam opinion in which the Chief Judge and Judges Davis and Joshua (ph) and --

Unknown Speaker: It was four to three?

Mr. Edwin J. Mcdermott: Four to three and Nichols joined, ruled this; they said that this case is peculiar in its facts.

Whereas here, employees all belong to a small betterly manageable category.

Their jobs have a large nexus of duties shared in common and other employees were specifically pointed out by the complaining employees, we deem the case to be different.

Now, the case on which the Court of Claims depended was the Selman case, Selman against United States.

In that case, Navy Captains had been assigned as Assistant Judge Advocate Generals of the Navy.

And the statute provided that if an officer was assigned to that position, he was entitled to the pay of rear admiral-lower half.

Nevertheless he was only paid at the rate of Navy Captain’s pay.

Now, when it came to the Court of Claims, the Court of Claims ruled that the statute was mandatory and gave them the pay of a rear admiral-lower half for the period of their service and gave Selman backpay for 44 months.

Now, this case, the plaintiffs are trial attorneys before the Armed Services Board of Contract Appeals.

Now, the trial judge pointed out and he set forth the position, descriptions of both the plaintiffs which are under GS-13 and the Air Force Attorneys which are GS-14 and he said that there is really do difference between the position descriptions.

The duties are the same.

They prepare cases, try cases, file posturing briefs, file pre-trial briefs, interview witnesses, secure expert witnesses, they do everything, the same job is both of them.

Now, he said that if you apply the equal pay for equal work statute and if you look at the General Attorney series, you come to the inescapable conclusion that the plaintiffs are entitled to be classified at grade GS-14.

Justice William H. Rehnquist: You have to make two jumps though to have the Selman case control this case, do you not?

You have got that there is language in either the Back Pay Act or the Classification Act that is equally mandatory and you have got to show that Selman is right in the light of our decision in the King case?

Mr. Edwin J. Mcdermott: Well, Selman is right because it was pursuant to a statute which provided for that pay, a pay of a rear admiral-lower half for an Assistant Judge Advocate General, it is a specific provision of a statute.

Now, we say that whereas Selman depended upon the provisions of a statute, we depend upon the provisions of the General Attorney Series and the trial judge and he studied this case, I think very well, he said this, “that the action of the comparison of the position descriptions at the DPSC and the AFLC demonstrate that they are strikingly similar” and he was of the opinion that one classifier, for instance, how that Dayton would look at the General Attorney Series of the position description and come to the conclusion and it was properly classified at grade GS-14.

Whereas the position classifier at the Defense Personnel Support Center will look at the same position description, the same General Attorney Series and come to the conclusion, that it was properly classified at GS-13.

Now, he said the position descriptions are almost strikingly similar and the duties of the trial attorneys are the same.

Now, also, Mr. Rupp argued that the Back Pay Act does not cover the situation.

Now, in the amicus curiae brief, at page 16 on line 17, there is an analysis of the Back Pay Act.

Now, it is submitted that the phrase unjustified or unwarranted personnel action within the meaning of the Back Pay Act applies as well to this action wrongly classifying the plaintiffs in this case as it would as if there were a removal or reduction in rank or a suspension.

And he -- that is pointed out that the Congress left that phrase almost open for interpretation and that the Civil Service Commission did the same thing.

And that there is no statement in any of the Congressional hearings or reports defining what is meant by unjustified or unwarranted personnel action.

And that is merely a question of interpretation of the statute and we submit that, on that basis we are entitled to recover.

Now, so far as jurisdiction is concerned, we depend on three things.

One, the General Attorney Series and the trial judge has found that we are entitled to grade GS-14 there under.

There are only two factors that are concerned there and that was and he went into them quite thoroughly in his opinion.

Now, actually if you look at this case and you look at the Selman case, and in Selman, the Court said, that they were entitled to the rank of -- to the grade -- payable rear admiral-lower half because the statute so provided.

We say that we are entitled to the grade of GS-14 because the General Attorney Series so provided and the equal pay for equal work statute so provides.

Now actually, if you come down to the position of the Civil Service Commission, that says that we disregard the statute which says equal pay for equal work and we look at the position description of the person only under the series which is applicable to it.

Now, the Court of Claims and the trial judge ruled that that was improper and arbitrary and capricious because the Commission actually refused to follow a Congressional Mandate of equal pay for equal work.

And there are many cases, recorded claims where that provision has been established and enforced.

Now, we submit also that the trial judge found that there was discrimination in this case and he specifically found that out, found that in his opinion where he said on the evidence in this case he has concluded that the refusal to classify plaintiffs to GS-14 is arbitrary, discriminatory and is not supported by substantial evidence.

Now, if there be discrimination in this case, then we cite the decision of the Court of Claims in Chambers against United States, and that ruled that a black applicant for a position in the Social Security Administration who had been discriminated against was entitled to backpay.

Now, that is a very well written opinion by Judge Nichols and I suggest that if that opinion be followed and fact of discrimination be found to have been adopted by the trial judge as a finding, based upon his review of the record then I suggest that we are entitled to relief.

Now actually, if you look at what is referred to as the remand statute, all that the Court of Claims has done here has been to follow it.

They found that the Civil Service Commission’s action was arbitrary and capricious and that the Commission should comply with the mandate of the statute calling for equal pay for equal work.

And the Court of Claims ruled that the grades of other lawyers representing in other per curiam agencies before the Armed Services Board of Contract Appeals provide an essential benchmark and without consideration to them no confidence could be felt to the statute calling for equal pay for equal work has been obeyed.

Now the statute, that is 92-415, that is what is referred to in Mr. Rupp’s brief as the remand statute, provides that in any case within its jurisdiction the Court of Claims shall have the power to remand appropriate matters to any administrative or executive body or official with such direction as it may deem proper.

And the senate report pointed out that the Act provides the United States Court of Claims with the necessary means to compel administrative or executive bodies to take further action where it is necessary to make an adequate record.

And that is all that the Court of Claims has done here.

It said that that it disagrees with the trial judge that the Court has the right to reclassify people, but that is a job for the Civil Service Commission and it remanded it back to the Civil Service Commission to take into consideration, the equal pay for equal work statute and to find if the plaintiffs using as a benchmark the grade applied to the trial attorneys from the Air Force at Dayton to determine whether or not they were entitled to grade GS-14 and that is all that the remand statute does.

So we ask the Court in consideration of this case to find first all that the Court of Claims had jurisdiction.

To consider this, it is never necessary for a statute to itself provide that for a breach of it, a person shall have an action against United States because that is what the Tucker Act does.

The Tucker Act gives jurisdiction to the Court of Claims.

And there are many statutes and regulations, the breach of which do not spell out the right to sue in the Court of Claims for damages.

So we submit that there is -- first all there is jurisdiction and that it is a good thing for the practice of law generally to raise the grades of lawyers who appear before the Armed Services Board of Contract Appeals.

Now, we have a letter from the chairman of the Armed services Board of Contract Appeals in which he says that generally most of the lawyers who appear before them are grade GS-14.

The only exception appears to be the trial attorneys for the Defense Personnel Support Center and when they do the same work that other lawyers do before the Armed Services Board of Contract Appeals then I submit that they are entitled to the same pay because it is equal work, equal pay for equal work and that is a statutory definition and reinstate and I submit that the Court of Claims’ judgment should be affirmed.

Thank you, sir.

Chief Justice Mr. Chief Justice Burger : Thank you gentlemen.

The case is submitted.

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United States v. King - Oral Argument

Thu, 23 Aug 2012 18:16:54 +0000

Case:

United States v. King

Media File:

672_19690402-argument.mp3

Related Transcript:

672_19690402-argument

Transcript:

Argument of Ruckelshaus

Chief Justice Earl Warren: Number 672, United States versus John P. King.

Mr. Ruckelshaus.

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

This case involves the applicability of the declaratory judgment statute to the Court of Claims.

The decision of the Court of Claims was that the declaratory judgment statute, the federal declaratory judgment statute was applicable in this case.

Statement of the facts of this case I think would be in order in order to set the state for this decision.

Colonel King who was the respondent in this case on May 14, 1959 was found physically unfit for active duty by the Army Physical Evaluation Board.

On June 18, 1959, this decision was reviewed by the Army Physical Review counsel and that body found King fit for duty.

The latter decision was upheld by the Army Physical Disability Appeal Board on July 21, 1959 and King was retired for longevity on July 31, 1959.

In August of 1959, King filed an application for correction of military records with the Army Board for the correction of military records.

A hearing was held in January of 1961 and the application was formally denied by the Under Secretary of Army on May 19, 1961 that ended King's procedure in the Army Appeal Boards.

On July 26, 1965, respondent King filed a petition in the Court of Claims alleging that the action of the Under Secretary of Army was arbitrary and capricious in contrary to law and demanded judgment in an amount equal to the taxes paid on his retirement since 1959.

Now, the difference between the retiring for longevity and for disability now was that he would've been paid 75% of his full pay as a Colonel in both instances except that if he had been retired for disability he would not have to pay any taxes on that retirement pay.

Justice Potter Stewart: It's wholly exempt from tax, is it?

Mr. Ruckelshaus: Yes, that's right Mr. Justice.

Justice Potter Stewart: If it's disability retirement.

Mr. Ruckelshaus: Pursuant to the Government's motion to dismiss and it asserted affirmative defense, the Court of Claims dismissed respondent King's petition on the grounds that petition was basically a claim for a tax refund.

And since King had failed to file a refund with the Internal Revenue Service he was barred from asserting it in this suit pursuant to Section 26 U.S.C. 7422 (a).

The Court further stated on its own motion that the only basis for maintaining this action was under the Declaratory Judgment Act and gave plaintiff King -- respondent King in this case 30 days to file a brief on the applicability of the Declaratory Judgment Act to the Court of Claims.

After briefs were filed, the Court ruled on February 16, 1968 that the Declaratory Judgment Act did apply to the Court of Claims and further the Court gave King 30 days to amend his petition and seek a declaration, “a declaration of his right to be retired for disability and to have his military records change.”

It was from this order of the Court of Claims that the Government has sought in this Court granted certiorari to the court below.

Now, this case in its broader sense I think involves the question of whether the power and authority of the Court of Claims should be appreciably increased with reference to suits against the United States without any additional grant of power or authority from Congress.

I think specifically the question before the Court is whether the Court of Claims in this case or indeed in the broader sense in any case as the jurisdiction or power to enter declaratory judgment and I might say that the Court of Claims for the first time is saying that cases which have a money cast or which are money-related or which are money-oriented confers jurisdiction upon that Court to grant declaratory judgment.

I think that at the outset it can be stated that it is agreed on the part of the Government and on the part of respondent an amicus that the declaratory judgment statute itself confers no jurisdiction on the Court of Claims or indeed on any court by its own terms.

I think the statute speaks of the power of a United States Court to declare the rights within its jurisdiction.

So the jurisdiction for this Court of Claims to enter this declaratory judgment had to be found somewhere else.

Chief Justice Earl Warren: We'll recess on Mr. Ruckelshaus.

Mr. Ruckelshaus, you may continue with your argument.

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

When the Court adjourned, the argument had just been put forward that there was no dispute between the petitioner and the respondent in the amicus or the court below for that matter as to whether the declaratory judgment statute itself conferred any jurisdiction on the Court of Claims to hear or to have the application of declaratory judgment statute applied to that Court because the statute itself says that they only have the power or right to declare rights within its jurisdiction so that that phrase within its jurisdiction means they must find this jurisdictional grant somewhere other than in the Court of -- the declaratory judgment statute itself.

And where the respondent and the court below looked to find that jurisdiction is in the Tucker Act and the Tucker Act by its terms according to the court below on the opinion at page -- appendix on page 32.

Now, the Court said that Mr. King could seek declaratory relief even though he was “unable to obtain or request a money judgment.”

And the Court then went on to say that the declaratory -- the Tucker Act granted judgment in a case of this nature because of the money cast or money orientation or a money relatedness of the claim.

Now, that is the contention of the Government that this flies in the face of the traditional grant of jurisdiction to the Court of Claims.

It flies in the face of the years of statutes and years of decisions that have been handed down restricting that jurisdiction to claims and which a money judgment could be awarded.

Now, this Court itself in Glidden versus Zdanok said that from the beginning “from the beginning” that meaning the Court of Claims has been given jurisdiction only to award damages not specific relief.

I think that the argument of the Court of Claims below seeking to restrict this jurisdictional grant or broaden this jurisdictional grant into areas where there was a money cast or money orientation or money relatedness again flies in the face of this statement from Glidden versus Zdanok.

Now, the court below originally dismissed this action on the grounds that it was a claim for a tax refund and said that since the plaintiff of the respondent herein had not filed a tax refund claim pursuant to 26 U.S.C. 7422 (a) that the Court had no jurisdiction.

Now, then, the Court invited the plaintiff to file a declaratory judgment and the plaintiff filed a declaratory judgment alleging essentially the same things and in his filed the brief favor of filing a declaratory judgment and when eventually it filed -- amended the petition.

Now, the plaintiff asked for essentially the same thing that he had asked for in his original petition.

Now, the only difference being that it was phrased in terms of a declaration of his rights.

Now, I don't see how the Court of Claims can be said to have expanded its jurisdiction under Declaratory Judgment Act simply because the claim itself as filed or the petition as filed was stated in a different way.

They really they released that the petitioner was seeking, the plaintiff was seeking herein was pretty much the same thing that he was seeking under his original claim.

I think the question of whether it's a tax question or not, the original petition as filed really does not concern this Court because if the claim as originally filed or was a tax question if it was a petition to recover tax money then clearly the Court is without jurisdiction to entertain this under Declaratory Judgment Act because the Declaratory Judgment Act specifically precludes suits with respect to tax.

Justice Thurgood Marshall: Didn't Judge Davis said, the real question was the army regulations and not revenue code?

Mr. Ruckelshaus: Yes Mr. Justice Marshall, he did say that the real question was the army regulation but I think he was forced to make that statement because he had already ruled prior to that time that this was essentially a tax refund claim.

And so if he said that it was a -- it had to do with the eventual tax refund then he would be faced with the same section of 28 U.S.C. 7422 that he had dismissed it on previously.

Now, if he then turns around and says as he did on the last page of his opinion that the only question before the court below is the question of whether this man was properly retired, then I think he loses the money cast or money orientation or money relatedness of this claim which he says it's necessary in order to confer jurisdiction on that Court.

Justice Thurgood Marshall: And it's your position therefore loss of jurisdiction?

Mr. Ruckelshaus: No, the minute he said that the sole question before the Court had to do with whether the man was properly retired.

Justice Thurgood Marshall: He didn't say sole, he said the controlling as I've got (Inaudible)?

Mr. Ruckelshaus: I think he -- that's the last part of his opinion.

He said the question before the Court in the declaratory judgment action that was filed and he said on page 40 of the appendix the only question he presents or need present relate to his retirement from the army.

Justice Thurgood Marshall: Yes.

Mr. Ruckelshaus: And those are the only issues with which this Court will treat in its further proceeding in this case.

I think that's once he has said that, he has lost his argument that confer to jurisdiction in the first place that this case had a money cast to it or money orientation.

I don't think it's enough that you can say somewhere in the future way down the line.

The petitioner herein may be entitled to some money.

Now, this I believe what include virtually every case that was filed in any court.

Justice Byron R. White: Now, why is it that he couldn't have said in the Court of Claims that United States made a mistake in retiring me and put me in the wrong category and by reason of that mistake I am out some money and that the United States told me that money for having cause me to pay it out when I shouldn't have.

Now, what's wrong with that claim?

Mr. Ruckelshaus: Mr. Justice White, I think that the original --

Justice Byron R. White: Do you think that's just a tax refund claim?

Mr. Ruckelshaus: That's what the court below held in its original order to dismiss the --

Justice Byron R. White: Well, I know but he says if I were in the right category why if I were retired in the right category, well of course I owe those taxes and as long that classification stands then why I did all the taxes but I want to get rid of the classification.

I certainly can't do it in the tax refund suit.

Now, but he'd listen to me in the tax refund suit to review this classification question, this is the only place I can go to have this classification reviewed and this is what's cause me the money.

Why do you suppose that -- why would that be thrown out of the tax refund claim or as beyond the jurisdiction of the Court of Claims?

Mr. Ruckelshaus: I think on basis of Prince against United States, Mr. Justice White, the Court therein entertained a very similar fact situation herein in which Prince had filed a petition for tax refund with the Internal Revenue Service before bringing his suit to determine whether he was properly retired.

And on the basis of that case which the Government does not completely accept by the way, the Court of Claims then when they had to decided Prince's case but in this instance why King did not file a petition for tax refund --

Justice Byron R. White: Do you think in a tax refund suit that in an ordinary tax refund suit that this officer could've had had litigated the correctness of his retirement?

Mr. Ruckelshaus: I don't believe that he could've had litigated or he could've had the determination made by the Internal Revenue Service as to whether (Voice Overlap).

Justice Byron R. White: Or in that kind of a suit?

Mr. Ruckelshaus: Well, in Prince against United States, Mr. Prince did just that Mr. Justice White.

He had his determination as to whether he's properly retired.

Justice Byron R. White: In the tax refund suit?

Mr. Ruckelshaus: In the tax refund suit in the Court of Claims.

Justice Byron R. White: Well, in the Court of Claims, yes but how about the Internal Revenue Service that we won't look at that, you just know the tax if he -- could he get adjudicated in the District Court you think?

Mr. Ruckelshaus: Well, if Prince is a proper holding and as I say we have some question about that.

I don't see any reason why he couldn't because the district courts have concurrent jurisdiction in tax refund claims.

In addition to that I think that clearly King could've brought a mandamus action against the Secretary of Army under 28 U.S.C. 1361 and requested a mandate against the Secretary of Army to change his records pursuant to an arbitrary and capricious decision made by the Secretary of Army.

I think he could've got such a suit in a District Court or could've got such relief in the District Court.

He did not seek such relief in the District Court.

Clearly, he could not get that relief in the Court of Claims because our case is specifically holding tht mandamus does not lie although I think in this case what the Court of Claims is in effect doing -- is doing indirectly what they can't do directly and that is by declaring the rights of King in effect mandating the Secretary of the Army to change his records.

Certainly, if King then went into the District Court against the Secretary of Army the decision as to whether he was properly retired would've been collaterally -- the doctrine collateral estoppel would apply to those issues in the District Court.

So I think King had some additional remedies here to the one that he tried but that he chose this method in the Court of Claims at the invitation of the Court of Claims.

Justice Hugo L. Black: I don't see your Prince case cited in your brief, is it?

Mr. Ruckelshaus: I believe it is, Justice Black.

Justice Hugo L. Black: I didn't see in the index.

Mr. Ruckelshaus: It's cited on page 2 of Justice Davis' opinion Mr. Justice Black, its 127 Court of Claims 612.

I think that the argument that is advance by the respondent having to do with legislative history of Declaratory Judgment Act and of the 1948 recodification of that Act has a very little to do with the determination of whether the Court of Claims has jurisdiction over this case in the first instance.

And I think the most that can be said for their legislative history argument is that you can show from this history that Congress did not even consider the Court of Claims in enacting the declaratory judgment statute.

And that I would emphasize to the Court that we are not saying that the declaratory judgment statute specifically excluded the Court of Claims from its operation.

I think this is the thrust of the argument of the respondent here that the Government insists that the Declaratory Judgment Act statute specifically excluded the Court of Claims.

We do not insist that I think that what we do say is that before the United States Government consist to be sued or before sovereign immunity is waived there must be a clear and expressed statement of that waiver on the part of Congress and that there is no such clear and expressed statement either in the declaratory judgment statute or in the Tucker Act.

And that without such a clear expresses statement the argument sovereign immunity has been waived in this case simply cannot stand up.

Justice Byron R. White: What made you to the Tucker Act after the waiver as the immunity by the United States to the extent you concede United States waiver?

Mr. Ruckelshaus: The Tucker Act states its jurisdictional statement.

The Court of Claim shall have jurisdiction to render judgment upon any claim against the United States found that either upon the Constitution or any Act of Congress or any regulation of an Executive Department or upon any expressed or implied contract with United States or for liquidated or unliquidated damages in cases not sounding in tort.

I think the language that expressly waives it is where the Tucker Act says to render judgment upon any claim.

And when the Tucker Act was passed, the reason for the Tucker Act itself was the fact that Congress had been inundated with private bills that took up a good percentage of their time and they wanted this decision to be made by another court and so traditionally the jurisdiction of that court has been limited to hearing claims for money damages.

Justice Byron R. White: Do you think that is harmless just amended the statute, the Tucker Act has said the Court of Claims now also have jurisdiction to adjudicate Declaratory Judgment Act, he made it to money claim and that would be (Inaudible)?

Mr. Ruckelshaus: I think that would be clear enough Mr. Justice White that --

Justice Byron R. White: But what will Declaratory Judgment Act (Inaudible)?

Mr. Ruckelshaus: The Declaratory Judgment Act simply said that any court of United States may -- has the right to adjudicate --

Justice Byron R. White: Has jurisdiction?

Mr. Ruckelshaus: -- within its jurisdiction, he didn't say it didn't speak in jurisdictional terms.

It was the creation of additional remedy.

Justice Byron R. White: Well, it did speak about cases otherwise within its jurisdiction.

Mr. Ruckelshaus: Within its jurisdiction what it said that the court could issue a declaratory judgment in a case or controversy within its jurisdiction.

And in this, I think that means you must find the jurisdictional grant in some statute other than the declaratory judgment statute and that's why the Court of Claims in the respondent herein is seeking to find that jurisdictional grant in the Tucker Act.

Justice Byron R. White: Well, when Declaratory Judgment Act was passed, what was wrong with Declaratory Judgment Act?

Mr. Ruckelshaus: Well, I think the primary question was one of rightness prior to the Declaratory Judgment Act and there were many -- you had to do with a rightness of a claim that some -- there were many purposes that it was primarily to decide controversies between private individuals that had not reached the degree of rightness in which a suit could normally be brought.

And that someone did not need to act of their parallel or did not need to avoid act being for fear of the consequences when they could get their rights determined in advance of having the act.

I think that was the original purpose of declaratory judgment statute.

Justice Byron R. White: There isn't -- there wasn't jurisdictional power regarding the (Inaudible)?

Mr. Ruckelshaus: Well, I think that there was a problems of rightness and problems of whether the controversy had ripened enough to be determinable by a court, justiciable by a court and that prior to the enactment of the declaratory judgment statute many cases were dismissed for being premature and that many activities on the part of private individuals were inhibited because they could not get their rights determined prior to the time that they acted.

Justice Byron R. White: Do you say that the Declaratory Judgment Act didn't help the Court of Claims in declaratory judgment situation because the claim became once and otherwise this jurisdiction in the first place.

Mr. Ruckelshaus: I think that's right Mr. Justice White.

Justice Byron R. White: Because of the lack of waiving.

Mr. Ruckelshaus: Because there has to be a waiver somewhere or consent to be sued in all that the Congress has ever consented in this area was that the United States could be sued in the Court of Claims for money damages.

Justice Byron R. White: For right of claims and consent of money damage suit would only mean that the claim is sufficiently right.

Mr. Ruckelshaus: Well, I think it goes further than that because if you are to say that the Court of Claims has the power to grant declaratory judgment in areas where the claim is not right, these means that under the general grant of the Tucker Act to determine controversies in regarding governmental regulation and this amounts to a considerable increase in power in the Court of Claims whether you call that additional remedy or additional jurisdiction.

Now, that was not otherwise have.

Justice Byron R. White: Because I understand your position you do not claim that the Declaratory Judgment Act on its face in speaking of the Courts of the United States excluded the Court of Claims?

Mr. Ruckelshaus: That's right.

Justice Byron R. White: That within the word “courts” is included the Court of Claims but the Act doesn't give the Court of Claims the privilege of doing something that wasn't doing before because it didn't have jurisdiction to do so --

Mr. Ruckelshaus: I think --

Justice Byron R. White: -- to issue declaratory judgment because of lack of consent for the United States.

Mr. Ruckelshaus: I think the problem Mr. Justice White --

Justice Byron R. White: But where does the consent of the United States stop in the Tucker Act?

Mr. Ruckelshaus: I think it stops when somebody goes into the Court of Claims and request something in addition to a money judgment or other than a money judgment.

Justice Byron R. White: You mean that ask for a declaration about of money judgment but the money judgment isn't right or not, or the money claim isn't right or not?

Mr. Ruckelshaus: Well, if the Court, I think the problem is basically is a problem between jurisdiction and remedy and we were talking about sovereign immunity.

We can get into a semantic argument on whether the Declaratory Judgment Act simply created a new remedy and had nothing to do with jurisdiction.

When viewed in light of the Tucker Act or we can look at the whole situation of the Court of Claims saying they have the power under the Tucker Act the jurisdiction of the Tucker Act to grant declaratory judgment and see that they are exercising considerably more power than Congress ever intended for him to do and that where a court is exercising considerably more power than they did in the past under a court decision as regards United States that before they do that there has to be a clear consent on the part of United States to be sued.

And in this case there was not such a consent and there was not such a waiver of sovereign immunity.

Justice Thurgood Marshall: Well, I suppose you could spell out the declaratory judgment involving a matter of dollars and cents would the Court of Claims do?

Mr. Ruckelshaus: Well, I think that's exactly what the -- has been done here Mr. Justice Marshall the --

Justice Thurgood Marshall: Or if it involves a matter of dollars and cents, isn't that the Tucker Act?

Didn't it say you're limited to dollars and cents claim?

Mr. Ruckelshaus: The -- in the declaratory judgment the question of whether any further relief can be granted is a reserve in Judge Davis' opinion and the petitioner herein asked for a money judgment in the form of a declaratory judgment petition and I don't think that traditionally declaratory judgments have been used to grant money judgment and so if and again in this particular case if what they're asking for is a money judgment by the Court's own earlier decision.

It is a tax claim and as such specifically not cognizable (Voice Overlap).

Justice Thurgood Marshall: Haven't you run across declaratory judgments and ordinary actions would end up in sizeable money?

Mr. Ruckelshaus: I'm sorry I didn't hear your question Justice Marshall.

Justice Thurgood Marshall: Declaratory judgments in ordinary courts, district courts involving hundreds of thousands of dollars, simply a declaratory judgment?

Mr. Ruckelshaus: That's right.

Justice Thurgood Marshall: Nothing wrong with that?

Mr. Ruckelshaus: No, there's nothing wrong except that the --

Justice Potter Stewart: Except against the United States is that (Voice Overlap)?

Mr. Ruckelshaus: Except against in the Court of Claims against United States.

Now, there (Voice Overlap) --

Justice Potter Stewart: I thought you said in any court?

Mr. Ruckelshaus: Well, I am not maintaining, Mr. Justice Stewart, in any court because they have issued some declaratory judgments under the Admiralty Act and under the Federal Tort Claims Act where the jurisdictional grant to sue the United States is considerably broader than it is in the Tucker.

Justice Potter Stewart: Oh, I remember those cases in your brief at least the admiralty one but I thought your basic claim was that absence on special conferral of jurisdiction that no court not merely the Court of Claims but the District Court didn't have the power to our judgment against the United States?

Mr. Ruckelshaus: Well, without some jurisdictional absence, some jurisdictional grant and a clear waiver of sovereign immunity by Congress, yes they cannot have a Declaratory Judgment Act against United States.

And we -- it's our contention that under the Tucker Act there is no such a waiver of sovereign immunity.

And what the -- I think it's really happening here is that the Court is -- the Court of Claims is reaching out the past judgment on a whole conglomerate of decisions being made by the United States Government in attempting to infuse their jurisdictional power into all areas of governmental problems and governmental decision making that simply was not contemplated with the Tucker Act and does not contemplate in the jurisdictional grant given at Court of Claims.

Justice Potter Stewart: The District Courts have concurrent jurisdiction up to what amount is that?

Mr. Ruckelshaus: $10,000.00

Justice Potter Stewart: $10,000.00 and there are several courts of appeals --

Mr. Ruckelshaus: That have held that, if they try to found jurisdiction on the Tucker Act that the declaratory judgment action does not lie.

Justice Hugo L. Black: Can the tax court issue a declaratory judgment?

Mr. Ruckelshaus: I can't answer that Mr. Justice Black.

I'm not -- I can't answer whether they can or not.

A District Court -- District Courts have from time to time issued declaratory judgments against United States in specific statutory areas but I'm not aware that it had been issued in the tax court.

Justice Hugo L. Black: What about the Court of Customs Appeals?

Mr. Ruckelshaus: CCPA?

Justice Hugo L. Black: Yes.

Mr. Ruckelshaus: To my knowledge they cannot either Mr. Justice Black.

Chief Justice Earl Warren: Mr. Kabatchnick.

Argument of Neil B. Kabatchnick

Mr. Neil B. Kabatchnick: Mr. Chief Justice, if it please the Court.

It is the respondent's position that the decision below holding that the Declaratory Judgment Act does apply to the United States Court of Claims was correct and that the decision below should be affirmed.

The considerations before the Court revealing the correctness of the decision below is readily apparent from an examination of the provisions of 28 U.S.C. 2201 the Declaratory Judgment Act and 28 U.S.C. 451.

As the Court is aware the Declaratory Judgment Act says in pertinent of part that any court of the United States in a natural controversy within its jurisdiction may declare the rights and other legal relations of the parties whether or not further relief is or could be sought.

Of course the keyword from respondent's point of view is the word “any” any court of the United States.

Court will recall that in the original Declaratory Judgment Act passed in 1934 the language of the Act was the courts of the United States and that in the recodification in 1948, the language was changed to read any court of the United States.

It would seem that on its face without going beyond the bounds of Section 2201 and examination of that language of that phraseology would readily cause anyone to come to the conclusion that the Declaratory Judgment Act does apply to the United States Court of Claims.

Justice Hugo L. Black: What about the Texaco?

Mr. Neil B. Kabatchnick: Sir, I find nothing if following my theory if it is correct in going to the provisions of Section 451 and the term Court of United States as defined there.

The tax court is not specifically identified within the language of Section 451 and --

Justice Hugo L. Black: Just one of any court?

Mr. Neil B. Kabatchnick: Sir?

Justice Hugo L. Black: I'm under the terms of any court, wasn't it?

Mr. Neil B. Kabatchnick: If as a Court of the United States I would think that it is but it's not expressly identified within Section 451 which --

Justice Potter Stewart: Well, it's not covered by the definition, is it because it says --

Mr. Neil B. Kabatchnick: No, sir.

Justice Potter Stewart: -- has a catchall on the end any court created by Act of Congress the judges of which are entitled to hold office doing good behavior and tax court judges serve for term of years not during (Inaudible).

So it would not be included.

Mr. Neil B. Kabatchnick: Yes, sir.

Justice Hugo L. Black: What about the Court of Customs?

Mr. Neil B. Kabatchnick: Yes, sir.

That is expressly if my -- if respondent's theory is correct it would apply to the Court of Customs Appeals which is expressly stated in Section 451 as being within the term “Court of the United States.”

As I indicated earlier if it was believed that we would have to go outside the bounds of Section 2201 to find a definition of the term “Court of the United States” as respondent has pointed out we could go to Section 451 of Title 28 which defines Court of the United States.

And within that definition of course there is the term or the designation of the Court of Claims in expressed language.

Now, I believe it is significant that at the time of the original passage of the Declaratory Judgment Act in 1934 in many of the decisions holding that the Act did not apply to the United States that the expressed statutory definition of a Court of the United States was not contained explicitly in the judicial code.

Therefore, I believe the Court need not go beyond an examination of the terms of Section 2201 and Section 451 to find expressed language indicating that the Declaratory Judgment Act does apply to the United States Court of Claims.

Now, considerable discussion was made of the matter of the waiver of sovereign immunity which would permit the declaratory -- the United States Court of Claims to apply that procedural remedy and proceedings within its jurisdiction.

I submit that Section 1491 the Tucker Act is the waiver of sovereign immunity is this statute which permits the United States Court of Claims to apply the procedural remedy accorded by the Declaratory Judgment Act to proceedings within its jurisdiction.

As the Court held in the Aetna Life Insurance Company versus Haworth at 330 U.S. 227 in 1937, the operation of the Act is procedural only.

As the Court in the Scaly Oil case said it does not enlarge the range of remedies.

It does not expand the jurisdiction of the Court.

And I think it's quite significant in assessing the merit of the decision of the court below that the court and respondent respectfully invites of the Court's attention to the language in the Scaly Oil case where the court said that before the Declaratory Judgment Act, the federal court would entertain a suit on a contract only if, and this was a contract action if the plaintiff asked for an immediately enforceable remedy like money damages or an injunction.

Then the Court went on at page 671, 672 to say, the Declaratory Judgment Act allow the relief to be given by way of recognizing the plaintiff's right even though no immediate enforcement of it was earnest.

And I think this is the essence of the holding of the court below.

I would like to point out in connection with Mr. Ruckelshaus' argument that examination of the order entered on February, I believe it was February 10, 1967 which is set out in the appendix.

I believe at page A-12 that the Court of Claims did not dismiss the respondent's original petition and did not dismiss it on the grounds that it was a tax refund case.

The Court said so far as it appeared at that time that appears at the only possibly basis that the United States, the action could be maintain was under the Declaratory Judgment Act, leave was given to file briefs and argue the matters no matter was argued and ultimately the Court rendered the decision below that it's before the Court's consideration today.

So if the Court did not dismiss the action below as a tax refund case.

Now, I think it's extremely significant here to understand and there are some intricacies, the operation and the theory of respondent's case below.

Respondent has persistently as the record in this case shows and the briefs below, the briefs here that this is not a tax refund case.

Respondent's claim is a claim for physical disability retired pay which put for the action of the Secretary of the Army before July 31, 1959 the day of retirement and but for his actions afterward where he sought administrative relief, that the respondent would've been paid physical disability retired pay.

The gross amount of which is the same, 75% whether by disability retirement or by longevity.

However, if he had retired for physical disability in July 31, 1959 he would've receive 75% the total amount due him, his basic pay provided by statute.

If he had been retired by reason as he was here for longevity, a portion of that 75% was deducted by operational law as and it happens here to be income tax.

Now, the respondent went to the Army Board for the correction of military records under 10 U.S.C. 1552 in August of 1959 asking that his records be corrected to show that he was retired by reason of physical disability.

As pointed out and I would particularly and respectfully invite the Board's attention to the subject matter of footnote 4 on page 4 of respondent's brief where the respondent has endeavored to specifically identify what would've happen had his records been corrected.

If the respondent's records have been corrected in 1961 pursuant to his application, his records by operation of law under 10 U.S.C. 1552 would've been corrected to show that he was retired by reason of physical disability.

In other words, not for one second would the respondent by operation of law under 1552 ever have been deemed to have been retired for longevity.

His records would have been in all records of the Department of the Army would have been corrected to show that for all times, for all purposes he had been retired by reason of physical disability.

As a result of such a correction of the record as respondent has endeavored to point out in this footnote.

The Department of Army under 10 U.S.C. 1552 (c) by that statute from current applicable appropriations of that Board, Department of the Army, funds would have been used to pay the full 75% or that amount that would have been due him would've been paid out of army appropriations.

And evidence of this is indicated of how this operates has indicated in the Darby case, Darby versus the United States which respondent has cited in the footnote below.

And --

Justice Potter Stewart: You say the amount in this footnote would coincidentally have equal the amount of taxes without --

Mr. Neil B. Kabatchnick: Yes, sir.

Justice Potter Stewart: -- it's not coincidentally it's -- that's because that's the difference, isn't it?

Mr. Neil B. Kabatchnick: That's the actual (Voice Overlap) --

Justice Potter Stewart: Not coincidence?

Mr. Neil B. Kabatchnick: My choice of words might have been --

Justice Potter Stewart: Yes, but you mean it comes out of army appropriation it's not a --

Mr. Neil B. Kabatchnick: Yes, sir.

Justice Potter Stewart: Not the out of or whatever source or tax refund comes from?

Mr. Neil B. Kabatchnick: Yes, Justice Stewart.

And it is on this theory that plaintiff or respondent below filed this action for physical disability retired pay and I might point out also that had -- if these were deemed a tax refund case, it was respondent's position below and respondent's position here that going to the tax and making application for tax refund would be a futile gesture on the part of respondent because the Commissioner of Internal Revenue does not have jurisdiction to assess whether or not this man was physically disable at the time of his retirement in 1959.

Justice Byron R. White: Well, what if he brought suit in a District Court for a tax refund which I suppose he can do, couldn't he?

Mr. Neil B. Kabatchnick: He would first --

Justice Byron R. White: To bring the suit he might not want.

He could bring -- could he present the claim and have it adjudicated that he had been misclassified upon retirement?

Mr. Neil B. Kabatchnick: He could've brought an action Justice White in the form of a declaratory judgment action to have his --

Justice Byron R. White: What about a tax refund suit?

Mr. Neil B. Kabatchnick: He would first have to file his application for refund but this is not and I respectfully submit --

Justice Byron R. White: Alright, he files an application for a tax refund that is rejected?

Mr. Neil B. Kabatchnick: Yes, sir.

Justice Byron R. White: Then he sues in the District Court for tax refund?

Mr. Neil B. Kabatchnick: This could possibly to be done and this was --

Justice Byron R. White: And then he would claim that I am entitled of the tax refund because they put me in the wrong category.

Mr. Neil B. Kabatchnick: But the Court I don't think the Court and I don't think that the Commissioner of Internal Revenue would be a futile act as far as Commissioner of Internal Revenue is concerned because he has no basis for determining --

Justice Byron R. White: Well, I want to know about the Court.

Mr. Neil B. Kabatchnick: I don't -- I think that the Court could if this were a tax refund case, I think that or excuse me, no he could not seek a declaratory judgment because he accepted under the exemptions of --

Justice Byron R. White: Well,

Mr. Neil B. Kabatchnick: -- Declaratory Judgment Act.

Justice Byron R. White: -- is he asking money?

He's asking for a return of taxes he's been paid.

He says the reason I'm entitled to it is that I was put in the wrong category and was taxed when I shouldn't have been.

So, give me my money back here's the reason, now why can't he have that adjudicated by a judge and why can't the judge say, well the army didn't make a mistake when they retired?

Mr. Neil B. Kabatchnick: As I think that a District Court as a disability retirement action could (Voice Overlap) --

Justice Byron R. White: This is in a tax refund suit?

Mr. Neil B. Kabatchnick: I don't --

Justice Byron R. White: When he sues for the return of taxes couldn't he have adjudicated in that suit the army had made a mistake and once that was adjudicated they have a judgment for taxes he shouldn't pay.

Mr. Neil B. Kabatchnick: I do not think that the Court would possibly even reach that question because there had not been a prior adjudication or there would be nothing before the Court as to the merit or lack of merit of the tax refund.

And that's why it was respondent's position Justice White that going to the Commissioner of Internal Revenue would be compelling the respondent here to perform a futile gesture because it is not taxes that he is seeking and I –- this has been consistently opposite as the Court of Claims said below, the tax court here are no consequences.

The interpretation with tax statute is not in question.

It is action arising out of whether or not the respondent here was unfit for general military service or not unfit.

Justice Byron R. White: What would be -- would you think you'd have said something fatal if you have answered me yes?

Mr. Neil B. Kabatchnick: Your Honor, I just feel and maybe counsel has failed to convey these thoughts of the Court and I apologize --

Justice Byron R. White: Well, I understand that you say (Voice Overlap) --

Mr. Neil B. Kabatchnick: That this is --

Justice Byron R. White: -- but you really weren't interested in the tax refund suit?

Mr. Neil B. Kabatchnick: Yes, sir.

That's correct.

This is not a tax refund suit.

Justice Byron R. White: So you really -- my question is irrelevant but that's a fair (Inaudible).

Mr. Neil B. Kabatchnick: Well, I can't if Your Honor I cannot speak with any expertise as to the general nature of a tax refund suit other than as the general term applies if I may use that phraseology sir.

If it please the Court, --

Justice Potter Stewart: Did your client go as far as he could administratively?

Mr. Neil B. Kabatchnick: Yes, sir.

The only place we could go was to the Army Board for Correction of Military Records.

That was after retirement prior to retirement there were three stages, the Physical Evaluation Board proceeding, the Physical Review Counsel proceeding and the Disability Appeal Board proceeding.

Now, it's prior to --

Justice Potter Stewart: Retirement.

Mr. Neil B. Kabatchnick: -- retirement and I believe in the petitioner's brief in their statement of the facts on page 3, they mentioned subsequently.

But I noticed that Mr. Ruckelshaus corrected this in his narration of the chronology or what the administrative processes were in the court below.

Justice Potter Stewart: And you fully exhaust them?

Mr. Neil B. Kabatchnick: Yes, Your Honor.

Justice Potter Stewart: I mean there's no issue about that?

Mr. Neil B. Kabatchnick: No, sir.

Justice Potter Stewart: Between you and your --

Mr. Neil B. Kabatchnick: No.

Justice Potter Stewart: -- brother?

Mr. Neil B. Kabatchnick: All of the available remedies have been exhausted and proceedings of the correctional records are of course are in the appendix.

But I think that basically getting back I think to the basic question here I think that the language of 2201 and 451 are clear that the act does apply as far as waiver of sovereign immunity that this is carried forth in or show by 1491.

Now, --

Justice Abe Fortas: Well, I suppose that your position that if the Government says that -- if the statute says its sovereign immunity is waived with respect to this category of claims against the United States then that's a waiver that makes -- that opens the door to whatever remedy a court may apply, is that your position?

Mr. Neil B. Kabatchnick: Yes.

Yes.

Justice Abe Fortas: Now, on the other hand, I suppose that the argument is that the United States waived sovereign immunity but only for purposes of permitting a judgment for money and not for purposes of obtaining declaratory relief.

Mr. Neil B. Kabatchnick: That's my understanding.

Justice Abe Fortas: And your position is that once a Government has waived sovereign immunity with respect to a particular subject matter, the restriction on the form of action is of no consequence.

Mr. Neil B. Kabatchnick: As to form of action Justice Fortas it would be a consequence but I'm thinking of the language of describing what a declaratory proceeding is that is not a proceeding in equity or a law but a sui generis.

It's also been described as a procedural remedy as a remedy I think that you of course must have the basic consent in particular statute such as suits and Admiralty Act.

Justice Abe Fortas: Well, that's really the issue here, it seems to me I'm not sure that I'm help by talking about it in terms of jurisdiction that the question maybe here whether the waiver of sovereign immunity by in the statute which is a consent to be sued for money judgment also operates as a consent to be sued and declaratory judgment action.

Mr. Neil B. Kabatchnick: It would be respondent's position Justice Fortas that where you have consent to sue such as in the Tucker Act which gives you the jurisdictional to leave, to proceed for judicial relief that this waiver in the Tucker Act does accord the claimant the right to seek declaratory relief.

Justice Abe Fortas: Oh, yes.

Mr. Neil B. Kabatchnick: As the form of action or as incidental portion of his claim, of his monetary claim and as what's stated in the Pennsylvanian Railway Company as a procedural step to the accomplishment or the achievement of the receipt or to be put in the position, I believe it was one of the phrases that Judge Davis used below to be put in the position to have this right, to have a judicial statement of his right to the claim or a recognition of his right to a monetary claim.

Justice Abe Fortas: In short, a declaratory judgment.

Well, I'm sure it seem to me it have to take that position.

It seems to me that involved in this case are two questions.

One, does the Court of Claims -- does the declaratory judgment statute make available as a matter of theory that's sort of a instrumentality that sort of remedy to the Court of Claims?

And your argument is that it does and I've listened to that and read what you got to say in your brief.

But the next question is when the United States consented to be sued in the Court of Claims by way of an action for money judgment, does that extend, does that consent to be sued also extend to a consent to be sued for declaratory judgment in the Court of Claims in this type of situation?

Mr. Neil B. Kabatchnick: I might in response to your second portion of your question, of course the first portion, Justice Fortas my answer is yes that the Act, our position if the Act does apply.

As to whether the consent, as I understand your question, where their consent also gives leave to not only seek monetary relief but also declaratory relief, my answer to that would also be in the affirmative for this reason.

When the Tucker Act or when the first act of establishing the Court of Claims in 1855 and the 1863 statute, of course we did not have the concept of declaratory relief and also of course when the Tucker Act was passed in 1887 we didn't have that.

We didn't have that until 1934 and I believe that taking the history of the Declaratory Judgment Act and the Tucker Act and of course they didn't, when the Congress passed the Tucker Act they did invidious declaratory relief and this is an advent of recent -- comparatively recent advantage.

And I think that looking in retrospect especially when it says any claim it does not say a claim for present money due.

Justice Potter Stewart: Just at the verbal level the statute, the linguistic, the semantic level.

You don't -- it's not true is it that the Tucker Act does confine itself to monetary claims.

It is in the disjunctive.

It says any claim against the United States followed upon the Constitution or any Act of Congress or any regulation of an Executive Department.

Mr. Neil B. Kabatchnick: Yes.

Justice Potter Stewart: Or upon contract or for liquidated or unliquidated damages in cases other than tort cases.

Mr. Neil B. Kabatchnick: That's correct.

In fact, in the Jones decision, United States versus Jones which reaffirmed the Lear decision.

There was a dissent in that decision that said that even under the 1887 Act that it was the intent of the Congress to go beyond really monetary type of relief in the Court of Claims.

And of course our position is that the utility of declaratory judgment as it released to the Court of Claims it would be a procedural step and that there is no limitation in the Declaratory Judgment Act that a consideration of both 2201 and 451 leaves and readily apparent that the decision does apply.

Thank you very much.

Chief Justice Earl Warren: Mr. Ruckelshaus, if you have something briefly in closing.

Rebuttal of Ruckelshaus

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

I would just point out at the outset that as to the court decision below to dismiss the case on -- originally on the ground since the tax refund while the dismissal order itself is somewhat ambiguous that Judge Davis' opinion in the record on page 13 clearly states the reasons for dismissing the claim.

He says before bringing the suit here meaning King did not however filed a claim with the Commissioner of Internal Revenue for a refund of the taxes paid on his retirement benefits.

And since the Internal Revenue Code of 1954 bars a suit for taxes in the absence of the timely refund claim, we issued an order upholding in effect the Government's defense that the petition alleges basically a claim for refund of taxes paid on retirement pay.

So the Court I think in its decision did say this was the reason that it dismissed the case as far as the grant, Mr. Justice Fortas, under the Tucker Act of waiver of immunity here, I think that so traditionally the term “claim” has meant money claim and Congress has never overturned that that this Court and the court below should not have overturned this tradition without a clear congressional statement on.

Chief Justice Earl Warren: Very well.

Featured:

United States v. Bianchi & Co. - Oral Argument

Tue, 25 Sep 2012 22:36:12 +0000

Case:

United States v. Bianchi & Co.

Media File:

529_19630429-argument

Related Transcript:

529_19630429-argument

Transcript:

Argument of David L Rose

Chief Justice Earl Warren: [Inaudible]

Mr. David L Rose: Mr. Chief Justice, may it please the Court.

This case presents a narrow question of statutory interpretation, but a question which is fundamental to the process of resolving disputes under government contracts.

In this case, the Court of Claims has reversed administrative findings of fact as not supported by substantial evidence on the basis of evidence, which had never been presented to the administrative decision maker.

The administrative findings were made pursuant to the Standard Disputes Clause of government contracts, which in effect charges certain government officials with resolving factual disputes arising under the contract and it makes their decisions final.

The Wunderlich Act, which is before us here today, provides for judicial review of such decisions for arbitrariness fraud or lack of substantial evidence.

And the question presented therefore is whether, as the Court of Claims has held, a Court reviewing such findings is free to upset them as not being supported by substantial evidence or as being arbitrary on the basis of evidence, which has never been presented to the administrative decision maker.

It is of course our position that judicial review under the Wunderlich Act, like judicial review in most other instances, is to be made only on the administrative record and not on the basis of evidence, which is never been before the administrative decision maker.

I'll note that our position is supported by the decision of every District Court and Court of Appeals, which has passed on this issue.

Unknown Speaker: [Inaudible]

Mr. David L Rose: Well, I would say that at least one has clearly.

I think that two others have clearly indicated that this is the view they take.

In order to set the issue in its context, I should like briefly to recall to the Court the facts which give rise to it.

In July 1946, the respondent was a successful bidder on a contract to build an earthen dam in Upper New York State.

Included in the contract was the construction of certain outlet works, including a tunnel, which was to be 710 feet in length and which was to be aligned with concrete.

The tunnel was designed to carry water from in front of the dam to the stream below it, it was not designed for the people to go through.

The tunnel was to be constructed through rock and was to be free standing that is, it was designed on the premise that the rock was sufficiently stable to allow the tunnel to stand without any permanent ceiling supports, except for a short period -- short piece at either end of 50 feet in length.

By the end of March 1947, a subcontractor had dug the tunnel through or, hold the tunnel out to use the engineering terminology, without ceiling supports of any kind either permanent or temporary.

Before placing the concrete however, a factual dispute arose.

The respondent took the position that the underground rock was materially different from that which have been shown in this specifications in borings and that permanent steel supports were necessary in order to hold the tunnel up and that they should be installed at the government’s expense before placing the concrete.

It sought the payment under Article 4 of the contract, which has to do with conditions materially different from those shown in the specifications are normally to be expected.

The contracting officer denied the respondent's claim on the ground that the rock was in fact sufficiently stable for a free standing tunnel, and that it was of a kind which was to be expected from the borings in specifications.

Pursuant to the disputes clause, respondent appealed to the Corps of Engineers Claims and Appeals Board, which held a full trial type hearing where each side introduced all the evidence it desired to introduce.

Respondent produced nine witnesses there, but introduced the testimony of only four, including engineers and a geologist.

The government introduced the testimony of three witness, all of whom had personal knowledge of the fact and whose testimony fully supported the government's position.

I think the geologist's testimony on each side is the critical testimony before the Board.

The record before the Board was in our view, a classic instance of sharply conflicting testimony by lay and expert witnesses who had personal knowledge of the facts and where the finder of fact could reasonably find either way.

The Board found that the underground rock was of a kind to be expected and that permanent tunnel protection was unnecessary, thereby sustaining the contracting officer's decision.

The respondent filed a suit in the Court of Claims approximately six years later.

Justice Potter Stewart: Any statute limitation?

Mr. David L Rose: Yes, it is six years, Your Honor.

I think they just came under the limit.

I should add that the hearing before the Board was conducted, three years prior to the Wunderlich Act and that the suit was filed here approximately a few months after the Wunderlich Act.

The testimony was heard before a Commissioner of the Court of Claims who took evidence de novo over the strenuous objections of Government Counsel, evidence which had never been presented to the Board.

The respondent introduced testimony of approximately 15 witnesses and approximately six or seven times as many exhibits as it had in the administrative hearing.

The Commissioner made independent findings, principally on the basis of the evidence, which had not previously been presented on the basis of the evidence, which was not before the Board, and the Court of Claims overturned the Board's findings and awarded judgment to the respondent of approximately $150,000.

It did not find that the Board's findings where arbitrary or unsupported by substantial evidence on the basis of the evidence before the Board, but it held that it was entitled to receive evidence de novo, which had never been before the Board and that on the basis of all the evidence, including the evidence received de novo, the Board's decision was not supported by substantial evidence.

Justice John M. Harlan: [Inaudible]

Mr. David L Rose: No, I think first, Your Honor, they read the statute as authorizing the reception of evidence de novo, although the standard of review is substantial evidence.

We had then --

Justice Potter Stewart: The government put in evidence de novo as well, did it not?

Mr. David L Rose: Yes, only after making the objections and after its objections had been overruled.

Justice Potter Stewart: Yes.

Mr. David L Rose: And there was no assertion here of any waiver of the government's position.

We then have the principal issue here, which is whether, as the Court of Claims has held, a reviewing Court may overturn factual findings on the basis of evidence never before it or as the Courts of Appeals and District Courts have held, review is limited to the evidence, which was before the Administrative Board that is to the administrative record.

Justice Potter Stewart: I have a preliminary argument -- difficulty with your argument.

You've used the word repeatedly reviewing Court and review.

I suppose or you tell me if I'm wrong, if jurisdiction in the Court of Claims wasn't based in this case on its -- on the general jurisdiction statute, which I think is 28 United States Code, Section 1491(4).

Mr. David L Rose: Yes.

Justice Potter Stewart: Which says the Court of Claims shall have jurisdiction to render judgment upon any claim against the United States founded upon any express or implied contract to the United States, is that it?

Mr. David L Rose: Yes, I think that's the jurisdictional grant, Your Honor, but I think the Wunderlich Act itself, which is incidentally entitled an act to provide review is specifically was specifically designed with that in mind, that is to provide, to authorize judicial review in spite of the provision of the Standards Disputes Clause, which says that the administrative determination is to be final.

Justice Potter Stewart: Well, don't we have to kind of begin, at least we have to kind of begin with the general function and power of the Court of Claims under that statute.

The way that language reads, it's not a Reviewing Court, it's not an Appellate Court, it's the Trial Court.

Mr. David L Rose: Well that's right Your Honor, just as the District Court as the Trial Court and has jurisdiction under the Tucker Act under 1346 (a) (2).

Justice Potter Stewart: Yes.

Mr. David L Rose: Each jurisdictional statute gives the Court authority to hear disputes, cases arising under contracts.

Now if there were no Disputes Clause in the contract, then each Court could proceed to trial in the normal course.

This Court, in a line of decisions going back to 1878, has upheld Disputes Clauses such as this one in government contracts.

And in the Wunderlich decision, which was in 1951, the Court held if there is no judicial review except in the cases of fraud and bad faith.

So that -- although the Wunderlich Act is not a jurisdictional grant, it does provide that the Standard Disputes Clause provision will not be read to limit or prevent judicial review.

Justice Potter Stewart: You say -- it's not only it's not a jurisdictional grant, it's a withdrawal of jurisdiction I suppose you say --

Mr. David L Rose: No I think --

Justice Potter Stewart: -- withdrawal of the general jurisdiction conferred by 28 U.S.C 1491(4).

Mr. David L Rose: The Court has jurisdiction and under that -- with that jurisdiction Your Honor, in the Wunderlich case, this Court held that there was no judicial review before the passage of the Wunderlich Act, there was no judicial review except in cases of fraud or bad faith, except to that extent there is judicial review, but as in other cases of arbitration there is no review.

So, that this statute is putting back to the Courts both the District Courts and the Court of Claims the authority to review in spite of the agreement of the parties that the decision was to be final and conclusive.

Unknown Speaker: [Inaudible]

Mr. David L Rose: No, I think they would not, because the statute itself --

Unknown Speaker: [Inaudible]

Mr. David L Rose: Yes, the statute says, “Any such decision shall be final and conclusive, unless the same is fraudulent, capricious, arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence.”

So, here we have both the statute and the contract, which makes the decision final except in these limited circumstances.

Unknown Speaker: [Inaudible]

Mr. David L Rose: No, my argument is divided into three parts basically.

I'm going to discuss the language of the act, legislative history, and the purposes of the Disputes Clause and since this is a question of legislative intent, I'd like to turn first to the most authoritative source of that intent, namely the language of the statute, which I've just recited as found in pages on two and three of our brief.

What we understand that statute to mean is this simply, that the administrative decision is to be final and conclusive, if it was honestly made and if it was reasonable.

I think the terms that Congress has used here are the subtle and traditional terms for a review of factual findings both by the administrative bodies and it's quite an analogous to the situation of the Court in a jury case.

The term fraudulent is merely preserving the pre-Wunderlich situation and it's not involved in this case.

The terms arbitrary and capricious are antonyms of course for the term reasonable.

Similarly, a decision cannot be so grossly erroneous as necessarily to imply bad faith, if it's a reasonable decision, because if a reasonable man could make it, then there is no need or no possibility indeed of inferring bad faith.

And lastly, the term supported by substantial evidence as the House Report, which reported the final bill, which became the Wunderlich Act stated quoting this Court's decision in the Consolidated Edison Company Case, “the term substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”

In other words, evidence that a reasonable person could accept.

As we see it then, Congress in this traditional and subtle language has said that the administrative resolution of factual disputes is binding if it was honestly made and if it's reasonable and the Court's function therefore, as we understand it, is limited to seeing to it that the adjudicator, the administrative officials acted honestly and reasonably and their review is limited to that scope.

Justice Potter Stewart: Another -- a little difficulty I have is your repeated use of administrative agency finding, the administrative process and so on.

This is all, but here is a contract between two contracting parties and here is the so-called administrative finding and the finding by one of the parties to the contract, it's a little different from a disinterested jury, isn't it?

Mr. David L Rose: It is Your Honor, but that is what the parties contracted to do and indeed in the Martinsburg railroad case, we have the same situation where a railroad entered into a contract of this kind with a private contractor and named its Chief Engineer as the factual arbiter.

And as I have indicated, both this Court in a line of decisions going back to 1878 has approved this kind of a clause and Congress indeed by the passage of the act here in making such decisions final and conclusive has put its stamp of approval on it too.

Justice Arthur J. Goldberg: Well, Congress did not approve the clause [Inaudible]

Mr. David L Rose: Well, with that qualification, yes Your Honor.

I think that's -- so the Standard Disputes Clause in this form was before Congress at the time of the passage of the act.

Justice Arthur J. Goldberg: [Inaudible]

Mr. David L Rose: Right.

Justice Arthur J. Goldberg: [Inaudible]

Mr. David L Rose: Precisely.

Justice Potter Stewart: So you both agree, both you and your adversary agree that the Disputes Clause doesn't mean what it says.

The only question is how much --

Mr. David L Rose: Review --

Justice Potter Stewart: Less does it mean, and what it actually does --

Mr. David L Rose: That's right.

Well, we think it means that it's final if it's a reasonable decision.

Justice Potter Stewart: Yeah, but that isn't what it says?

Mr. David L Rose: No, that's quite right.

And since the Court's function is limited as we understand it to determining whether the Board acted reasonably, we think it's quite apparent from the ordinary use of language that you can't go beyond the evidence, which was before the Board.

If the term is arbitrary, a decision cannot be condemned as being arbitrary or capricious on the basis of evidence, which was never before the decision maker.

And similarly, the term so grossly erroneous is necessary to imply bad faith, which is a term found in the decisions of this Court prior to the Wunderlich Act.

This Court in the Ripley case, Ripley versus United States in 220 U.S, 222 U.S and 223 U.S said that in substance that you can't condemned and overturn this kind of administrative decision, except on the basis of facts known to the decision maker.

And lastly, the term substantial --

Justice Byron R. White: [Inaudible]

Mr. David L Rose: That's right.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Board.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: That's correct.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: The prevailing view in the Court of Claims was that there was a review for arbitrary --

Justice Byron R. White: [Inaudible]

Mr. David L Rose: I don't think so Your Honor.

I think the Needles case, which we cite in the Dean case or Young case, indicate that the Court of Claims could not base its decision on evidence, which was not before the decision maker.

At any rate, this Court in the Ripley case, which I have just referred to made that quite clear.

There are three cases, three decisions in the same case there, where this Court sent the case back to the Court of Claims to ascertain what the decision maker knew.

And since that -- that was the only basis in which the decision could be overturned, on the basis of what the decision maker knew, on the basis of evidence that was before him.

And therefore, as we understand it, the review was for reasonableness in factual findings.

And if it is a review for reasonableness, the evidence which was never before the decision maker can have no bearing on that review, because the decision can't be condemned as unreasonable on the basis of material that was never before the decision maker.

Now the term substantial evidence is of course by now deeply routed in our jurisprudence both in decisions and statutes.

And we think it is quite significant that in every statute in which Congress has passed providing for such review, judicial review for substantial evidence, it has met judicial review upon the administrative record.

We collect some of those statutes in pages 24 and 25 of our brief.

And indeed in every statute where Congress has provided for judicial review without setting forth a standard, it has been held by this Court and it has been held and Congress has gone along, that review was on the administrative record.

As Mr. Justice Brandeis, said speaking for Unanimous Court, a proceeding under the Packers and Stockyards Act is a judicial review, it's not a trial de novo, this is page 26 of our brief.

The validity of an order of the secretary therefore like that of an order of the Interstate Commerce Commission must be determined upon the record of the proceedings before him.

So that there was a subtle meaning to this term substantial evidence and the other terms are arbitrary, capricious before Congress passed this Act.

Justice Arthur J. Goldberg: [Inaudible]

Mr. David L Rose: Absolutely Your Honor, indeed the title of the Act is an Act to provide review, meaning judicial review.

Well, that brings us then to the legislative history of the Act.

The Court of Claims has indeed recognized the logical weakness in its position, but has said in effect that this is what Congress intended and therefore we have to go along.

It's our position that the legislative history shows not only that Congress intended to use these terms, these subtle terms in their traditional and subtle meaning to provide for judicial review on the administrative record, but also that Congress added the standard of substantial evidence specifically to require each side to present it's case fully and openly to the administrative officers or Board.

And that its intent is only consistent therefore with a view that substantial evidence means substantial evidence before the decision maker.

That Congress used the terms in their traditional and subtle meaning, is clear from the House Report the report on the final bill.

On page four of that report there is reference to the terms arbitrary and capricious and Congress notes that these are the terms that's used in the Administrative Procedure Act, and also refers to the Ripley case to which I have just adverted and where this Court said, a Court of Claims decision could be upset only in the basis of facts known to the decision maker.

Similarly, the term substantial evidence Congress noted was included in the Administrative Procedure Act where of course review for substantial evidence is on the administrative record.

And Congress referred to this Court's decision in the consolidated Edison case, which was a case under the National Labor Relations Act where again review is on the administrative record.

So we think it is clear that Congress intended to use these terms, knew it was using terms that had a subtle meaning and knew what that meaning was.

Now, the main purpose of the Wunderlich Act, I think as everyone will concede was to provide or restore judicial review in situations other than fraud and bad faith, but there is another purpose and I would like to direct the Court's attention to that.

In the last two pages of our brief, pages 59 and 60, we quote from the House Report and I'll summarize, it's at the bottom of pages 59 and 60, and I'll summarize the beginning of that.

It had come to the attention of Congress that some of the administrative hearings were not full hearings in that the records were inadequate and Congress sought to change that situation and how, what instrument that it used to change the situations, the substantial evidence test.

If you look at the last line of page 59, this is the House Report on the bill that was finally reported.

It is believed that if the standard of substantial evidence is adopted this condition will be corrected and the records of hearing officers will here after contain all the testimony and evidence upon which they have relied in making their decisions.

And Congress went on to say, this is in effect to require each party to present openly its side of the controversy and afford an opportunity of rebuttal.

Now Congress could use that term substantial evidence in order to effect this result, only if it understood the term substantial evidence to mean substantial evidence on the record, because if either side could withhold evidence from the Board and then introduce it in Court to sustain or upset the decision there would not be this necessity of introducing it's case fully before the Board.

Justice Potter Stewart: This so called administrative agency doesn't have any subpoena power, does it?

Mr. David L Rose: It has none Your Honor.

I should add though that the very authority cited by counsel for respondent indicates that in almost every instance that's the article in -- for practicing lawyer, in almost all cases the parties have been able to obtain the desired witnesses and documents.

Justice Potter Stewart: Is a transcript made and are the exhibits all preserved?

Mr. David L Rose: Yes I would say that in this instance counsel for petitioner, counsel for respondent excuse me, withdrew a number of the exhibits and these were hard to find six years later or about eight years later when the case came to trial, but all of the record was made, a transcript was taken, it's reproduced verbatim in this record here.

Justice Potter Stewart: Is a transcript routinely made and preserved with the --?

Mr. David L Rose: Yes, upon the request there is a provision for summary before some of the agencies where counsel for each side agreeing that this is what the testimony was.

Chief Justice Earl Warren: [Inaudible]

Argument of William H. Matthews

Mr. William H. Matthews: Mr. Chief Justice, may it please the Court.

Government counsel hasn't commented at all on the testimony of the witnesses before the congressional committees of the Senate and the House at the hearings in connection with this legislation.

We deem that's very important to arrive at a fair interpretation of the provisions of this statute.

Now the main force behind this legislation was the construction industry and the representatives of that industry were very wrote up over the Wunderlich decision.

They were joined by the General Accounting Office who felt that their statutory authority had been taken away from them, the authority to adjust and settle claims by and against United States have been taken away from them by the Wunderlich decision and so they joined industry in an effort to obtain this legislation.

Now the only opposition to the legislation was the Department of Justice.

The industry witnesses have hailed the Wunderlich decision in strongest terms barring again and again from the dissenting opinions, the language used in the dissenting opinion in the Wunderlich decision.

The plea of the industry and all of this is on the record, was that they get back to the position that they were in prior to the Wunderlich decision and that the Court of Claims be permitted to exercise the same jurisdiction that it always had exercised over -- in testing the decisions of these contracting agencies.

And their testimony is very clear that they interpreted the proposed legislation as doing just that.

The testimony of the many witnesses to this effect is referred to in our brief.

One of the leading Advocates of this legislation was the Associated General Contractors and their plea was that the Committee draft legislation that will grant the Courts, “Jurisdiction to hear determine and enter judgment against United States on any claims in which the Courts – in which the contractors will seek review.”

Now they act as a substantial evidence standard, be applied and that the Courts be authorized to render judgment, “On the evidence presented to the Court.”

The testimony of the General Accounting Office witness with respect to the proposed bill was and I quote that there should -- “that they would be restored to the Courts and to the General Accounting Office, their present jurisdiction or their normal proper jurisdiction.”

The bill as finally enacted, adapted the language proposed by the General Accounting Office.

There really was no sponsor before the Congressional Committees for the government's present position that review be restricted to the administrative record.

Congress was made fully aware of these standards applied by the Court of Claims in reviewing these contracting agency decisions.

They were informed that over a period of many years the standards arbitrary and capricious had been employed and that the Court of Claims had also recognized the substantial evidence rule.

Government counsel states here that pre-Wunderlich the standard was limited to fraud and bad faith.

In that connection may I read from the government's petition for writ in this case.

At page 10, they say there is no doubt that Congress passed the Wunderlich statute in order to make certain that judicial review of an administrative decision under the disputes clause would also be available where the contractor establishes arbitrariness and capriciousness.

In this respect, Congress can be said simply to have codified the view many times by -- reiterated by this Court prior to its decision in United States v. Wunderlich.

Congress was also, in this testimony taken at these hearings, fully appraised of the fact that the Court of Claims permitted the presentation of evidence in open court in testing these administrative decisions of these contracting agencies and that they had done so over a period of many, many years going back to 1911 in the Ripley decision.

And Congress was informed why it was so necessary for the contractors that the Court of Claims exercise jurisdiction in this manner, that this disputes clause was not a matter of negotiation between the contractor and the contracting officer, but neither had the authority to modify it or change it in anyway.

Congress was told to through the mouths of the witnesses that a Board composed of employees of the contracting agency was no adequate substitute for an impartial review by the Court so that it will be just as impartial as trying a case before a jury composed entirely of the contractors.

Congress was told about the inadequate hearing procedures afforded by these contracting agencies.

The fact that the contractor would go in and present their witnesses, they would be subjected to cross-examination.

The Government would produce no witnesses of its own or in those cases where the government did produce witnesses, the Congress was informed that these Boards relied on ex-party statements, some of which were made by the very officials whose decisions where the subject matter of the appeal.

These contracting agencies had no statutory power to conduct a fair hearing, whether or not a hearing was afforded or whether a record was made less entirely in the discretion of the head of the department.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: If there had been no act, the contractors would still have had the right which they've always had under the Tucker Act to bring an original proceeding in the Court of Claims to test the decision of the contracting agency.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: In spite of the disputes clause for 50 years -- 50 years, contractors have been permitted to go into the Court of Claims and test the administrative decisions whether those of a Board or whether in the -- going back 50 years ago like in the Ripley case.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Well the Wunderlich decision would have made, that's the reason they needed the legislation as far as --

Unknown Speaker: [Inaudible] absent the act?

Mr. William H. Matthews: Absentee Act they had no adequate remedy at all.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Despite of all the defeciencies in the hearing they had no adequate remedy in the Courts.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: But Congress gave them, but if you go to the report and the report itself is -- everything in the report is grounded on the testimony of the witnesses who appeared before the Congressional Committee.

Now the very important --

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Sir?

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: The Department of Justice defended the Wunderlich decision; that was it.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: That was the only -- as far as the decision is concerned, but there was no testimony indicating a desire to change the usual procedures in the Court of Claims in applying the standards arbitrary and capricious that the standards that have been implied over a period of many, many years.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: That was the decision of the Department of Justice in substance.

Now, these Boards had no statutory powers, they hadn't any power to administer an oath or to compel the attendance of witnesses or to compel the attendance of documents.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: I would say yes, judging from the actions taken by the Board.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Well I'll give you an illustration on that.

I'd like to refer to page 45 of the petitioner's brief, where petitioner and this is in the present case, he makes the statement and I quote, “Since the Board normally adjourned referring to this Board hearing, at 5:00 PM the Board limited respondent's presentation in order to allow the government time to present its case, citing record page 109.”

Now page 109 in the record will show that the limitation imposed on these two witnesses, the total time that they were to -- had to testify was one hour.

In the Court of Claims the same two witnesses, their testimony took almost a full day.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: But I would say that the counsel for the respondent didn't object, but certainly the reason it seems to me to be obvious that he wouldn't want to antagonize the Chairman of the Board.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Well in this -- before the Court of Claims there is 3,000 pages of testimony and before the Board I think there are 100 pages of testimony and there are about 100 pages of exhibits which -- many of which are not included in this printed record.

Unknown Speaker: [Inaudible]

Mr. William H. Matthews: Well I would say that there have many, many times, there are many recurrent problems in connection with these hearings, because there is no power to subpoena the witnesses.

Take for example, and this is just one of many, an engineer, a resident engineer in charge of a project leaves the government.

He is an important witness, there is no adequate substitute for his testimony yet he refuses to testify.

The government can't get him and the contractor can't get him and there are many, many illustrations and that happens all the time.

And with respect to this improvement in the hearing procedures a witness who interpreted the proposed legislation as maintaining the usual procedures in the Court of Claims testified before the committee that with the addition of the substantial evidence rule, there would be marked improvement in these hearing procedures, which would be of great value to the contractors.

Now that certainly does -- then the committee reported -- the committee adopted this suggestion, even incorporated some of the language of the witness in their report, but it seems unlikely that the committee would use the material drawn from a testimony of a witness who interpreted the act as not restricting review from the administrative record and from that testimony draw a conclusion entirely different from that of the witness, of this same witness who testified with respect to the conduct of the proceedings and commenting on the substantial evidence rule, made reference to the Administrative Procedure Act to show that it had comparable substantive standards with a body of law interpreting them.

A like reference was made in the committee report to these substantive standards.

Now it seems clear that if the committee had intended to restrict review like in the Administrative Procedure Act, it would have at least made reference in the report to some of these procedural standards.

Justice John M. Harlan: Without question I take it the power of Congress to do what the government claims it did.

Mr. William H. Matthews: I don't question the --

Justice John M. Harlan: Don't have any constitutional --

Mr. William H. Matthews: I have no constitutional due process argument.

Now the petitioner counsel for government refers to statutes containing specified standards of review where review is restricted to the administrative record.

Now if Congress has intended to ask the Court of Claims of jurisdiction under the Tucker Act, it seems it would do exactly what all of these statutes do.

They provide procedural safeguards to conduct a fair and full hearing.

They all provide for the making of a record.

They grant the -- they all grant the administrative agencies, the basic powers to conduct full and fair hearings, give them the subpoena, all the subpoena powers and the other powers necessary to do that.

And such procedural safeguards are also found in the statutes referred to by the government counsel without specified standards of review where review is restricted to the administrative record.

The government counsel seems to concede that a fair trial and a complete record is essential to test the decisions of the contracting agencies.

They make that admission in their brief.

Now in many instances it is impossible for several reasons.

In the first place, to paraphrase the language of Mr. Justice Jackson and his dissenting opinion in the Wunderlich decision, one who acts as a judge of his own department maybe influenced by his own loyalties and it is true there unconsciously at times an employee of department, loyalty to his department will influence his decision.

Now can these administrative irregularities be cured by a stay?

As indicated by the counsel for the petitioner, the Court of Claims has no power to remand to a contracting agency and in the case of United States against Jones, this Court made clear that the Court of Claims had no such power.

And it certainly has no power to please the administrative agencies to assure that a full and fair hearing is granted.

We submit that the only fair interpretation of the statute is that Congress did not intend to change the usual procedures in the Court of Claims permitting the presentation of evidence de novo.

Now we submit that in the present case, the administrative irregularities committed by the Board, but wants the Court of Claims to render its decision on the basis of evidence presented de novo.

At the trial of this action before the Court of Claims, we established that the Board considered and relied on two documents, the contents of which were not made known to the respondent at the time of the Board hearing.

The principal document was a letter from the residential engineer in Baltimore to the Chief of Engineers of the Army, forwarding the contracting officer's findings and all the appeal papers and this letter contained six pages of comments on the merits of the case and recommended that all of the claims be disallowed.

Justice John M. Harlan: Mr. Matthews suppose the Court of Claims under this statute, was of the view that for some reason or other evidence which should have been taken or was -- had not been presented, should have been heard by the contracting officer, could it send the case back to --

Mr. William H. Matthews: It had no authority to -- that was made clear in the case of the -- in the Jones case, that the Court of Claims has no power to remand at all, to -- they didn't have any power to remand in that case to the --

Justice John M. Harlan: Was that before or after the Wunderlich Act in John's case?

Mr. William H. Matthews: Well the Wunderlich Act certainly doesn't give them any part.

Justice John M. Harlan: I realize that, but it does change the --

Mr. William H. Matthews: That was before the Wunderlich case.

Justice John M. Harlan: It has changed.

Mr. William H. Matthews: Before the Wunderlich yeah.

Justice John M. Harlan: Before the Wunderlich.

Mr. William H. Matthews: Yes.

Justice John M. Harlan: [Inaudible] so much later.

Mr. William H. Matthews: No it doesn't.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Well as far as the contractors are concerned, a great deals was accomplish by the Act Mr. Justice Black.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: As far as --

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: As far as the determination by the Board it had no effect, but it did -- it took -- the Act took away this absolute power that invested in this Board which was just composed of employees of the other party to the contract.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Well it has the same effect, except that the -- they'd have to apply the standards and they'd apply them in the way that they always applied them before.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Well after actually the Wunderlich, before the -- after the Wunderlich decision the contractor had no remedy at all practically in the Court of Claims, because it had to prove not only fraud, but conscious fraud.

I mean fraud of conscious wrong doing.

Justice Hugo L. Black: Did he have it before [Inaudible]

Mr. William H. Matthews: Well, and again I read a portion of the government's petition there.

It seems -- I think that prior to the Wunderlich decision, the standards of arbitrary and capricious were employed which gave the contractor more of a remedy than just a strict standard of fraud.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Well that was held in the cases -- in Kleeberg case and other cases, the Gleason case and other case decided by the government in their petition.

Justice Hugo L. Black: [Inaudible] the Court of claims nevertheless had power to [Inaudible]

Mr. William H. Matthews: I think that's correct Mr. Chief -- Mr. Justice Black but the Congress wasn't changed -- showed no intent whatsoever to change the usual procedures and they were apprised of these procedures.

And they felt that the contract --

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Well they knew that the nature of the remedy afforded in the Court of Claims and they extended the -- they broadened the standard from fraud to arbitrary and capricious and not supported --

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: They reversed the Court of Claims in the Mormon case.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: I would call the --

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: I don't go quite that far Mr. Justice Black.

I say it's admissible in evidence.

It's admissible in evidence and it carries with it a very strong presumption and I just read in answer to your question what the Court of Claim said in the Needles case which was before this Wunderlich Act and this the test they applied, this is on page 11 of our brief.

“If this Court is satisfied that no reasonable man could have determined the dispute upon all the relevant facts and data as the Administrative Officer did, then the Court is justified in inferring as a fact that the decision was not made impartially or in good faith.”

In other words this standard, this was decided before the Wunderlich, I mean before Wunderlich Act.

Justice Hugo L. Black: How long?

Mr. William H. Matthews: It's 101 Court of Claims, that must have been several years before wouldn't you say.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: That I think was after Mormon.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: And I think this was before Mormon.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: I think the Court of Claims has more rigidly enforced these standards in the last -- since the Wunderlich Act or since the Wunderlich decision.

And then, I refer on page 10 to the -- I mean I just mention one thing.

I want to take exception and strong exception to the request here by Government Counsel for this Court to pass on the sufficiency of the evidence before the Board and it's my understanding that, that has been their request.

They're asking this Court to do so and I refer in that connection to footnote 20 -- footnote 1 of page 20 of the Government's brief, where they say there is no issue before this Court as to the vein of the facts, before the -- and that the government's petition solely on the important legal question whether the Court of Claims was restricted to the administrative record.

That footnote completely misled us and we therefore thought we shouldn't burden this Court with this wrong statement of facts about -- the statement of facts of what transpired at the Board hearing.

So there is a record here, substantial record and it's unlike any case that's I'm familiar with where the Court has passed on the sufficiency of the evidence below.

But as this Court feels that it's before the Court why we trusted we will be permitted to file a statement of facts before the Board.

I don't feel -- I think it's clear that the government has made it clear in their brief that they were going to request this Court to pass on the sufficiency of the evidence.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: I have referred to it.

I'm very familiar with it Mr. Justice Black.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: That was one of the points that the Court raised in it's opinion, and I think there is a lot substance to that.

Now take for example our own case, assuming that the Board had given us a decision in our favor, we had an issue that the Boards have no authority whatsoever to determine liability for unliquidated damages, so that in our case, we were seeking damages for delay.

The delay was an issue before the Board.

If the Board had rendered a decision in our favor, we would have had to bring a suit in the Court of Claims and claim for damages arising out of the same identical facts that our claim for changed conditions and adjustments in the contract, which were all within the scope of the contract, that the Board has authority to determine, so we get X dollars before the Board.

And going to the Court of Claims, we have two suites -- a separate suite.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: And furthermore there is this point -- as I pointed out in one of the amicus brief submitted here, the government has a right to counterclaim.

They have to start if they want a counterclaim.

They have to start an original -- I mean how you can counterclaim against something they started -- that they usually counterclaimed as they have to in the Court of Claims.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: I say no attention -- I don't say no attention should be paid to it, because they give a great deal of weight to the -- it seems to me from the Needles case and other cases that the Court of Claims has given a great deal of weight to the decision of the Board, and they apply the same rule -- they apply the substantial evidence rule as indicated in the committee report.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: May I illustrate it this way just by giving one answer.

In the 15 years prior, this in the record of the hearings, in the 15 years prior to the Wunderlich decision, there are only 48 cases out of thousands and hundred -- apparently, thousands and thousands that went to the Court of Claims under the disputes clause and of those 48 cases, only 16 where the Board decisions were reversed.

They only had about three a year, but it's vital.

The important part of it is the contracting officer and even back at that level, this is all under testimony, knows that his decision isn't going to be final as soon as it reaches a level of the head of department that sometime a Court can look at it and it makes a fair deal between the government and the contractor.

Justice Hugo L. Black: [Inaudible]

Mr. William H. Matthews: Yes Mr. Justice Black.

Chief Justice Earl Warren: Mr. Rose?

Rebuttal of David L Rose

Mr. David L Rose: I should like to make two points in the time allowed to me.

The first is that I would agree that the association of General Contractors of America was a moving force in the Wunderlich Act.

Page 29 of the senate hearings, this is the review that they sought.

The position of the association as we believe that any decision should be subject to judiciary review in order to guarantee that such decision is reasonable, made with due regards to the rights of both contracting parties, and this is a key part, and supported by the evidence upon which the decision was based, and that is what they sought and that we submit as what they got, when they got the substantial evidence test.

Mr. Gaskins who was a contractor representative and one of the leading spokesman for the contractors when asked what kind of review it would be in Court, said “It will be an appellate review.”

Now the term appellate review to me, means review on the record and that is precisely what we contend here.

Justice Hugo L. Black: [Inaudible]

Mr. David L Rose: They can suspend their proceedings Your Honor, just as they do in the ICC case, the Pennsylvania Railroad case that we cite, suspend their proceedings with an indication that that they want the record rectified and we cite -- I see absolutely no reason why the same thing couldn't be done here at this Court in Pennsylvania railroad case approved that Court of Claims procedure in ICC cases.

Now, I should like to make this point at the end.

The purpose of the disputes clause is to provide an expert an inexpensive forum for the quick resolution of factual disputes.

This court has approved the disputes clause and Congress in the very passage of the Wunderlich Act approved it subject to judicial review for substantial evidence.

The taking of evidence de novo frustrates that purpose in two basic ways.

It makes the resolution of factual disputes both expensive and time consuming.

Here we have 17 years that this dispute has been going on whereas the dispute before the Board was over an year-and-a-half, and the tremendous expense of two trials on the same issue of liability the -- whereas one hearing before the Board, there were three hearings in three separate cities San Francisco, Washington and Boston in the Court of Claims.

There is a tremendous expense involved and a tremendous duplication of effort.

Our opposition will eliminate one whole trial type hearing and therefore accord with the original intent, which was to provide an expeditious and inexpensive forum.

Justice William J. Brennan: [Inaudible]

Mr. David L Rose: Absolutely if there was --

Justice William J. Brennan: [Inaudible]

Mr. David L Rose: I would say Your Honor, where the contractor has so clearly established his case in the evidence before the Board, that there is no reasonable mind could come to a contrary conclusion, then the Court of Claims could enter judgment.

Justice William J. Brennan: [Inaudible]

Mr. David L Rose: Well, that is --

Justice William J. Brennan: [Inaudible]

Mr. David L Rose: Well, in our view, the Congress by the inclusion of the substantial evidence test clearly intended that there should be a record made and that's what the --

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Well, I think they should suspend proceedings and have a record made.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Well --

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Well, that would still not affect the case that we have here.

I would think that's a possibility Your Honor.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Well, in the extreme case where there is no record, this would be a possibility Your Honor.

I would indicate that although there is no express power to remand, there is this power to suspend and there would be the sanction of imposing judgment.

Justice Byron R. White: [Inaudible]

Mr. David L Rose: Absolutely and there is no contention here that the contractor was denied an opportunity to present all the evidence he wished to before the Board.

The record is clear to that effect.

Justice Hugo L. Black: [Inaudible]

Mr. David L Rose: No, I think that the procedure followed in the Pennsylvania Railroad case could be followed here that indeed one of the purposes for judicial review was we think to cure the procedural defects as well as substantive defects, and in the primary jurisdiction cases the ones I'm referring to the Court of Claim is merely suspend its proceedings and the case does in fact go back to the administrative agency and the proceedings are held there, and I think that would be the comparable situation here with the sanction to impose judgment if the --

Justice Hugo L. Black: [Inaudible]

Mr. David L Rose: Yes, absolutely, and we think that one should be.

It's our view that it should be remand, but either would cover the situation here and neither is before the Court here in our view, because here we think that each party was afforded full opportunity to present its evidence and there was ample evidence to support either conclusion before the Board.

Featured:

Glidden Company v. Zdanok - Oral Argument, Part 3

Tue, 25 Sep 2012 22:34:18 +0000

Case:

Glidden Company v. Zdanok

Media File:

242_19620226-argument-3

Related Transcript:

242_19620226-argument-3

Transcript:

Argument of Cox

Mr. Cox: Mr. Chief Justice, just before the recess, I was attempting to emphasize the judicial functions perform by the Court of Claims and particularly sought to call attention to the fact that at least in some instances, it seems to perform judicial duties which must be performed by a court.

And I cited the determination of just compensation in the case of the taking is in illustration.

I would add to that a second category of business which results from the fact that the Court of Claims has jurisdiction not only of suits against the Government but also of not only set-offs but counterclaims against as those citizens or other person who are plaintiffs in the Court of Claims.

And without attempting to particularize, it seems to me that there could be little doubt not only that this is the kind of business which is the daily grist of courts but that undoubtedly some of those counterclaims would involve claims by the United States against the citizen which could not be adjudicated finally outside a court.

And we think this emphasizes again that this Court's business is in truth the kind of business which was thought of as part of the judicial power of the United States of the kind of business that the court normally dealt with and was equipped to deal with.

Hereto, I think when other distinction is important and then I plan to drop this point.

There was well recognized that the time the Constitution was adapted and in the earlier English Law and later in our law, a difference between sovereign immunity and the existence of a legal cause of action, if you will, against the Government.

And what Court of Claims has been set up to deal with is not the distribution of large gist but the adjudication of these causes of action against the Government of the kind of cause of action that was well-known and could be maintained where ever the sovereign choose waive it's immunity not only prior to the adoption of the Constitution but in this cou -- in England, but in this country about that time and in various types of cases afterwards that points develop with a history in our brief.

And I simply allude to adhere as further evidence that controversies to which the United States may be a party as a matter of recognized usage at the time the Constitution was adopted involved not only controversies in which the United States might be the moving party but controversies in which the United States would be defendant.

And in holding the contrary, it seems to us that the Williams case is wrong not only as a matter of logic but also as a matter of history.

Chief Justice Earl Warren: Let's assume -- if your argument being true to saying that Congress has imposed (Inaudible)

Mr. Cox: No, sir.

It does not.

I think not.

I was just coming to the --

Chief Justice Earl Warren: Am I correct?

Am I correct in (Inaudible) if I may say this true (Inaudible) to say that any respective court that Congress sets up (Inaudible) that it may impose upon those courts any constitutional law (Inaudible) to which claims (Inaudible) whether in fact biased?

Mr. Cox: Well, we do -- we do make that point.

We do argue in our brief and I aser -- submit here that in the case of special courts set up that the seat of the Government with a limited jurisdiction that Congress may as held in the O'Donoghue case call upon them to perform non -- not strictly judicial duties.

I don't think our case depends on that.

And I think the Court of Claims can be held to be a constitutional court without reaching that conclusion.

But the answer to Your Honor is yes, we do make that argument.

May I suggest that, because I was just going to develop this directly, that I try to develop affirmatively where we do stand on this question.

And then if I haven't answered all the questions to Your Honors' mind, I'll try to do my best.

I was just about to say that what we have here is a tribunal which is a court like any Article III court or except in its place in the hierarchy like this Court in respect to all its business, in respect to all its powers, in respect to the tenure and compensation of its judges, in every respect except for this fringe congressional reference jurisdiction.

And if it were not for that, it would seem to me there was really nothing to be arguing about here.

The question then becomes how does this affect the case.

Well, I would say first, Mr. Chief Justice, that just as the existence of this congressional reference jurisdiction has never been thought to prevent all the rest of the Court of Claims business from being judicial and justiciable and from being cases and controversies such as this Court could review.

So it would seem to me that the existence of this fringed non-judicial duties should not be held to affect the quality of the judges' tenure that they have been set up predominantly for the purpose of exercising judicial power the Congress has sought in everyway that it could to give them constitutional tenure because it thought it was appropriate to the dispatch of the judicial business because, and it mentioned this specifically in 1953.

It would make them available for assignment to other courts and finally because it declared this was to be a constitutional court.

So I would submit that even if these other duties have been given that this should not take away from the judges their constitutional status.

And I point out that that was the holding in the O'Donoghue case although since we are asking the Court to reexamine many authorities in this field.

I think the reexamination necessarily involves the O'Donoghue case, too.

Now, I would think that under --

Justice Potter Stewart: What would be -- what would be your point Mr. Solicitor General that the -- the judges could simply decline if they wanted to to perform their --

Mr. Cox: Well --

Justice Potter Stewart: congressional reference function?

Mr. Cox: My -- my argument up to this point leaves hanging the question what about this congressional reference function.

And I would say first that I don't think there is any occasion to enter a part and inquiry into it, because the -- I do think that one could uphold the status of the judges without going into it.

Still, it is here and I ought to go on.

Justice Felix Frankfurter: What do you want to --

Mr. Cox: I was going to answer Justice Stewart's question.

There are three possible answers, it seems to me.

The first is that being a special tribunal and not like the normal courts this district and circuit courts that this fringed that the rule in Hayburn's Case does not apply in this fringe jurisdiction can be added.

Justice Potter Stewart: Because it's in the District of Columbia or what?

Mr. Cox: Or because it is a primarily.

Because it is a special court which doesn't have the general jurisdiction, the adding of the non-judicial business therefore seems to me not to involve all the problems of overloading the court and the risk of destroying its independence which would be involved if you are dealing with the District Court and the Courts of Appeals.

And this is not after all a rule Hayb -- Hayburn's case is not a rule which is written into the Constitution.

It's a matter of preserving the independence of the judiciary.

But I think there's room for recognition of some questions of degree.

The -- the ten --

Justice Felix Frankfurter: The tenure part.

Mr. Cox: I was just going to say, the tenure part clearly is, and I think a verification also in the Constitution, is that you can't take all of what was regarded as judicial business in 1789 and give it to people who do not have the tenure.

Justice Felix Frankfurter: (Inaudible)

Mr. Cox: Yes.

Justice Felix Frankfurter: (Inaudible)

Mr. Cox: It -- well, the second possible conclusion is that the judges may not be required to do this but just as judges have from time to time all through history in this country, voluntarily taken on additional responsibility.

So the judges of the Court of Claims may voluntarily take on this responsibility.

Finally, there would be of course Mr. Justice Stewart that the possible conclusion that this part of the Court of Claims jurisdiction must be excise.

I would make just one point with -- with respect to that.

I think that Congress has attempted to make it a constitutional court.

It has also attempted to give them this jurisdiction.

Now, if you say you can't have both, it is quite clear to me that the primary intention of this difficulty was pointed out to the Congress hypothetically.

The primary intention was to make them a constitutional court.

And I would submit that if the Court should feel that it had to face this question of the congressional reference jurisdiction and if it felt it could not be given even to the specialized court and then it should give effect to the primary intention of Congress as it has declared it and the rule that the congressional reference jurisdiction could not be added to a constitutional court that if Congress wanted a tribunal that could do both, it would have to change its legislation around.

But I think really the point which I can see the being most significant is the one I have made first to with that the -- had the -- that the status of the judges who have the judicial power to exercise is -- is clear and that that is the only question involved here and that the effect of this once a year congressional reference shouldn't alter their constitutional status or Judge Madden's power to sit therefore as a constitutional judge in the Second Circuit.

Justice Felix Frankfurter: (Inaudible)

Mr. Cox: I wasn't --

Justice Felix Frankfurter: (Inaudible)

Mr. Cox: No, no, what I said -- what I meant to say Your Honor was that I'm not asking the Court to reconsider anything in O'Donoghue.

And I don't think my argument requires me to.

I said I suggested that for me simply to say O'Donoghue holds you can add non-judicial duties to some Article III Judges was hardly an end of the matter because I was asking the Court to reexamine two other cases that hardly laid my mouth to say well, as to that one, it's a binding precedent but that was all I was saying.

Justice Felix Frankfurter: (Inaudible)

Mr. Cox: I don't quarrel with anything in O'Donoghue.

Chief Justice Earl Warren: Mr. Shea.

Argument of Francis M. Shea

Mr. Francis M. Shea: Mr. Chief Justice, may it please the Court.

Mr. Justice Stewart may I add just a footnote to under mark the Solicitor General on his last point.

The Court of Claims itself and in rescind considered that the exercise of the congressional reference power was as commissioners and so stated.

Chief Justice Earl Warren: As what (Inaudible)

Mr. Francis M. Shea: Has commissioners.

But they exercised their powers as commissioners and Judge Madden when the 1953 Act was before the Congress indicated to the appropriate committee that they might well no longer be in a position to require the Court to exercise that jurisdiction although it was indicated that as a voluntary matter they would exercise it.

And I suppose, since Hayburn's case itself, the -- as the Solicitor General has pointed out for judges to take on the three of the judges, at least in Hayburn's case Jay, Duane and Cushing, indicated that they could take on that function which was non-judicial as commissioners.

Justice Potter Stewart: As a matter of grace or (Voice Overlap) --

Mr. Francis M. Shea: And it's a matter of grace.

It couldn't be required to.

Now, if the Court please, I wonder if in --

Justice Felix Frankfurter: That's the trouble in trying that under the federal (Inaudible)

Mr. Francis M. Shea: And five of the judges who sat on and told them they had dispute could have declined.

Now, I wonder if I might possibly, in my limited time, be most hopeful to the Court if I could seek some points of reference which might be considered still fixed in this maze of complexity.

In the first place, it seems to me reasonably clear that the framers of the Constitution were in cant and anxious to be certain that those exercising judicial power were independent and could not be put under the coercion by the other two branches of the Government.

They were thinking of judicial power, I suppose, in the traditional sense.

Certainly, they could not have had in mind the kind of subtleties which we had been discussing today.

If they were thinking in terms of the jurisdiction customarily exercised by the Courts in Westminster, they were competent lawyers there whom I assume knew that going back as far as the 14th Century the Courts of Westminster to with Court of Chancery and the King's Bench had exercised just the kind of jurisdiction that is exercised by the Court of Claims, the petition of right, monstrans de droit, the traverses of office.

Chief Justice Earl Warren: What was that?

Mr. Francis M. Shea: Traverses of office.

In short, they were anxious to protect, it seems to me, the exercise of the kind of judicial power that the Court of Claims is exercising from -- from the coercion or influence of the other departments of the Government.

And I would suppose that the Court of Claims needs the protection as much as any court in the judicial system that is likely to come into conflict with the Congress and the Executive Department.

It's not -- it's passing on large problems involving large sums of money but it's also passing on critical constitutional rights involving the Bill of Rights problems, involving civil rights problems.

There was before this Court in O'Donoghue the question of the independence of the judiciary coming up in the in the guise of the Pahy case.

In the Lovett case, the question of the bill of attainder; there are recently been before the Court questions of whether or not a member of the Armed Forces in a courts martial case is entitled to the protection of the Sixth Amendment for instance.

So that I would suppose that this was the kind of exercise of judicial power that the framers of the Constitution wanted to protect against the coercion of the other departments and that this Court would not deny that protection unless it's compelled by persuasive argument that the Constitution would not permit it.

Now, let me go on to one or two other points that I should hope were still fixed points of reference.

I would suppose that there was no contest about the proposition that the Constitution doesn't invest jurisdiction in any court except this.

I suppose that it is -- it is clear that what the Constitution does is authorizing power the Congress and give the Congress discretion to create inferior courts to ordain and establish inferior courts.

And I would have thought before the arguments in the Lurk case and this that there had never been any question that Congress might give as much or as little of the powers specified in the second section of Article III as it chose to give to such a court and that have ordained and established a court under Article III and give it nothing but the Tucker Act jurisdiction there'd be no doubt that it could established that as an Article III court.

Justice Potter Stewart: Would there be --

Mr. Francis M. Shea: I --

Justice Potter Stewart: -- would there be doubt if it did do that?

Mr. Francis M. Shea: Would there be what?

Justice Potter Stewart: (Inaudible) if it did do that.

If it gave -- if it set up a tribunal and denominated it a court and gave it only Tucker Act jurisdiction, would Congress have the power to -- to provide that the members of that tribunal should have anything else except life tenure?

Mr. Francis M. Shea: I should have thought that there was not the slightest doubt about that into argument advance today that Congress ordained and established an inferior tribunal and gave it only federal question jurisdiction.

Indeed, I -- I have supposed that -- that the argument that in the Constitutional Convention was how much of this going to be taken, how much can Congress take away from the State.

But it didn't have to take it away.

I would have thought that clear, Your Honor.

It seems to me that from the time of what is it Cary against Curtis right straight through the Lockerty case which was decided after Williams and -- and Bakelite that no doubt had ever been raised about this issue.

Justice Potter Stewart: Well Mr. Shea, what about the Municipal Court of the District of Columbia?

Mr. Francis M. Shea: The Municipal Court of the District of Columbia, I think, is to be explained in terms of an exception.

I think that -- that the Canter case was based on a reasonable -- a reasonable position and that is that the Congress in the territories may exercise both the national power and the power of the state legislature and can set up and that's all that was involved in the Canter that they could set up a government for the -- for the territory --

Justice Potter Stewart: As I understand --

Mr. Francis M. Shea: -- and they have to set up legislature courts and so forth.

Justice Potter Stewart: The national parts, their commissioners will agree on judicial power I suppose.

Mr. Francis M. Shea: Well --

Justice Potter Stewart: I mean that couldn't constitutionally be.

Mr. Francis M. Shea: I -- it -- it seems to me that in the national part, in the territory which is not a part of the nation.

What Canter says and it seems to me --

Justice William J. Brennan: But I think what Justice Stewart has reference to -- I don't know the fact in which you're -- you're suggesting.

Mr. Francis M. Shea: Well I'm not sure --

Justice William J. Brennan: What about (Voice Overlap) --

Mr. Francis M. Shea: I'm -- I'm not sure that I'm certainly familiar with it but I suppose territory -- where there has been taken out of -- of -- of the State's jurisdiction forth et cetera, et cetera that they're in a situation of a territory.

Justice Felix Frankfurter: As I understand your position that Congress in concurring that both judicial power with reference to (Inaudible) United States has (Inaudible)

Mr. Francis M. Shea: This --

Justice Felix Frankfurter: In what (Inaudible)

Mr. Francis M. Shea: I had thought that there was no doubt --

Justice Felix Frankfurter: About what?

Mr. Francis M. Shea: -- about the proposition that Congress could ordain and establish an inferior court under Article III and give it only a federal question jurisdiction that is that they didn't have to give it -- they didn't -- don't have to give it that --

Chief Justice Earl Warren: Yes, but when -- but I thought --

Justice Felix Frankfurter: Assuming not Congress should give all jurisdictions that the Court of Claims has with reference to the claims in dispute, that you have a tribunal make it (Inaudible) at the same time, there's no (Inaudible)

Mr. Francis M. Shea: I would have thought so, Your Honor.

It seems to be that if they can do that --

Justice Felix Frankfurter: (Inaudible)

Mr. Francis M. Shea: I would have thought that -- that it could not.

I would have thought that if they could do that, it seems to me that if they can do that, they can just destroy the federal --

Justice Felix Frankfurter: (Inaudible)

Mr. Francis M. Shea: -- system.

Justice Felix Frankfurter: (Inaudible) Secretary of Commerce?

Mr. Francis M. Shea: Can confer it on the Secretary of Commerce.

Yes, Your Honor.

But may I -- may I suggest this in regard to that.

Justice Felix Frankfurter: (Inaudible) permit your free with the Secretary of Commerce.

Mr. Francis M. Shea: No doubt about that.

Justice Felix Frankfurter: (Inaudible)

Mr. Francis M. Shea: No time to for update, Your Honor.

Justice Felix Frankfurter: Can you define what the administrative (Inaudible) in determining the claim?

Mr. Francis M. Shea: May I suggest this to Your Honor as a response I'm trying to make to the question, I would have thought that -- that -- that one of the fixed points was while to be sure administrative agencies may deal with matters that are within Section 2 of Article III that if Congress intend, if Congress puts that power in a judicial tribunal, the judicial tribunal --

Justice Felix Frankfurter: In fact you're burning the whole question.

Mr. Francis M. Shea: Well --

Justice Felix Frankfurter: I understand (Inaudible) is that Congress could if to a known judicial body, the same must follow that the fact on claims in the United States subject to the same kind of so called judicial procedure not entirely to be -- to be uphold in order to fix that.

If it good to itself therefore those -- you are to give it to a non-judicial body.

Mr. Francis M. Shea: Well, I think it can give to a non-judicial body.

Justice Felix Frankfurter: Well but if (Voice Overlap) --

Mr. Francis M. Shea: I have no -- I have no difference about that

Justice Felix Frankfurter: (Inaudible)

Mr. Francis M. Shea: Well, that certainly was held in Canter.

If it isn't -- if it doesn't give him life tenure, it's a non-judicial body but if -- if Congress attempts, if Congress sets up not in territories but if it sets up within the nation a judicial tribunal, now you -- you've raised the question as to what is judicial tribunal.

But in any event, Your Honor --

Justice Felix Frankfurter: The adjudication of claims against the United States which should be to recognized at all or itself may dispose of the legislation if not the case within (Inaudible) judicial power (Inaudible) what was necessarily judicial power?

Congress then, as I understand it deposit with the Secretary of Commerce impediment of claims between Joe and Smith which was a staple of Westminster jurisdiction but since claim against the sovereign were not the same with Westminster jurisdictions, he can dispose of it in anyone (Inaudible)

Mr. Francis M. Shea: Well, the staple loop Westminster Hall jurisdiction, Westminster Hall certainly had a lot of jurisdiction.

Under the petition of right that and the other --

Justice Felix Frankfurter: You're getting it to well known very staple in which legal problems when we talk about the commissioner right.

The Checker Court and what they are.

That was not a staple suits against the sovereign enforce it in the Court or certainly nothing except by the devious way petitioner bribed the staple of Westminster jurisdiction.

Mr. Francis M. Shea: Well, all I can say is that it exercised the great deal of jurisdiction under the various --

Justice Felix Frankfurter: -- (Voice Overlap) -- just as the Court of Claims in Westminster but I don't see why you take the burden of it at all and say Congress couldn't have a non-judicial body disposed of the claims against the Government.

Mr. Francis M. Shea: Well Your Honor, certainly this Court has repeatedly stated insofar as I know except for the footnote in -- in Mr. Chief Justice Vinson in the Tide -- Tidewater case has constantly asserted that -- that the judicial power of Article III in the nation, not in the territories, but in the nation can only be invested in Article III courts.

But in any event, as you point out, I don't have to carry that burden on whether --

Chief Justice Earl Warren: (Inaudible)

Mr. Francis M. Shea: I'm sorry.

Chief Justice Earl Warren: (Inaudible)

Mr. Francis M. Shea: Well, may I only say this in conclusion, Your Honor.

It does seem to me that -- that there are some fix points of reference left.

The question presented is not whether Congress could put this in Article I court so called.

The question is have they ordained and established an Article III court.

Certainly, the jurisdiction as the Solicitor General has pointed out is jurisdiction that falls within the definition of those items in Section 2 of Article III.

Can Congress -- why can't Congress ordain and establish an Article III court to exercise exclusively apart from these congressional reference cases exclusively power jurisdiction defined in the section -- second section of Article II?

At least it is not to be set that there was a reasonable basis for Congress who had done everything they can to do this.

They have a reasonable basis on which to do it even if arguments can be made to the country and that where Congress has done everything it can to exercise the power clearly invested in it.

Why shouldn't the normal deference of this Court to the exercise of congressional power unless clearly it can't be done allow Congress to exercise the power given to it to ordain and establish such a court to exercise jurisdiction that could clearly be given.

Thank you Your Honor.

Chief Justice Earl Warren: I want to ask (Inaudible) this traditional congressional reference power to the Court of Claims?

Mr. Francis M. Shea: Well now, I take it Your Honor is saying why can't they require them to do it.

Chief Justice Earl Warren: (Inaudible)

Mr. Francis M. Shea: Or -- or do you mean could -- could the courts throw up the country exercise?

Chief Justice Earl Warren: Might (Inaudible) the courts -- the courts of what they have done in the -- with the Court of Claims?

Mr. Francis M. Shea: Well, I would -- it seems to me the solidest ground, Your Honor.

As you know, distinction has been made.

The Solicitor General has -- has made it that on the basis of the O'Donoghue case.

The specialized tribunal in the District of Columbia at least could be invested with power --

Chief Justice Earl Warren: That is a specific -- specific congressional power.

Mr. Francis M. Shea: Well, but what that case says is that the Article III while it's an Article III court, nevertheless, it may under Article I be given supplementary powers.

Now, my own feeling is --

Chief Justice Earl Warren: But the Government's had another jurisdiction under the powers of the Congress.

Mr. Francis M. Shea: Yes, but I think O'Donoghue says Arti -- the court was created under Article III.

It exercised Article III power but as Congress has plenary power of the district, it may exercise its Article I power to add some powers.

Now, and -- and -- but this couldn't be done and said O'Donoghue in the States.

Now, so far as the Court of Claims is concerned, I think the solidest ground to stand is the ground that Court of Claims itself stood on and in rescind.

And so far as that's concerned Your Honors, so long as -- as -- it's not imposing the jurisdiction on the District Courts or the -- or the -- or the Circuit Courts of Appeal.

I supposed since the Ferreira case, so long as it's being done as a commissioner is an act of grace on the part of the court, this doesn't -- this doesn't threaten the court system.

And I -- I would feel that that was a -- a solidest ground to stand on in regard to that -- to that jurisdiction.

Thank you, Your Honor.

Chief Justice Earl Warren: Mr. Robb.

Argument of Roger Robb

Mr. Roger Robb: Mr. Chief Justice and members of the Court, I would first like to direct my attention to a -- statements that have been made with respect to the timeliness of the raising of the question as to the capacity of Judge Madden to sit in the United States Court of Appeals for the Second Circuit.

In the first place, Mr. Cox in talking about the timeliness of raising this jurisdictional question stated that if it were a matter of jurisdiction relating to the subject matter of the lawsuit that he agreed, as I recall his statement, that that jurisdictional question could be raised at any time.

I say with equal emphasis that if there'd be a constitutional lack of capacity on the part of Judge Madden to sit in an Article III court that that jurisdictional objection may likewise be raised at any time.

Now in fact, the judges of the Court of Claims when we filed a petition for certiorari in this Court, a petition was also filed by the judges of that court as amici curiae in support of the petition filed by the petitioner here.

And I would like briefly to call to Your Honors attention the statements contained on page 5 of that amici curiae brief in support of our petition.

Our petitioner apparently did not bring to the attention of the Court of Appeals the objection now made to Judge Madden's participation in the hearing and decision of that court.

But as Mr. Justice Frankfurter noted in his dissent on other grounds in the Lurk case, the question raised by the petitioner is jurisdictional in nature.

Such a jurisdictional point may be raised at any time.

See McGrath against Kristensen which one of the cases upon which we rely.

If Judge Madden, and I'm still quoting from this brief of the judges of the Court of Claims, if Judge Madden because of constitutional prohibitions was not competent to serve, as petitioner contends, the judgment in which he participated is null and void.

That is the end of my quote and the cited number of case upon which we rely and support of our position that we may raised this jurisdictional question at any time particularly during the course of these proceedings and particularly during the pendency of it and after this petition before this Court.

And in -- thirdly in reply to that contention made by the opposition, I would like to call Your Honors' attention the ruling of this Court in the case of Lamar against the United States decided in 1960 where a Christian was presented to the Court as to the constitutionality of making an assignment of one circuit judge to another circuit.

The case was tried.

It's a criminal case.

It was tried and went on appeal.

It came to this Court.

And there was a petition -- petition for certiorari to this Court I should say.

And I think there were further proceedings taken in this Court and I would like to very, very briefly to note that this Court in a unanimous opinion held that the question they raised was properly and fully considered and was passed upon by this Court.

We submit that authority along with the case of Donegan against Dyson which I have also quoted in my brief as authority to the effect that this Court has on numerous occasions or at least on a number of occasions considered that the making of application upon the hearing of a petition in this Court was timely.

At least, no objection -- no objection was made this court undertook to hear and determine the particular objection which was raised as to the jurisdiction.

Now, reference had been made to Section 1492 of Title 28 of the United States Code which grants to the Court of Claims the power and the function to pass on these congressional reference cases.

At the time of the enactment of the Act of 1953 which undertook -- which was an undertaking by Congress to describe the Court of Claims as the -- an Article III court.

Congress eliminated from Title 28 Chapter 91 the reference to the departmental reference cases which were to the heads of various departments.

They eliminated that provision by the same Act but retain this congressional reference case.

Now, it is interesting to note that, and I would like to call to Your Honors attention the remarks made by Senator Gore at the time of the hearings held with respect to this 1953 Legislation and I referred to a footnote on page 12 of the petitioner's reply brief, in which Senator Gore stated, “If in the future, judges of the Court of Claims should refused to act upon congressional reference cases on the ground that they are not within the proper scope of jurisdiction of a constitutional court.

I suppose a simple remedy will be for Congress to redesignate the Court of Claims as a legislative court.”

I refer that to Your Honors to indicate that Congress in describing this court as an Article III court has the feeling apparently that it may redesignate the court at anytime it sees fit to serve its purposes.

I want to thank you.

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: I do sir.

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: I do except with respect to cases against the sovereign.

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: That is true but the sovereign cannot be sued without the sovereign's consent and may lay every condition it sees fit to lay upon.

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: That is correct, sir.

Justice Hugo L. Black: Sovereign has implied that was an Article III court but (Inaudible)

Mr. Roger Robb: I would say yes.

I would say yes.

I think sovereign can lay any conditions --

Justice Hugo L. Black: (Inaudible) of this?

Mr. Roger Robb: Including conditions of the type that Your Honor --

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: -- refers to.

Justice Hugo L. Black: -- many claims, there can only (Inaudible)

Mr. Roger Robb: I'm afraid the only answer that I can make to that is that the sovereign can lay down any conditions that it sees fit to lay down with respect to being sued and not being sued.

Justice Hugo L. Black: (Inaudible) you are willing what is (Inaudible)

Mr. Roger Robb: I'd say yes.

Justice Potter Stewart: That was done under the Federal Tort Claims Act, was it not?

Justice Hugo L. Black: (Inaudible)

Mr. Roger Robb: I say yes.

Justice Felix Frankfurter: That's the answer to Justice Stewart's (Inaudible) unless the federal court, those courts were unconstitutional.

Mr. Roger Robb: That's right.

Justice Felix Frankfurter: What we did this morning is about jurisdiction.

Mr. Roger Robb: Thank you, sir.

Featured:

Glidden Company v. Zdanok - Oral Argument, Part 1 (No. 481)

Tue, 25 Sep 2012 16:44:35 +0000

Case:

Glidden Company v. Zdanok

Media File:

481_19620221-argument-1

Related Transcript:

481_19620221-argument-1

Transcript:

Argument of Eugene Gressman

Chief Justice Earl Warren: Number 481, Benny Lurk, Petitioner, versus the United States.

Mr. Gressman.

Mr. Eugene Gressman: Mr. Chief Justice, may it please the Court.

As this case comes back here once again, it is confined to the constitutional issue to wit -- whether Article III of the Constitution authorizes or permits the assignment of a retired judge of the Court of Customs and Patent Appeals to sit on the District Court for the District of Columbia.

And thereby, to preside over and render judgment against a petitioner on trial for a felony as defined in the District of Columbia Code.

Well, facts in this case are quite simple (Voice Overlap) --

Justice Felix Frankfurter: Does it make a difference whether it's felony or misdemeanor?

Mr. Eugene Gressman: Well, it only makes in the sense that felony is (Voice Overlap) --

Justice Felix Frankfurter: You're assuming misdemeanor is triable before a court and jury, would it make a difference?

Mr. Eugene Gressman: Not at all, Your Honor.

Justice Felix Frankfurter: Alright.

Mr. Eugene Gressman: Now the -- as I stated, the facts are simple and without contest.

This petitioner, Benny Lurk, was indicted, tried before a jury and convicted of the crime of robbery as defined in the District of Columbia Code.

He was -- his trial was presided over and judgment was rendered against him by Judge Joseph R. Jackson.

Trial took place on March 22, 1960.

Now, Judge Jackson had then appointed to the Court of Customs and Patent Appeals in 1937.

He sat on that court for more that 14 years and retired there from in 1952.

Several years thereafter, began a series of assignments of Judge Jackson pursuant to Section 294 (d) of Title 28 of the U.S. Code which expressly permits and authorizes the assignment by the Chief Justice of the United States of judges, retired Judges of the Court of Customs and Patent Appeals to sit on District Courts around the country.

The particular assignment in question here and the one which covered the period during which petitioner's trial took place, delegated or authorized Judge Jackson to sit on the District Court for the District of Columbia for the entire year of 1960.

And in that connection, it is important to note that the assignment made of Judge Jackson for the year 1960 did not designate him to sit as one of the -- or in place of any of the regular 15 judges composing the District Court of the United States, simply authorized him to fill an office so-called of the Judge of the District Court of the United States for the District of Columbia, an office which was created solely by virtue of the assignment, made pursuant to Section 294 (d).

And the petitioner's challenge in this case goes to the constitutionality of that statute which purports to authorize this office of District Judge of the United States by virtue of an assignment of a retired judge of the Court of Customs and Patent Appeals.

We, therefore, attacking the de jure as well the de facto in nature of this Judge's participation as a Judge of the District Court.

And under these circumstances as we developed more fully and I reply brief in this case, the first defense offered by the Government in this case in terms of de facto doctrine is no answer to the challenge, the constitutional challenge made by petitioner in this case that no office could exist by virtue of an assignment under this statute.

Now, before I get to the heart of the constitutional issue, there are several preliminary considerations which I would like to submit, which I feel are critical to an understanding of that constitutional issue and which form the context within which this issue must be viewed.

Now, first such consideration is the fact that this petitioner is here alleging a personal constitutional right as an inhabitant of the District of Columbia to have his trial in the District Court, heard by a judge authorized to execute Article III judicial power and author -- and having the constitutional immunity or independence of action which Article III gives to judges of Article III courts.

And that to deny him that claim, that right, we suggest, is to deny this petitioner due process of law in his trial and conviction.

Now, this personal claim of the petitioner, this personal -- (Voice Overlap) --

Justice Felix Frankfurter: Let me ask you.

If you're right, why do we have to bother about due process?

Mr. Eugene Gressman: Well, I think it -- it automatically follows.

The claim is Your Honor that the provisions of Article III, Section 1 relating to the independence of the federal judiciary in terms of salary and tenure of office are designed primarily, I suggest, for the protection of the litigants and the defendants who are called before Article III courts and they are not as this Court said in Evans against Gore and reiterated in the O'Donoghue case.

They are not a private grant to the judges themselves.

Justice Felix Frankfurter: Do you think the life tenure was put in the Constitution on due process consideration?

Mr. Eugene Gressman: No, Your Honor.

I think it was put in there primarily to -- as the Evans against Gore points out that in order to ensure that the guarantees and other provisions of the Constitution are properly administered and applied by the judges of Article III courts, that it was absolutely essential that the judges be given constitutional independence of action and they could only do that by giving them life tenure and by protecting them from any diminution in their compensation.

Now, I think necessarily follows from that that the litigants and the defendants are entitled to that constitutional independence on the part of those who are sitting in judgment of them.

Justice Felix Frankfurter: If there is no valid court, you don't have to bother about due process, do you?

You have to bring everything under due process.

Mr. Eugene Gressman: No, Your Honor.

I think it -- it is one way of expressing it but I think if there is no valid Article III court here or no valid Article III judge, that puts an end to it.

But I think that one way of saying that from another angle is simply that there's been no due process accorded him.

But I don't want to pursue that situation because I think as you say, the -- the complete answer is if I am right, law in the fact that this Judge was not authorized under the Constitution to sit in this case or to render judgment.

In that respect, I submit further that it is no answer as the Government seems to suggest that Judge Jackson has life tenure by virtue of a congressional enactment in 1930.

Whatever statutory protections of tenure or salary that Judge Jackson may have is no substitute for the constitutional requirements, the constitutional protection which can only be given to an Article III judge and simply because Congress is seen fit to give life tenure to a so-called non-Article III judge does not thereby satisfy the constitutional claim which I am here asserting, a claim which requires and necessitates that the life tenure and the protection against salary compensation diminutions come from the Constitution from Article III, Section 1 and not from any statutory enactment.

And I might say that as I will develop later, that Congress in this instance has demonstrated an ability and a constitutional right to cut the salaries of judges such as Judge Jackson as they did in fact in 1932.

But moreover, this constitutional claim which petitioner is here asserting is one which very definitely can be raised and pursued by this petitioner as an inhabitant of the District of Columbia because the O'Donoghue case completely answers any contrary claim by demonstrating and ruling that District of Columbia inhabitants are not less fortified by the guarantee of an independent judiciary than in other parts of the union and that they too like the inhabitants of all the other 50 states, have the right to have their cases arising under the Constitution and laws of the United States heard and determined, I'm quoting, “By federal courts created under and vested with the judicial power conferred by Article III."

Justice John M. Harlan: The Court of Appeals didn't reach the constitutional question.

Mr. Eugene Gressman: Well, Your Honor --

Justice John M. Harlan: Do we have to?

Mr. Eugene Gressman: They did reach the constitutional question.

I'll be glad to examine into that at this point.

Now, their answer to this claim which I am asserting, which is a constitutional claim by this petitioner, was that regardless of what might be said with respect to Article III of the Constitution, the complete answer is to be found.

They said in another section of the Constitution to with the district clause of Article I which is in Section 8 Clause 17 of Article I.

So they said, “We will avoid any determination of your claim under Article III because we feel that the complete answer is to be found under the District of Columbia Clause.

Now, that District of Columbia Clause merely reads that the Congress shall have exclusive jurisdiction to legislate for the National Seat of Government or the District of Columbia.

And it has been viewed as a rather plenary congressional power.

Well, be that as it may, the complete answer to the -- to the analysis rendered by the Court of Appeals below on that ground again is to be found in the O'Donaghue case in 289 United States, which demonstrates that that District of Columbia Clause is not to be read in a vacuum and it is not inconsistent with the application of Article III of the Constitution.

Moreover, this Court said in O'Donaghue, it is not to be used and I quote, “To destroy the operative effect of the judiciary clause namely Article III within the District of Columbia.”

Now, that means very simply this, that if petitioner is right in asserting that Article III of the Constitution prohibits this assignment and requires that this case be heard and determined by an Article III judge, then it is no answer to that claim that the District of Columbia Clause provides any type of an answer because the two clauses are in no way inconsistent and the District of Columbia Clause is not to be used to prevent the operative effect of Article III.

In other words, both the District of Columbia Clause and Article III must be read together, both of them must be applied and if one of them namely Article III prohibits this assignment, that is the end of the matter.

There is nothing in the District of Columbia Clause which would override or make inapplicable the provisions of Article III.

Justice Felix Frankfurter: Mr. Gressman, is there -- just confirmed an impression I have or information I have as a matter of fact, the assigning of Chief Justice to courts throughout the country, either the District Courts or Court of Appeals, but let's stick to District Court trial, jury trial, is the assigning statutory authority given to the Chief Justice differentiate between judges of the Court of Customs Appeal and judges of the Court of Claims?

Mr. Eugene Gressman: Well, I think there are different subsections but I think --

Justice Felix Frankfurter: I don't -- I mean the power?

Mr. Eugene Gressman: No, the power is there saying --

Justice Felix Frankfurter: Well, that -- whatever you -- whatever you may be arguing as to the particular authority of power or sanctions derivable from the District of Columbia Clause of the Constitution; the purpose of the sitting in the District of Columbia wouldn't carry you, that wouldn't take care of, object the right to assign at another district outside of the district.

Mr. Eugene Gressman: No, Your Honor.

It is a unique type of argument that has been advanced and has been determined by the Court of Appeals solely on the basis of the assignment to this particular District Court.

Justice Felix Frankfurter: That's all they had before them.

Mr. Eugene Gressman: That's right, Your Honor.

Justice Felix Frankfurter: And I'm not questioning the naturalness of the propriety or the correctness for chance of dealing with the situation that had before them indeed I'm flouted.

But for purposes of argument, I just want to know would the problem be -- you couldn't -- this argument couldn't be made if which has just a statue has been assigned to a trial in the Southern District of New York.

Mr. Eugene Gressman: Certainly, it could not be sought to be justified in terms of the District of Columbia Clause.

My suggestion or argument is, however, that there should be and must be no difference that the O'Donoghue case has definitively decided that there is no difference in this claim or this right as between district inhabitants and inhabitants of New York.

And therefore I say, we get back to the original proposition and it is as if -- in effect as if these were made to another District Court in the United States.

Justice Felix Frankfurter: But so far as this case is concerned, file the case that you're charged and we are charged, we may move simply within the narrow confines or what the Court of Appeals of the District decided.

I'm not saying with its conclusion but we may --

Mr. Eugene Gressman: Yes, indeed --

Justice Felix Frankfurter: -- may restrict the problem to its narrow confines.

Mr. Eugene Gressman: Of course Your Honor, and there are some special problems with respect to the District of Columbia courts which do not exist with respect to the Federal District Courts and any other parts of the country.

But in this respect, with respect to the right to have your case heard and determined by an Article III court, the O'Donoghue case has definitively said that there is no difference and if there -- if there are any distinctions to be made --

Justice Felix Frankfurter: And the O'Donoghue case itself concerned the District.

Mr. Eugene Gressman: That's exactly right and --

Justice Felix Frankfurter: And therefore --

Mr. Eugene Gressman: -- and I suggest and I have raised as one of the points and issue in this case, in the petition for certiorari that the assumption made by the Court of Appeals that this assignment might well had been invalid if made to a Federal District Court outside the district, but they said it would, it is perfectly permissible by virtue of the District of Columbia Clause.

I suggest that it is an issue and it raises serious --

Justice Felix Frankfurter: But why --

Mr. Eugene Gressman: -- constitutional questions as to the equality in the administration of federal justice if that assumption of the Court of Appeals be accepted.

And it's those questions of equality of administration of the justice and equality in the rights of the inhabitants of the United States were question which the O'Donoghue case sought to put to rest and I suggest did put to rest completely and therefore, completely form an answer to the analysis, to the assumption and to the ruling of the Court of Appeals.

Justice Felix Frankfurter: It required the constitutional amendment to secure equality for the people in the District.

Mr. Eugene Gressman: Well, the O'Donoghue case pointed out that when this Constitution was formulated, there was no District of Columbia.

It was a District of Columbia was formulated several years thereafter from the States of Maryland and dis -- and Virginia.

And that the inhabitants, the original inhabitants of what is now the District where on an equal footing with the inhabitants of the rest of the United States and that this equal footing in effect has never been destroyed.

There was no indication in the forming in the District of Columbia that the inhabitants were meant thereby to be stripped of the rights which were given to them by virtue of the creation and adoption of the Constitution.

Justice Felix Frankfurter: But there was an anticipation of the Constitution or specific anticipation that a district would be created --

Mr. Eugene Gressman: Well, that --

Justice Felix Frankfurter: -- something called the capital.

Mr. Eugene Gressman: That is true but there was un -- uncertain where that would be.

But in any event, no --

Justice Felix Frankfurter: What I'm saying --

Mr. Eugene Gressman: there is --

Justice Felix Frankfurter: -- is that one would have to swallow a lot, swallow everything that was said in O'Donoghue.

Mr. Eugene Gressman: Well, I would suggest Your Honor that in this respect, I have that the O'Donoghue case seems to me unanswerable in terms of its determination that with respect to this kind of a right or to have cases heard by Article III judges, there is no practical or let-alone constitutional reason for making such a discrimination against the inhabitants of the District of Columbia because you have an Article III court in the District of Columbia.

And why do you -- same as you have in Article III courts in other Federal Districts around the country.

Justice Felix Frankfurter: You're assuming the whole question in the implication that because you have an Article III court therefore you have to have one?

Mr. Eugene Gressman: Well, I say that, I'm not saying that you have to -- that is not the question here whether you have to have one in the District of Columbia.

The fact is that you do have one and the O'Donaghue case so ruled.

Justice Felix Frankfurter: But you do have one but you don't have to have one for the District of Columbia.

If justice may be administered by judges who do not have life tenure and whose salary go to a gross aspect of the Administration of Justice and on salary but not immunized against diminution.

If you may have that and that has been constitutional practice, but I do not know how long in the beginning of time, then my question arises, why do we have to travel outside the purposes of this case --

Mr. Eugene Gressman: Well --

Justice Felix Frankfurter: -- to namely where the judge was assigned merely to the District.

In this case, why do we have to travel outside the bounds except by the Court of Appeals and practically of course, that's all decided.

It takes -- it doesn't take care of contingencies.

If the Chief Justice confronted with an application for sua sponte there's a need to judge in some district, we naturally would pause if we don't -- if this isn't decided in sending a Court of Custom Appeal man to some other place than district, if that's all what would be decided in this case.

If he had only the direction of the Court of Appeals just as a practical matter as you suppose you thought.

But I'm suggesting that as a matter of the adjudicatory requirements of this case, do we have to travel outside as Justice Harlan asked you a little while ago outside of the scope set by the Court of Appeals?

Mr. Eugene Gressman: Certainly, one does not have to travel beyond the scope of the fact that this involves an assignment to the District of Columbia Court but I do not concede that there's any lack of a constitutional requirement that a case here in the District of Columbia for this District of Columbia Court be heard other than by a non-Article III judge.

Justice Felix Frankfurter: And as a matter -- I also appreciate why you want them invoked, why you press due process, I understand that.

Mr. Eugene Gressman: Well, I'm only saying Your Honor that under the -- as I read the provisions of Article III of the Constitution, as I read the cases in this Court, going back particularly to Evans against Gore and to as interpreted and applied in the O'Donoghue case, simply is that this is a universal right accorded to inhabitants of the District of Columbia as well as inhabitants of other parts of the country.

Now, true enough?

Justice Felix Frankfurter: Well how can you say that when both -- I don't know how many, almost from the beginning of time, trials from the District of Columbia were not have before Article III judges.

Meaning by that, judges who had life tenure with a non-diminishable salary, how can you say that and the constitutional practice or the practice has been ever since the creation of this District?

Mr. Eugene Gressman: We are confronted seems to me with the -- with the ruling of this Court in the O'Donoghue case that this District Court and the Court of Appeals are constitutional Article III courts.

Now, what was the situation before that is somewhat confused but at least since the O'Donoghue case, there has been no question.

But that this Court, the District of Columbia is basically and primarily an Article III court and its judges are entitled and do have the constitutional protections afforded by Article III.

Justice Felix Frankfurter: If there are Article III courts, then what's the vice?

Mr. Eugene Gressman: Pardon?

Justice Felix Frankfurter: If they are Article III courts then what's the trouble?

Mr. Eugene Gressman: The trouble is Your Honor, that Judge Jackson was not constitutionally equipped or authorized to exercise the Article III functions of that District Court which is precisely the heart of the constitutional issue which I --

Justice Felix Frankfurter: You mean because at the time he was appointed, he wasn't such?

Mr. Eugene Gressman: Well, I would like to develop the argument in some length in answer to that question because I don't think there's a simple short answer that can be given to it.

It really involves the whole essence of the constitutional claim and the constitutional issue which is at stake here.

And all of these point, I merely suggested that the District of Columbia Clause and the fact that this is essentially as you point out, the District of Columbia problem, does not provide the complete or the -- any part of the answer to the ultimate constitutional issue which must be faced here.

Justice Felix Frankfurter: Is this Court in your view today that February 21st, 1962, is that court today an Article III court?

Mr. Eugene Gressman: The District Court?

Justice Felix Frankfurter: No, the Court of Customs Appeal?

Mr. Eugene Gressman: No, it is not, Your Honor.

Justice Felix Frankfurter: It is not.

Well, I thought you said the Court of -- O'Donoghue case said it was?

Mr. Eugene Gressman: No, the O'Donoghue case said that the District Court of the -- Federal District Court and the Court of Appeals of the District of Columbia are constitutional courts.

Justice Felix Frankfurter: Haven't you got trouble with that if it's a constitutional court, how can it exercise non-constitutional functions?

Mr. Eugene Gressman: Well, the --

Justice Felix Frankfurter: And if it can, it can only because of the District of Columbia article?

Mr. Eugene Gressman: That's right Your Honor.

Justice Felix Frankfurter: Both of them admix in the district where you cannot admix anywhere else in the country.

Mr. Eugene Gressman: That is perfectly right Your Honor.

Justice Felix Frankfurter: So that the --

Mr. Eugene Gressman: That's what the O'Donoghue case said.

Justice Felix Frankfurter: -- District of Columbia Clause has functions that must be faced.

Mr. Eugene Gressman: But they're not functions which are called into play in this case.

There has been no suggestion made by the Government in this case.

There was no suggestion made in the O'Donoghue case that the non-Article III functions of this District Court which are conferrable upon it by virtue of the District of Columbia Clause ever involved criminal proceedings.

Justice Felix Frankfurter: Don't you think O'Donoghue and Williams both require critical analysis if they're constitutional courts, how can they be given non-constitutional fact functions and if they can be given non-constitutional functions then you got something that's very different from the district courts of the United States elsewhere?

Mr. Eugene Gressman: That is correct Your Honor, the way the Williams and O'Donoghue cases were decided.

But I suggest again Your Honor that the basic ruling in O'Donoghue was that while certain nonjudicial functions could be given the District Court by virtue of the District of Columbia Clause, those were certainly nonjudicial actions such as the right to appoint a school board, the right to give certain advisory opinions, the right to perform certain administrative matters to render probate and divorce proceedings.

But nowhere was there ever any suggestion and it is significant the Solicitor General does not suggest in his brief that one of those nonjudicial functions is the trial at the criminal proceeding such as we have in this case.

If ever there was a proceeding which invoked and call forth and necessitated the exercise of Article III functions of this District Court, it was this trial of this petitioner for the -- a felony under the District of Columbia Code.

And I suggest that it is impossible from any standpoint to say that this trial of this petitioner involved anything other than the exercise of this Court's Article III judicial functions as defined in the Constitution.

The criminal power is the very essence of judicial power.

Justice Felix Frankfurter: Does anybody sug -- why should anybody suggest that the trial over which Justice Jackson presided for as unlike or in anyway unlike in the sub -- subject matter and in the procedure was unlike the trial in the Southern District of New York or the District of Massachusetts?

Mr. Eugene Gressman: Well, --

Justice Felix Frankfurter: That isn't in controversy, is it?

Mr. Eugene Gressman: Well, the amicus judges in this case have suggested that kind of a distinction by virtue of the argument that this type of jurisdiction arise in over criminal crimes specified in District Columbia Code could have been given to the municipal court which is a legislative court.

Justice Felix Frankfurter: But if --

Mr. Eugene Gressman: But it -- it did not and I don't think the argument is sound.

Justice Felix Frankfurter: But if -- if that argument has any validity then this Court has no jurisdiction.

Mr. Eugene Gressman: If this were a legislative proceeding --

Justice Felix Frankfurter: If this were non-Article III judicial case in the District Court then we must dismiss this case --

Mr. Eugene Gressman: I would think so.

Justice Felix Frankfurter: -- because we can't review a nonjudicial action by anybody.

Mr. Eugene Gressman: I would think that's exactly right Your Honor and many of the cases --

Justice Felix Frankfurter: Better examine the starting point of all these business.

Mr. Eugene Gressman: Well, that brings us then again to the very heart of the constitutional issue in this case.

And I start with the assumptions and the decisions rendered by this Court.

With respect to the two tribunals which are in issue here and which must be compared, the Bakelite and the Williams cases decided that the Court of Customs and Patent Appeals was a legislative or Article I tribunal deriving no function or jurisdiction in its creation from Article III of the Constitution.

And on the other hand, we have the O'Donoghue case saying that while the District Court for the District of Columbia may be given certain non-Article III functions which are not in issue here.

It is primarily an Article III court created thereunder and endowed with all the powers and functions which are given to a -- to a court by Article III and its judges are endowed with the judicial independence which the first section of Article III gives to judges of Article III courts.

So therefore, we have posed very clearly, the basic question whether the judge of this legislative court as so described in the Bakelite and Williams cases can be assigned over to a constitutional court such as the district court below to pursue as to perform the Article III functions necessitated by the trial of a criminal case therein.

Now, I suggest Your Honors that this necessitates in the first place an understanding of what is meant by the judicial power of the United States as expressed in Article III and it called forth to be exercised in this proceeding in the District Court.

And I suggest Your Honors that what Article III judicial power basically means is this.

That it is that function, that judicial function which cannot in anyway be delegated to or exercised by any other arm of the Government.

We get back here basically to a question of separation of powers.

There is a certain core of judicial action and jurisdiction which is conferred upon the Article III tribunals and this District Court in particular which cannot be exercised by any other organ of the Government, be it administrative, be it legislative or executive.

Now, this seems to me to call forth the whole host of considerations that we normally associate with the courts of law and equity.

The -- what Justice Frankfurter has described in several occasions as jurisdiction over matters such as where the traditional concern of the courts at Westminster prior to the establishment of the Constitution.

This calls forth the exercise of that judicial power over cases and controversies which involved the use of the federal rules or civil and criminal procedure which incorporate all the provisions of the jury trial system and which involved all the other traditional powers of equity and law, the substantive and procedural elements of Title 28 and Title 18 of the U.S. Code.

Those functions which by the very nature are so judicial in nature that they cannot be given by Congress to any other agency of the Government, and unless a court has that non-delegable power, the judicial power, which it alone can exercise, then it is not a court created under or exercising Article III judicial power.

And I suggest that the most outstanding example of that non-delegable power which is not susceptible of exercise by any other organ of the Government is this criminal proceeding instituted against this petitioner.

It is inconceivable that this petitioner could have been tried and convicted by an administrative agency, by an Executive Department or by Congress itself.

This was something that was not susceptible of judicial determination other than by an Article III tribunal with all the traditional inherent powers that it alone can exercise.

And this District Court has that power obviously and it did exercise it in this case, and it therefore necessitated that it have a judge qualified constitutionally to administer this Article III judicial power.

Now, I want to hasten to add an important qualification on this or an additional power which the District Court has here which I think has led to the confusion in this case, that Article III courts also have power.

In addition to this core of non-delegable judicial power, they also have power to render judgments over cases and controversies which are equally determinable by other agencies of the Government.

Now, the Government's brief has emphasized and the all parties have emphasized very significant statement made over a hundred years ago in Murray's Lessee against Hoboken Land Company where Mr. Justice Curtis stated a very obvious and important consideration about the jurisdiction arising other than from Article III.

And I quote, he said, “That there are matters involving public rights which may be presented in such form that the judicial power is capable of acting on them.”

That means Article III judicial powers are capable of acting on them.

But which are also susceptible of judicial determination but which Congress may or may not bring within the cognizance of the courts of the United States as it deems proper.

Now, this means and I suggest this comes from the very heart of this case.

This means that there are functions under Article I of the Constitution given to Congress and in the execution of those powers are called forth certain judicial determinations.

And in the -- said determining, how those determinations shall be made?

Congress has a choice.

It may withhold to itself the power to make those determinations as it has done in historically, involving claims against the United States, the power to pay the debts of the United States.

It may withhold it to itself through private legislation or it may give it to an Executive Department to determine or an administrative agency or it may give it to a specialized tribunal such as the Court of Claims or it may also give it to an Article III court.

Justice Felix Frankfurter: Mr. Gressman, you know best how to make use of your time.

It does occur to me that the line you're now taking doesn't call for any use of time namely, that the -- the process for determining guilt or innocence under a charge of crime of a federal statute is something that must be -- must be performed, must be exercised by a court.

It couldn't be transferred to the Secretary of Commerce or there -- from health and welfare.

I don't see --

Mr. Eugene Gressman: Well --

Justice Felix Frankfurter: I can't imagine that there's any contest on this question.

Mr. Eugene Gressman: There is a contest.

Justice Felix Frankfurter: And the problem is, the problem is whether this was a tribunal of law in view of the strange hybrid that the District Court -- the courts present that are involved here but nobody questions at least I should be shocked intellectually somebody did question, that you can deposit the task of determining whether a man is guilty on the penal statute to a tribunal other than a conventional court.

Mr. Eugene Gressman: Your Honor --

Justice Felix Frankfurter: If I'm wrong about that, I should be delighted to be informed?

Mr. Eugene Gressman: Well Your Honor, the contest does get all not quite to the extent which you just stated it, but it does get to this point and I think it is relevant to this extent.

The argument is made by the Government that the Court of Customs and Patent Appeals also is an Article III tribunal and as the Bakelite and Williams case said to the contrary, they should be overruled.

Justice Felix Frankfurter: But I understand that argument.

Mr. Eugene Gressman: And that therefore, Judge Jackson having been a judge of the Court of Customs and Patent Appeals during, some -- and -- and being appointed to that court, acquired thereby article -- the same kind of Article III judicial power which as Your Honor points out is being administered in the District Court in this criminal proceeding.

Justice Felix Frankfurter: But if I may say so that's a very different thing than to -- than to argue that against which you're knocking an open door namely, that what it is in issue here is a nonjusticiable matter and therefore needn't to be tried by a requisite court.

Mr. Eugene Gressman: No, Your Honor what I -- all I'm trying to point out here Your Honor is the nature and the essential correctness of this Court's determination in Bakelite and Williams that this was an Article I or a non-Article III tribunal which never acquired any function.

Justice Felix Frankfurter: I can understand that argument.

I'm fully aware of it.

Mr. Eugene Gressman: And -- (Voice Overlap) -- what I'm saying is this that the very elaborate and impressive survey, an investigation contained in the Government's brief demonstrates conclusively it seems to me the correctness of this Court's determination in Bakelite and Williams.

And that determination is grounded upon precisely the argument I am trying to present here right now and that is this, that a court to be created under Article III as this District Court was created, must have necessity be created to exercise jurisdiction over these non-delegable, judicial matters, cases and controversies, matters which cannot as this criminal case could not be exercised by any other organ of Government.

Now, on the other hand, I'm saying that the Court of Customs and Patent Appeals as demonstrated conclusively by the investigation and the Government's brief and as confirmed, it seems to me, by the Bakelite and Williams cases, the Court of Customs and Patent Appeals never had that kind of non-delegable judicial power.

All they have ever had to this very day is this Article I judicial power.

This judicial power which is delegable as Congress sees fit either to an Executive Department as they once did in -- in the Customs and Patent matters or to an administrative agency or to a specialized court or to an Article III court in some situations or Congress itself could do it.

Justice Felix Frankfurter: But if once Congress exercised the choice which anteceded Hoboken Land case, way back Wayman against Southard that was made clear.

If Congress takes one of these things at either it could legislated on directly or put into the executive branch or make it a subject matter of judicial action.

If once it does the latter and creates a tribunal, it made clear that you indicated a minute ago, it made clear the specialized court which has nothing to do with the trial of criminal cases.

But if the tribunal is a tribunal under Article III, take the old Commerce Court, which I have restricted jurisdiction entirely with reference to this day commerce matters, I don't suppose there was a particle of doubt that every member or any member of that court could have been assigned by the Chief Justice, assuming authority was given by Congress, it could have been assigned by the Chief Justice to try an ordinary criminal case in Chicago or Denver.

Mr. Eugene Gressman: Well Your Honor, let -- let me -- let me make this comment on that.

I agree that 95% with what you just said but what the specialized federal tribunal of which you were just speaking lacks in its creation and in the jurisdiction conferred upon it such as the Court of Customs and Patent Appeals which we have here involved is a -- one I ordered of the judicial power which is non-exercisable by any other organ of Government.

Everything that this Court of Customs and Patent Appeals has ever done, is in the -- as a matter of congressional discretion, exercisable by some other organ of Government.

Justice Felix Frankfurter: I don't disagree with you.

I'm merely suggesting --

Mr. Eugene Gressman: Now --

Justice Felix Frankfurter: -- that what you're arguing and thinking your time on or rather I'm taking your time on is to me, the remotest of all questions in this case --

Mr. Eugene Gressman: Well, Your Honor --

Justice Felix Frankfurter: -- (Voice Overlap) -- to that, in light of the discussion.

Mr. Eugene Gressman: This is the very -- it seems to me, the very heart of the Government's --

Justice Felix Frankfurter: I don't have hold Bakelite to decide this case.

Mr. Eugene Gressman: The very heart of the Government's contention is that the Bakelite case was wrong and that this Court has always had.

This Court of Customs and Patent Appeals has always had Article III judicial power and all --

Justice Felix Frankfurter: Was the Government's case rest on overruling Bakelite?

Mr. Eugene Gressman: As this case?

Justice Felix Frankfurter: Yes.

As -- I'm looking at its brief.

Mr. Eugene Gressman: Well, the Government's --

Justice Felix Frankfurter: The Government case, if you tell me that the Government case depends on overruling Bakelite then I apologize to you for having me listen and take me your time.

Mr. Eugene Gressman: That's their ultimate position Your Honor.

They asked that to be re-examined.

They asked that its premises be re-examined and that it be directly and completely overruled.

And what I'm suggesting Your Honor is that their -- the supporting evidence which they cite for that proposition, for that ultimate position is -- does not justify an overruling of Bakelite that the Bakelite case decision was completely accurate then as well as now and that this Court of Customs and Patent Appeals has never exercised any part of the judicial power expressed in Article III of the Constitution.

Now, Your Honor mentioned the Commerce Court, created in I believe 1909 or so.

And that very definitely was a constitutional court Your Honor but for a very special reason, and I think it's -- it's a good example of what is the difference between --

Justice Felix Frankfurter: Special reasons were simple that life tenure was gift that they -- it was a tribunal which could do the kind of -- which could adjudicate matters that were normally matters of court, could adjudicate, the judges will give them life tenure.

That was the special reason.

Mr. Eugene Gressman: Wasn't more than that Your Honor.

The courts and the statute reads as follows, that this Commerce Court shall be composed of five judges to be designated and assigned thereto by the Chief Justice from among the Circuit Judges of the United States.

That's the first clause of the enact -- enabling legislation.

Justice Felix Frankfurter: --(Voice Overlap) -- but -- but it couldn't have been so because one them never sat on the Circuit Court.

Mr. Eugene Gressman: Well --

Justice Felix Frankfurter: That's Judge Julian Mack.

Mr. Eugene Gressman: That's right.

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Eugene Gressman: Then in the first instance, the Court shall be composed of five additional Circuit Judges to serve for one, two, three, four and five-year terms respectively.

Thereafter, they could not be reappointed to the Commerce Court, but other Circuit Judges from around the country were deemed to be brought in.

And the original five Judges including Judge Mack were to then to be assigned around by the Chief Justice to other Circuit and District Courts and around the country.

And they went ahead and did more than that.

They expressly gave in that legislation the power on these original five judges including Judge Mack, all the powers possessed by the District Judges of the United States.

Justice Felix Frankfurter: Suppose they haven't given them life tenure?

Mr. Eugene Gressman: Well, I think you'd have enough an up for -- another reason, you might not have -- they would not be Article III Courts for that -- Article III judges.

Justice Felix Frankfurter: Well, that's the decisive thing, isn't it?

Mr. Eugene Gressman: That's one of the decisive things.

It's also a decisive what kind of jurisdiction, what kind of powers they're invested with.

Justice Felix Frankfurter: Well, I'm assuming that they've satisfied your requirement drawn from Hoboken Land case, that the kind of business that they have to deal with is court business.

If it isn't that, then we haven't got a problem.

Mr. Eugene Gressman: Well, they too were dealing only with the Administration of the Interstate Commerce Act.

Justice Felix Frankfurter: I know, but the issues under that Act had to be cast in form of a nature that courts deal with.

Mr. Eugene Gressman: True enough, but I do not view the -- those matters as of the inherent non-jud -- or the inherent judicial nature which could not have been -- if Congress had so conceived, exercisable by some tribunal whose judges were not given life tenure --

Justice Felix Frankfurter: That's right.

Mr. Eugene Gressman: -- or by the administrative or executive agency.

And therefore, the reason why that was a commerce -- that Commerce Court was a constitutional court was in effect because these functions were super imposed upon the federal judiciary and these judges were -- these new Circuit Judges were given not only the function of the power to deal with the interstate commerce matters come in before the Commerce Court.

They were also expressly given this function and the duty of performing all the other functions, including the Article III functions of the other Circuit and District Courts to which they were to be assigned.

Now, that has never of course been done with respect to the judges of the Court of Customs and Patent Appeals or with respect to the judges of the Court of Claims.

And I suggest that we get back to the basic proposition that the vital distinction between the specialized federal courts such as the Court of Customs and Patent Appeals and the Article III tribunal is the possession by the Article III courts of this exclusively judicial power which cannot be exercised by any tribunal.

Justice Felix Frankfurter: Well, that isn't true because under the Tucker Act, every Federal District Court of the United States can pass on claims up to $10,000, which Congress tomorrow could withdraw from every court and vest in the Secretary of Commerce or the Secretary of the Treasury.

Mr. Eugene Gressman: That is precisely true, Your Honor.

What I am saying is that in addition to this exclusively judicial function of the Article III courts, they also have this function of deciding cases and controversies stemming from Article I of the Constitution which Congress may delegate either to Article III courts to its specialized tribunals, to administrative agencies or to itself.

Now that, it seems to me, has what is created in the confusion in the Government's mind in this case that because the Court of Customs and Patent Appeals has that kind of jurisdiction, which on occasion has been or could be exercised by Article III courts as well.

Therefore, the Court of Customs and Patent Appeals has all the attributes of an Article III court.

And I suggest again that what this Court of Customs and Patent Appeals lacks and what is critical to its lack of Article III status is the absence of this basic judicial power which cannot be delegated to anything but an Article III court.

And I suggest that the criminal jurisdiction and perhaps the diversity jurisdiction of the kinds of things mentioned in Article III and there are probably others.

We don't have to examine into them all that cannot be given by Congress to any other agency.

And we get back here to -- as I said before --

Justice Felix Frankfurter: I must say I don't -- I don't -- it must be my fault.

I go back to the -- to the Commerce Court.

Now, while the judges for usable and actually did sit in all sorts of cases throughout the country as a court, that court had no jurisdiction in diversity cases or as a court, it had no jurisdiction except to review orders of the interstate commerce.

Mr. Eugene Gressman: Exactly the same type as the Emergency Court of Appeals.

Justice Felix Frankfurter: Yes.

Mr. Eugene Gressman: Those were -- that was a court -- a so-called court superimposed upon the federal judiciary on judges who were qualified under Article III to exercise a particular Article I function.

But in this --

Justice Felix Frankfurter: But all I'm suggesting is -- I'm suggesting two things Mr. Gressman.

(1) That Congress of the power to establish specialized court composed of judges who are Article III judges.

(2) That in the District, Congress has created courts that have both judicial functions and nonjudicial functions.

They can be vested with judicial duties and nonjudicial duties.

And although, you have an admsixture of judicial and nonjudicial duties, it is for purposes of those matters that are confinable to courts, an Article III Court from which this Court or which this Court may review on appeal.

Although it -- such power couldn't be vested to courts of the United States outside of the district.

And therefore, when you deal with -- with specialized tribunal, you've got a problem different from the problem of the District Courts throughout the country which are vested in them all the jurisdiction that Congress sees fit to vest in federal courts.

They couldn't be charged with, one of the first things that happened.

They couldn't be charged with duties that are not judicial duties.

This Court wouldn't review judgments or determinations, advisory opinion as you called them, from them nor would it from the District where they couldn't decline to review good judicial matters from the District although that tribunal is also vested with nonjudicial function.

So we've got a -- we've got an admixture of situations in the District --

Mr. Eugene Gressman: Well --

Justice Felix Frankfurter: And -- and also specialized court that do not eventually suggest permit of this nice checkerboard determination.

Mr. Eugene Gressman: Precisely, I agree with everything Your Honor has said, but I would suggest this additional comment about that.

That the admixture of jurisdiction which the District of Columbia Court has which is unlike that of any other Federal District Court is not involved in this case.

Whatever nonjudicial functions were -- may constitutionally be given to that Court were not called into play in this case.

And the fact moreover that that Court does have certain administrative or nonjudicial functions, does not justify the assignment thereto of a judge from a nonjudicial tribunal or a non-Article III tribunal in order to exercise the District Court's admitted Article III power.

Now by of definition as you -- as I think Your Honor has agreed, this criminal proceeding was certainly an Article III function of this Court and in order to perform that particular function to render a judgment against this petitioner required a judge I suggest, that was qualified under the Constitution to perform that Article III function.

And I don't think the fact that this District Court has certain nonjudicial functions can serve as a crutch to permit the assignment or the performance of this Article III function of a judge who by his service on the Court of Customs and Patent Appeals never required Article III functions.

Justice Felix Frankfurter: But you have to encounter, I suppose you will if I stop asking my questions, the fact that this Court with this tribunal is now a full-pledge Court.

Mr. Eugene Gressman: Well --

Justice Felix Frankfurter: And that he continues to be a member of that tribunal.I know when this happened.

Mr. Eugene Gressman: You mean of the --

Justice Felix Frankfurter: When he was appointed, it added -- it preceded the creation that the transformation of that Court is to a regular court.

Mr. Eugene Gressman: Well now, Your -- Your Honor has referred to the --

Justice Felix Frankfurter: That's what I'm saying, you're discussing things which seem to me way, way over (Voice Overlap).

Mr. Eugene Gressman: Well, it seems to me that the answer to this so-called transformation of 1958 lies precisely in the analysis which I have been presenting Your Honor.

And that is that if I am correct in my reading of the Constitution and the cases decided thereunder with respect to these courts.

If it is true that the Court of Customs and Patent Appeals never had any heart of this non-delegable judicial function, if it only had the Article I powers of judicial to determine certain judicial matters which are exercaba -- exercisable by any agency of the Government, the Congress sees fit.

Then I suggest that without create and changing the jurisdiction or the nature of the Court of Customs and Patent Appeals, the 1958 declaration of Congress goes for naught because simply by saying that this is an Article III court when in fact there is no attempt to give that Court any of this inherent basic judicial function which is not exercisable by any other organ of Government, such a declaration cannot stand.

Justice Felix Frankfurter: Would you mind taking a minute to state what kind of cases come before this tribunal of the Court of Customs Appeal.

Mr. Eugene Gressman: Well as I understand it, there -- there are two basic kinds, the Customs matters and the Patent and Trademark Appeals from the denial of a patent or a trademark by the Commissioner of Patents.

Justice Felix Frankfurter: And that could not be vested in the District Court?

That could not be vested in the District Court?

Mr. Eugene Gressman: Certainly, it could Your Honor and in fact, you have an alternative.

Justice Felix Frankfurter: And the subject matter is of a judicial nature.

Mr. Eugene Gressman: This is the -- what I verb -- well, I have a better phrase what called the seductive cliché into which the Government has fallen, it seems to me, because what I have been trying to -- to -- to demonstrate in this argument is, that there are two kinds of powers, judicial powers exercisable by Article III courts.

One is the exclusively judicial function, and the second is this alter the na -- the Article I judicial function which is coordinate in many instances with specialized federal tribunals or even agencies of the Government.

The Government's brief points out correctly that there are certain cases under the Clayton Act that can be brought either in a Federal District Court, any part of the country or in the Federal Trade Commission.

Now, I suggest that -- it's going too far to suggest that therefore, the Federal Trade Commission is an Article III court because it is exercising the same kind of jurisdiction as the District Court in that case.

Justice Felix Frankfurter: No, but if a tribunal which has this ambivalent which has -- which is given a party over this ambivalent situation which may be cast in -- in adjudicatory problem if it is given to a tribunal and that -- and Congress gives that tribunal to life tenure, life tenure.

And it's located at -- no, let's stop there.

I do not see -- I do not see why then it doesn't satisfy your analysis namely --

Mr. Eugene Gressman: No.

Justice Felix Frankfurter: Namely -- the subject matter may be -- take the La Abra case, a Mexican claim against the Government or claim by the United States citizens.

Congress may pass a statute and says John Jones is entitled a $3,000,000 from the fund which makes it go and turn over to the United States.

Congress might say, the Secretary of Treasury should determine the bona fides of the claim or three, do what it did do and say, this is a controversy to be settled in an “honest-to-god” court.

Now, in Congress puts matters of that character, which it could distribute -- which it could either repay or give to an executive authority, gives it to a court, subject of case of controversy requirements and then give that tribunal life tenure.

I do not see what is lacking in making it a court within the requirements of Article III.

Mr. Eugene Gressman: Because Your Honor and that is precisely the point I've been trying to make.

That the answer to that is that they have not given them -- they cannot -- in establishing an Article III Court, you cannot give to it solely this ambivalent jurisdiction.

You've got --

Justice Felix Frankfurter: In other words, Congress -- you say that the proposal which has been made throughout my -- my professional life will have a separate Court of Patent Appeal, a Patent Court to withdraw the jurisdiction in all patent cases from the District Courts throughout the country and vested exclusively in a Court of Patent jurisdiction with no other judicial function and given life tenure, that wouldn't be an Article III court.

Is that what you're saying?

Mr. Eugene Gressman: Precisely Your Honor because that's exactly (Voice Overlap) --

Justice Felix Frankfurter: Oh I understand you but I'm sure I rejected it.

Mr. Eugene Gressman: -- what the -- the Hoboken Land Company case says.

And what -- what this Court said -- for example, what this Court said in the United States against Sherwood in 312 U.S. and then on unanimous opinion by Judge Stone, Justice -- Mr. Justice Stone saying that when the Court of Claims has identical jurisdiction with the District Court under the Tucker Act, they expressly pointed out that despite that concurrence of jurisdiction and I quote from it, “The Court of Claims remains a legislative, not a constitutional court.”

Justice Felix Frankfurter: That's because the statutes gave it additional power.

Because under the statute, Congress can ask an opinion of the Court of Claims, but nothing that you quote from Justice Stone there mean that if Congress shows to restrict the Court of Claims entirely to judicial business, it couldn't make of it a constitutional court.

Mr. Eugene Gressman: I say Your Honor that unless Congress gives to the judicial tribunal, that judicial power which cannot be delegated by Congress to any other agency or the Government, then you do not create an Article III court, and you violate the very basic concept of separation of powers upon which this whole doctrine rests.

Justice Felix Frankfurter: And you're saying if tomorrow, Congress chose to vest the power which now District Courts have, requiring to be constituted as a three-judge tribunal to review orders of the interstate commerce provision.

If Commerce chose to have one centralized court or say four, whatever the great the divisions, the traffic divisions of a country are at present, you say, that would not be an exercise upon the Article III if it didn't also say those judges should also have all other powers and be available for all other duties of a judicial --

Mr. Eugene Gressman: It seems to me that's precisely what Bakelite and Williams, O'Donoghue --

Justice Felix Frankfurter: Well, I know, but we're here reconsidering all the talk in these cases.

Those cases arose out of special circumstances, and one cannot understand the Bakelite case unless you consider that that case arose in connection with the very troublesome question at that time to what extent Congress can create nonjudicial tribunals for the enforcement of the Volstead Act.

I was about to say that the man in the wood pie.

Mr. Eugene Gressman: Well, Your Honor I only -- I can only suggest that it is my -- in my reading of the Constitution and in reading of these cases that gives rise to this consistent thread, this demarcation which explains what the Court did basically in Bakelite and Williams and which is consistent with the constitutional interpretation which I suggest is proper.

And --

Justice William O. Douglas: And of course you might add that it was a unanimous decision of the Court --

Mr. Eugene Gressman: That is right.

Justice William O. Douglas: -- imposed of Holmes --

Mr. Eugene Gressman: And --

Justice William O. Douglas: -- Brandeis and others who partner with first year law students.

Mr. Eugene Gressman: You might add that we never this -- particular, the tribunals are now constituted never reconsiders prior decision.

Justice Hugo L. Black: Some of us are very lucky.

Mr. Eugene Gressman: Well --

Justice Hugo L. Black: May I ask you one question?

I've been waiting to see if I could ask you.

Suppose the Congress would declare tomorrow Interstate Commerce Commission is a court in Article III court that they do try some cases that are essentially legal, reparations cases, could those judges be assigned to District Court?

Mr. Eugene Gressman: I suggest not under the Constitution.

Justice Hugo L. Black: Why?

What's the difference between that and this?

Mr. Eugene Gressman: Because they too, like every other administrative agency and like every specialized tribunal as we're talking about today, they do not have any of that essential judicial power which can -- by definition cannot be exercised by any other organ of the Government.

Now, there are very -- it seems, there are only a few examples of that type of Article III court.

Justice Hugo L. Black: Why couldn't they be if Congress declared it such as they've declared it with reference to this (Voice Overlap) --

Mr. Eugene Gressman: Because that it seems to me, you break down the whole distinction between the judicial and the legislative branch of Government.

If every organ of -- of the legislature or of the executive which makes some kind of judicial determination in matters arising under the laws of the United States, is susceptible of being declared an Article III tribunal, subject to all the powers and the limitations and the protections that are accorded therewith, then it seems to me you have destroyed the very basic distinction between the Article III and Article I and the separation of powers contained therein.

Now, there has to be a practical accommodations, of course, in the execution of the powers of Congress and in the exercising those powers, Congress must be given the freedom to choose where it want certain types of judicial determinations made either in the executive or the legislative or in the judicial branches of the Government.

But there are certain things called into play of a judicial nature, which when so-called into play, such as a criminal sanction cannot be exercised at the discretion of Congress but any organ of Government other than a court created under the Constitution Article III and composed of judges who are constitutionally independent and constitutionally authorize to exercise that.

Justice Hugo L. Black: May I ask you this?

It seemed to me as if you have occasionally sort of shied away from putting emphasis on the fact that judges are appointed for life, to try certain kind of judicial controversy.

But you have duties where you observe the rules of court and that you have emphasized more in Article III court and in another kind of court which confuses me.

I must admit.

It seems to me that maybe your argument -- I'm not absolutely sure.

These judges are appointed to the Court where they do not have life tenure, where they try a lot of cases that are not triable before a jury.

You do not observe due process of law including these safeguards and that you are arguing that this Judge is for different kind of court and doesn't have life tenure.

What difference would it make if they'd given him a life tenure before he was appointed or afterwards, would that make a difference?

Mr. Eugene Gressman: Well, he was given life tenure in this case by virtue of statute, enacted 1930 before his appointment, so he came on there certainly in statutory contemplation with life tenure.

Justice Hugo L. Black: Yes.

Mr. Eugene Gressman: But my suggestion is that by virtue of the nature of this Court, he did not have constitutional life tenure and there is a difference.

Justice Hugo L. Black: That's what I understood -- that's what I understood and that's why I want to know what's the difference between allowing this man to move from that Court into a District Court and try cases and controversies of the criminal nature and other natures that requires certain things like you, what's the difference in letting him move from there, having the Congress to say that the Interstate Commerce Commission, so do you consider the Court and assign him to these other places?

Mr. Eugene Gressman: Well, it seems to me that --

Justice Hugo L. Black: They might give -- they might give them a statutory a life tenure also.

Mr. Eugene Gressman: Well, it seems to me that permitting Congress to make that kind of a declaration and making it constitutionally effective thereby is to destroy the basic separation between the judicial and the legislative branches of the Government moreover.

It seems also clear to me that this critical non-delegable judicial function as expressed here particularly in a criminal proceeding is precisely where you need and must have this constitutional independence in your judges.

Justice Hugo L. Black: Well, get away from those non-delegable so what -- what exactly they have on the man being tried?

Mr. Eugene Gressman: Well, the man --

Justice Hugo L. Black: What kind of court does he get?

Mr. Eugene Gressman: Under this -- under that suggestion Your Honor, he could get anybody in the world who had been -- ever been appointed to this particular agency because he would thereby and forever after in a retired status or otherwise have Article III status, and you could have appointed the District Court by assignment.

Everybody who has ever been a member of the Interstate Commerce Commission or the SEC or any other agency including the Court of Customs and Patent Appeals which Congress has ever designated by fiat as a court created under Article III of the Constitution.

Justice Hugo L. Black: Why are the functions of the Interstate Commerce Commission if they are any less or anymore judicial than those of this Court?

Mr. Eugene Gressman: Well, they're judicial in certain -- in a certain sense that if they were framed in the nature of a case or controversy, they would be subject of course to -- and are subject to -- to inquiry and resolution.

Justice Hugo L. Black: What is a reparation suit?

Mr. Eugene Gressman: Well, --

Justice Hugo L. Black: What does it settle?

Mr. Eugene Gressman: It's a -- I suppose involves a suit or a claim by an individual or a corporation against the United States which --

Justice Hugo L. Black: Railroads.

Mr. Eugene Gressman: Or railroad against United States which certainly --

Justice Hugo L. Black: Are they in the nature of judicial controversy?

Mr. Eugene Gressman: They could be, but I don't -- I suggest they're not Article III judicial -- of this non-delegable nature because obviously, they are determined in many instances by the ICC in the first instance.

They're also determined by -- could be determined by other agencies or by Article III court.

But it seems to me also important to recognize that --

Justice Hugo L. Black: Well, I was asking that because I was wondering why that wouldn't justify Congress, it justified in this case and declaring that it's a court -- full-pledged Court to the extent that they can be assigned to District Courts.

Mr. Eugene Gressman: Precisely.

This was where the -- where the argument runs and that to the extent the Congress wants to make such a declaration as it did 1958.

As to this Court, it could make a similar declaration as to every other administrative agency that ever determines matters which are in a judicial form of say a case or controversy, as most administrative agencies do deal with, and at least in the first instance.

And thereby, you have appointed or delegated or assigned to the District Court and then whom the President and the Senate never considered as through their qualifications to render a judgment in a -- and -- and -- a trial in a criminal case or in any other type of this inherent non-delegable judicial functions performed in an Article III court.

And the whole system breaks down it seems to me.

Justice Hugo L. Black: Your argument seems to me that we have based, I'm not sure, on the idea that the Constitution provides certain things that must take place for judge acting -- I won't say an Article III court, but in a court that tries peoples' crimes, adjudicates lawsuits of a nature that require safeguard to the Constitution.

If they must be appointed and hold office subject to life tenure, confirmation and so forth by the Senate or these required to be confirmed by the Senate, they are, are they not?

Mr. Eugene Gressman: Yes.

Justice Hugo L. Black: Now, what else is left out?

Mr. Eugene Gressman: The investiture of that Judge and the Court to which he was appointed with authority to exercise the basic Article III function, which only an Article III court can exercise and that includes primarily and all we have involved here is criminal trials.

Justice Felix Frankfurter: Let me put this to you before you sit down.

This will tell you my difficulty.

Let's see if I can put it clearly.

The District -- the District Courts of the District of Columbia have both conventional judicial functions and non-conventional -- and nonjudicial functions.

For instance, the District Courts for the District of Columbia can fix rate of utilities which no U.S. Courts throughout the country can do not even -- and this Court has no power.

It can do that, is that right?

Mr. Eugene Gressman: Right.

Justice Felix Frankfurter: It also tries conventional criminal cases.

Now, the infusion of nonjudicial business into the powers of the District Court, do not prevent that tribunal from being an “honest-to-god” Article III court with reference to its judicial business.

Mr. Eugene Gressman: That's correct.

Justice Felix Frankfurter: Now, that empowerment, that investiture to use your good word of nonjudicial business in the District Court derived from one of the provisions of Article of Section 18 of Article I, “The power to deal with the District.”

Now, this Court has held for obvious reason that Article I has a lot of other provision giving Congress power, such as the power to regulate commerce.

What for the life for me, I cannot I understand is why, if the District Court of the District of Columbia is a judicial tribunal subject to review by this Court although there's an infusion of this executive authority, why any other tribunal having judicial business such as reparation suits, but also being given some other authority on the Article I, Section 3, why as to those tribunals, the addition of those nonjudicial matters would take the whole things so that they wouldn't be a court.

Mr. Eugene Gressman: It wouldn't be an Article III court, Your Honor.

There -- there --

Justice Felix Frankfurter: We don't have to have Article III courts because this Court had reviewed judgments of territorial courts which were under Article III courts.

Mr. Eugene Gressman: Well, precisely Your Honor, I think Chief Justice Vinson in his opinion in the Tidewater case expressly pointed out that this Court obviously reviews in judgments, in cases from tribunals which are not Article III courts with federal -- which are presented in such a form of a case or controversy which permits this Court to exercise review jurisdiction.

Now, this doesn't mean that simply because a matter is formulated in the -- in the posture of a case or controversy and arises under the laws of the United States that therefore necessarily, it is exercising our Article III judicial power.

Justice Felix Frankfurter: But this Court couldn't possibly run or issue a writ and review a determination by the Secretary of State until he gets into a lower court or the Secretary of Commerce or anybody else, it has to come here from up court and cases which come here from the District Court, come from a tribunal which from your point of view is tainted because it also has advisory capacity.

Mr. Eugene Gressman: Well, it's not tainted.

It seems to me --

Justice Felix Frankfurter: Well, it isn't a Court.

Justice Felix Frankfurter: That's all you have to say.

You say, the Court of Customs Appeal isn't a Court and Congress couldn't make it such and Congress couldn't agree at the Patent Court of the kind I have indicated because it wouldn't also be trying criminal cases.

Mr. Eugene Gressman: It's said because -- it is an Article I court Your Honor, and not an Article III court.

And this Court has from time in memorial been exercising review jurisdiction from both Article I courts and Article III courts.

Justice Felix Frankfurter: But do you know what I think about that -- that line of argument.

I've expressed myself in the Tidewater cases.

Mr. Eugene Gressman: Yes, sir.

Justice Felix Frankfurter: I think it's -- if I may say so respectfully, angels dancing on a pin's head.

Mr. Eugene Gressman: I think my time is expired.

Chief Justice Earl Warren: Mr. Gressman, in order that you may make your other points and conclude your argument in a comprehensive way, I'm going to give you ten -- ten minutes more --

Mr. Eugene Gressman: Thank you.

Chief Justice Earl Warren: -- although, your time is expired and if the Solicitor General needs, he may have it too.

Argument of Cox

Mr. Cox: May it please the Court?

Chief Justice Earl Warren: Mr. Solicitor General.

Justice William O. Douglas: Mr. Solicitor General, I don't like to interfere with counsel and question him a great length during the course of the argument.

I have a question I would like to put to you.You can answer it in due course.

It relates somewhat to the question that Justice Black asked.

I once served on the Security Exchange Commission whether the -- I was wondering during the course of the argument whether Congress could pass a law that would allow the assignment to the District Court for criminal trials or civil trials in the District of Columbia members of the Securities and Exchange Commission.

We have the -- we used to handle some controversies over there, cases or controversies or the Federal Trade Commission or the Interstate Commerce Commission, with or without the Commissioners having -- having life tenure.

Whether it comes down to this which seems to me to make irrelevant much of what has been discussed so far, namely as a person charged with a crime, entitle to a -- not only to Article III procedures contained in the Constitution, but also to an Article III judge.

Mr. Cox: Well, I would --

Justice William O. Douglas: Don't -- don't, just --

Mr. Cox: Well, I think it --

Justice William O. Douglas: -- that's the heart of the case (Voice Overlap) --

Mr. Cox: -- (Voice Overlap) -- will focus -- I think it perhaps ties in with what was going to be the beginning of my argument if I might give you a very short answer --

Justice William O. Douglas: In your own time.

Mr. Cox: -- for subject to explanation.

Let me say this that I think no question is presented necessarily in this case concerning how a man may be tried for a federal offense in the Southern District of New York or the District of Nevada that the question here is whether this Court was lawfully constituted to try the petitioner for the cri -- local crime of burglary in the District of Columbia.

And there's a world of history back at the courts of the District of Columbia.

So that I would also say that there is no constitutional right, for reasons I'll try to explain, to be tried for a local offense in the District of Columbia before a judge with security of compensation and tenure in the constitutional sense.

Justice Hugo L. Black: Pardon me for adding this to his statement.

I hope you will not assume without giving your reasons later that that can be done in the District of Columbia without it spreading to the rest of the country and point out through distinctions.

Mr. Cox: I will try to -- that --that is the first proposition on which we rest our case.

I would like to emphasize at the beginning the importance in this case.

First, of avoiding, entangling it in broader constitutional issues than the case necessarily presents.

And second, of avoiding the difficulty which I found, I fell into very often and thinking about the case of dealing with abstractions, entangling niceties rather than what people do and what rights they may have.

Now, it seems that the only issue which has to be decided on the merits in this case is whether the Court which convicted the petitioner was, as I said a moment ago, legally constituted for the purpose of trying a local charge of robbery in the District of Columbia or to state that question conversely, it's whether the trial for criminal violation of the District of Columbia Code before a court known as the District Court of the United States for the District of Columbia, but presided over by a judge from the Court of Customs and Patent Appeals violated any of the petitioner's legal rights.

I state of course in that fashion for a reason I indicated a moment so that we are much more likely to reach the proof, I think, by avoiding these undefined terms like judicial power of the United States, Article III court, legislative court, constitutional court, all which I suspect to give and shifting meanings throughout of the argument and instead pursuing to direct lines of inquiry.

First, whether the authority of Judge Jackson to preside at the petitioner's trial can be traced back to an origin in the Constitution; second, if it can, then the question arises whether the power was exercised in a manner which violates any statutory or constitutional rights of the petitioner.

And this does involve, I think, looking at what was done in concrete and specific instances.

Here, there's no question about the validity of the assignment of Judge Jackson to sit in this Court, which was signed by the Chief Justice on December 7th, 1959.

The authority to make the assignment is derived from Section 293 of Title 28 of the United States -- United States Code.

But I would emphasize that although that general power to assign a judge of the Court of Claims or Court of Customs and Patent Appeals to any Circuit or any District originated in 1958, there was a particular power to assign a judge of the Court of Customs and Patent Appeals to sit in the courts of the District of Columbia, either the Supreme Court is it then was known, now the District Court or the Court of Appeals for the District and if that statute was enacted in 1922.

It was enforced at the time Judge Jackson was appointed to what was life tenure by the statute and he must have been appointed by the President, gratified and confirmed by the Senate with a view to that possible assignment.

Indeed, as Judge Prettyman's concurring opinion in the court below points out, this is an interchange which has taken place very frequently.

I should also add that burglary is of course a local crime defined in the District of Columbia Code which may be tried under the District of Columbia Code in the Court known as the District Court of the United States for the District of Columbia.

It seems to me therefore that the case stands exactly as if Congress had specifically provided for the charge of robbery in the District of Columbia, should be tried in a court with this title.

A court which should have normal judicial powers who function in the matter common to most courts, which should have the jurisdiction of the Federal District Courts scattered through the country, which also should have jurisdiction over local crimes committed in the District and of suits between citizens of the District meeting certain requirements and which should further exercise certain legislative, executive, and administrative functions.

And over which there should preside either a judge known as the District Judge or a judge known as a Judge of the United States Court of Customs and Patent Appeals.

In other words, it stands exactly as if the Congress had said in so many words that a local charge of burglary in the District of Columbia may be tried before a court presided over by a judge of the Court of Customs and Patent Appeals.

And the petitioner cannot possibly prevail in this case, I submit, unless he can show either that Congress would have had no constitutional power to enact such a statute or else that its enactment with the provisions here violated some specific limitation, giving him constitutional rights.

Now, we find the authority to enact such a statute and therefore, this body of statute is having this effect in Article I, Section 8, Clause 17, giving the Congress power to exercise exclusive legislation in all cases whatsoever over such District as may become to seat of the Government.

And Congress has exercised that power creating courts in which the judges do not have life tenure, giving those courts duties which would not be regarded as proper to give to judges of an Article III court for -- well over a hundred -- indeed over 150 years.

The expressions of this Court summarized the point by saying that Congress exercises the combined powers of a general and of the State Government in all cases where legislation is possible in dealing with the District of Columbia.

And this power to function as the local sovereign certainly includes, we submit, the power to declare crimes and the power to create the Courts in which those crimes shall be tried.

Justice John M. Harlan: If Congress undertook to say that local crimes will be tried before the Interstate Commerce Commission, would you defend it?

Mr. Cox: That -- no, no --

Justice John M. Harlan: By what -- what --

Mr. Cox: I would say that --

Justice John M. Harlan: What's the difference (Voice Overlap) requirements envisage?

Mr. Cox: I assume and concede indeed that in exercising this -- by putting one sentence first and come in directly to your point.

I just want to point out that no one would challenge the right of a state to provide that burglary should be tried in such a court as that in which the petitioner was tried.

And it would seem to me that if Congress exercises the powers of the state in relation to the District of Columbia as has often been said then Congress must have, under Article I, the power to establish this kind of court.

Justice Hugo L. Black: And it could waive trial by jury.

Mr. Cox: No.

I suggest not.

Let me -- because this is the same as Mr. Justice Harlan's question.

Congress is subject in exercising its Article I power over the District of Columbia to the limitations provided in the bill of rights just as it is subject to those limitations in exercising any other legislative power.

And it is therefore subject, we would grant, to the provision granting a right to trial by jury.

Equally, we would say that it was subject to the Due Process Clause.

And I would think Justice Harlan to deal with your point explicitly that an attempt to try a man for crime before an agency constituted as the Interstate Commerce Commission before the District of Columbia commissioners, not functioning in a judicial manner, would be a denial of due process of law.

In other words, I take it that due process includes a right as Justice Frankfurter suggested earlier to a judicial proceeding --

Justice William O. Douglas: Well, they can in panel a jury.

Mr. Cox: They what?

Justice William O. Douglas: They can -- they might use a jury.

Mr. Cox: Well one of -- of course one of the difficulty is that telling about, “Could you try this before the Interstate Commerce Commission?

It depends partly on what do you mean by the Interstate Commerce Commission?

What procedure do you envisage?”

If the procedure is near enough to what we think of as a judicial procedure in the states that -- commonly exercised by Anglo-American courts then it would seem to me that the requirements of due process are met and any requirements that I think of in the bill of rights are met provided that the -- there is a jury and of course if It's been in no violation of other provisions of the Fourth or Fifth Amendments, unlawful search and seizure and things like that.

Justice Felix Frankfurter: I suppose Congress could establish courts restricted entirely to nonjury cases, just have a separate equity court, couldn't it?

Justice William O. Douglas: Well, yes.

Chief Justice Earl Warren: We'll recess now.

Featured:

Glidden Company v. Zdanok - Oral Argument, Part 1

Tue, 25 Sep 2012 22:34:17 +0000

Case:

Glidden Company v. Zdanok

Media File:

242_19620221-argument-1

Related Transcript:

242_19620221-argument-1

Transcript:

Argument of Chester Bordeau

Chief Justice Earl Warren: Number 242, The Glidden Company, etcetera, Petitioner, versus Olga Zdanok.

Mr. Bordeau.

Mr. Chester Bordeau: Mr. Chief -- Mr. Chief Justice and members of the Court.

Many of the arguments that I have prepared for this Court have been more or less discussed in the previous argument but I would like to answer some of the various questions that were put or at least to try to answer them in a way that I see them.

As Your Honors know, this case involves a controversy between former employees of the Glidden Company, the petitioner here.

It was the claim of these respondents that there was a breach of the collective bargaining agreement covering these employees while they were employed at the Elmhurst plant of the petitioner in Long Island.

When that collective bargaining agreement expired and when the plant was closed and when the employment of the employee thus terminated, a claim was then made by the employees that by reason of certain seniority rights contained in the collective bargaining agreement that they were entitled to be employed or continued in the employ of the petitioner at a new plant which the petitioner had established in Bethlehem, Pennsylvania.

They were not given this right to continue in employment with the -- the seniority rights which they claim have accrued.

The case was brought in the Supreme Court of the State of New York, and was removed by the petitioner to the United States District Court for the Southern District of New York with the claim that there was a diversity of citizenship in the requisite amount in controversy.

And now in this case of -- at the trial term which was held before the Honorable Edmund Palmieri, a judgment was entered dismissing the complaint.

An appeal was taken by the respondents to the United States District Court for the Second Circuit.

That appeal was argued before the Honorable J. Edward Lumbard, the Chief Judge of that court and a circuit judge before the Honorable J. Warren Madden of the United States Court of Claims, who have been designated by the Chief Justice to sit on the appeal in this case during that one week in February 1961.

Now, the third judge in the division which heard this appeal was Honorable Sterry Waterman of Vermont.

The result of the hearing before the appellate court was that Judge Madden wrote the majority opinion in which he reversed the lower court and remanded the case for further proceedings.

He was joined in that reversal by Judge Waterman.

The -- Judge Lumbard dissented in an opinion.

It was on the basis of the fact that Judge Madden as a judge of the Court of Claims was not an Article III judge that we have petitioned in part.

There were other reasons why we made a petition to this Court or the declaration by this Court that the Court has constituted and as the decision occurred was without jurisdiction to render the judgment against the petitioner here.

Judge Madden was appointed by President Roosevelt in 1941.

A copy of the Commission is at -- appears at page 7 of our main brief.

He was designated to the office or nominated rather to the office of the judge of the Court of Claims upon the duties and the services of the judge of that court.

In 1961, the Chief Justice in a designation and assignment which appear as an appendix to our main brief assigned that Judge Madden to sit as a circuit judge in the U.S. Court of Appeals for the Second Circuit.

There is no question presented here as to the regularity of the assignment and designation made by the Chief Justice.

There were no in -- no defects in the carrying out the regulation of the statute permitting the assignment.

It is the claim of the petitioner that the statute pursuant to which the Chief Justice maybe assigned and then designation of Judge Madden to sit in the Article III court is unconstitutional.

In that, Judge Madden was the judge of an Article I court without the constitutional protection which is granted to Article III judges under the provision of Section 1 of Article III.

Justice John M. Harlan: How do you stand under the Solicitor General's standing argument?

Is this raised in the Court of Appeals?

Mr. Chester Bordeau: We say under the cases which we have cited in our brief that the question -- there's a question of jurisdiction of -- the jurisdiction of the Court not only with respect, the Solicitor talks about subject matter.

We're talking about the jurisdiction with respect to the judges seating.

That is also an important consideration and just as important in consideration under the subject matter or jurisdiction of the subject matter of a case before a court.

That is been held uniformly, maybe raised at any time.

That is a jurisdictional defect --

Justice John M. Harlan: But you did not raise --

Mr. Chester Bordeau: -- constitutional defect.

Justice John M. Harlan: -- you did not raise it?

Mr. Chester Bordeau: We did not raise it, sir, until the petition for certiorari was presented to this Court along with request for the review of various other question which with respect to which the petition was denied.

Now, Judge Madden, as I pointed out, was appointed to the U.S. Court of Claims.

He was not appointed at any time to the United States Court of Appeals or any other district or the Article III court.

His appointment was to a court which had been declared unanimously by this Court to be an Article I court.

A court that did not have the constitutional guarantee with respect to tenure of office and compensation provided for with respect to Article III judges.

Justice Charles E. Whittaker: I'm not sure I understand just what confines you placed on phrase Article I court.

Mr. Chester Bordeau: Well, that's a very, very good question that I've asked myself that question over and over again.

And I think the answer to that question, Mr. Justice Whittaker, depending on which side the Court may feel the correct answer to be is decisive.

I have tried to frame that.

I've tried to frame it probably a little imperfectly at pages 7 and 8 of my reply brief which I would like to clarify by a statement running like this, "An Article I court is one granted by Congress the power and the function to determine judicially matters which are inherently susceptible to congressional determination under Article I and or, if I may use that phrase, to deal with those matters non-judicially which are within the power and the function of the Congress and all of which may be delegable by Congress."

That is what I gather from the various decisions which I have had the opportunity to read.

And carrying on from there to try to describe an Article III court, Mr. Justice Whittaker, follow up on your question, and Article III court on the other hand is one granted by Congress the power and the function to determine judicially cases or controversies described in Section 2.

Justice Charles E. Whittaker: Of this Court?

Mr. Chester Bordeau: This is Article III I'm describing to you now, sir.

Justice Charles E. Whittaker: But once -- but once your (Inaudible)

Mr. Chester Bordeau: It was our case ruled by a reason of a collective bargaining agreement entered into between an employer, the petitioner and the collective bargaining agent representing the employees of that employer.

There's a question of whether or not it was a state law or federal law.

We claim before this Court on our petition for certiorari that it was a federal substantive labor law question with reference to which there was a conflict in the decision that I ask this Court therefore to review.

But that petition was denied.

Now -- but that is the nature of the question.

It does not arise under the Constitution.

It may have a reason as we claim under the laws of the United States.

Does that answer you Mr. Justice Whittaker?

May I proceed then with the --

Justice Charles E. Whittaker: Yes.

Mr. Chester Bordeau: What I gather from the cases as to what an Article III court is.

And this will be slightly repetitive.

And Article III court is one granted by Congress the power and the function to determine judicially cases or controversies described in Section 2 of Article III arising under the Constitution or federal laws or arising under other laws in cases of diversity of citizenship which are not inherently susceptible to congressional determination.

Now, I think those two definitions describe the differences and the characteristics of an Article I and an Article II court.

A question which is posed by Mr. Justice Frankfurter in the Lurk case in asking what are the characteristics of the different courts in which we are dealing.

I think this definition, which I have submitted in this form, is an attempt to describe what the courts have said in making the distinction between Article I and Article III courts.

And I think, it is a distinction which is solved for there is no reason in my mind why Congress should not have the privilege and the right to have courts or tribunals which are subject to its whim, we call it that with respect to their tenure of office, with respect to their compensation.

If they -- because of this fact that this courts which are created by Congress under Article I had been created for the purpose of carrying out the powers and the functions of Congress and not any other branch of Government, it was for the purpose of carrying out the power and the function of Congress of the Court of Claims was established in 1854 or 1855.

As a matter of fact in the debates which appeared in the congressional glow.

It was emphasized throughout the many and many pages of discussion with respect to the establishment of the Court of Claims that it was being created because of the very heavy duty of burden which have been placed upon the Congress in passing upon bills relating to compensation and debts owing by the United States to individuals and others.

Justice Potter Stewart: Mr. Bordeau, this was a lawsuit for violation of collective bargaining agreement, was it not?

Justice Charles E. Whittaker: That's correct.

Justice Potter Stewart: Are those then involved something over which is the function and power of Congress?

What I have in mind, for example, that in the enactment of the Taft?Hartley Act in 1947.

It was proposed that violations of collective bargaining agreements be made unfair labor practices subject to the National Labor Relations Board.

Mr. Chester Bordeau: This was not an unfair labor practice case.

Justice Potter Stewart: Well, but no -- the Congress can do that but you're suggesting that that's -- that would have been somehow improper or unconstitutional.

Mr. Chester Bordeau: I'm saying --

Justice Potter Stewart: I don't understand why this particular lawsuit has to be in an Article III court even under your very definition.

Mr. Chester Bordeau: Because I say this, that the determination, we've got to keep in mind of course that no one has agreed to the position which we've taken that this is a federal substance of labor law problem.

I tried to persuade this Court that the (Voice Overlap) --

Justice Potter Stewart: Why was that in the federal court?

Was there a diversity of citizenship?

Mr. Chester Bordeau: Yes, diversity of citizenship.

So, all we have to do is defend it with the question under --

Justice Potter Stewart: (Voice Overlap) under Section 301.

Mr. Chester Bordeau: -- rights and obligations of contracts.

Justice Felix Frankfurter: Suppose you're right -- suppose you are right on the assumption that you're right, would you good enough to response to Justice Stewart's question namely that it arose under law of the United States?

Mr. Chester Bordeau: Then -- I -- I didn't get that.

Justice Felix Frankfurter: That it did arise --

Mr. Chester Bordeau: Did arise.

Justice Felix Frankfurter: -- the law of United States as you contend it.

On that assumption, what is the answer that --

Mr. Chester Bordeau: And if --

Justice Felix Frankfurter: -- Justice Stewart put you?

Mr. Chester Bordeau: And if Mr. Justice Stewart says that Congress were enact -- to enact the law saying that a refusal or rather a breach of a -- of the collective bargaining agreement was an unfair labor practice that I would say we are -- we are wrong in our position here.

I would have --

Justice Potter Stewart: (Voice Overlap) to doing that --

Mr. Chester Bordeau: -- and rather (Voice Overlap).

Chief Justice Earl Warren: You would say what Mr. Bordeau?

Mr. Chester Bordeau: That we are wrong in our position here that we are -- we have been denied of our constitutional rights.

I would have to say that in answer to your question.

Justice Felix Frankfurter: Mr. Bordeau, I think your line of argument shows how a stray one can go, from my point of view, how -- how foggy the whole business is which we tried to discuss these matters nearly as a matter of logic.

And for this reason, the judicial power of Article III, the judicial power shall extend through all cases arising under this Constitution, the laws of United States.

Now, Article III says the judicial power should extend to all cases arising under the laws of United States.

No legislative court had any jurisdiction except under cons -- as to controversies arising under the laws of United States.

This one was merely dealing with English to its construction of language --

Mr. Chester Bordeau: I --

Justice Felix Frankfurter: -- one would have, isn't that true?

Mr. Chester Bordeau: I just wonder about the --

Justice Felix Frankfurter: How could a -- how could a legislative court come in -- come in to being --

Mr. Chester Bordeau: Because --

Justice Felix Frankfurter: -- (Voice Overlap) legislative act?

Mr. Chester Bordeau: I think there are many claims that are made by citizens with res -- under the Constitution of the laws of the United States which come under the power of Congress to decide.

That is, for instance, the claims of payments of the debts of the United States.

Justice Felix Frankfurter: We're not dealing with this congressional distinction?

I'm taking your (Voice Overlap)

Mr. Chester Bordeau: No, I'm -- that's correct.

Justice Felix Frankfurter: Now --

Mr. Chester Bordeau: I had enough (Voice Overlap)

Justice Felix Frankfurter: The judicial power shall extend to all cases arising under this Constitution the laws of United States.

Mr. Chester Bordeau: Yes.

Justice Felix Frankfurter: What I'm saying -- what I'm putting to you is this.

If one merely deals with the Constitution over a bunch of conglomeration of words, how wrong we can go?

One can be thinking purely and logically but one can go awfully wrong and this is my view.

Because if that's all you do, then every legislative court, no legislative court can came into be.

No legislative court has any authority except by virtue or what Section 2 calls arriving under this Constitution, the laws of the United States, therefore, the whole conception which runs through from the beginning of Canter since American Insurance Company against Canter.

The very distance of legislative courts apart from Article III courts is in violation of the mere English of the Constitution.

Mr. Chester Bordeau: Well, I don't know of that power sir.

Having --

Justice Felix Frankfurter: How about the -- deal with this question that I've put to you that Article III cover -- says the judicial power shall extend to the laws of -- to all cases arising under the Constitution and laws.

And if Article III defines the tenure of the judges, Article III, I think -- I think, if one has to guess on the materials we've got, I think if one had to do that and live all history and send history to the wind, one has the right to conclude that they meant Article III to be the inclusive, comprehensive provision for establishing courts of the United States.

Mr. Chester Bordeau: Well, I think an answer to that would be --

Justice Felix Frankfurter: I'm not saying that therefore I reached the logical conclusion --

Mr. Chester Bordeau: Well --

Justice Felix Frankfurter: -- as you reach the opposite conclusion.

Mr. Chester Bordeau: I think we all have the --

Justice Felix Frankfurter: Because this isn't only a case where a page of history is worth a volume of logic.

It's the case where three volumes of history as against one volume of logic.

Mr. Chester Bordeau: Under Article I, the Congress has the power to pay the debts of the United States.

And in doing so, it will necessarily have to pass upon and considered constitutional provisions and the provisions of -- of various legislation that maybe enacted by Congress but that still does not take away from Congress under Article I, the right to pay the debts of the United States and in doing so -- and in doing so to set up those arms of Congress that may -- that may deem appropriate --

Justice Felix Frankfurter: Yes, but if it sets up --

Mr. Chester Bordeau: -- for it to determine those questions.

Justice Felix Frankfurter: But if it sets up anything like a court, meaning adjudicatory body governed by the procedures that are familiar to us composes of judges, etcetera.

If it sets up a court, then I put it to you that just reading the Constitution as an -- an informed professor of the English literature which the Lord knows I'm not, I should think its clearly required that it come -- that it come within from Article III --

Mr. Chester Bordeau: Well --

Justice Felix Frankfurter: Because that's what the judicial power extends to.

Mr. Chester Bordeau: Mr. --

Justice Felix Frankfurter: Any case arising under the laws of the United States that that comes into being only when Congress chooses not to have the Secretary of the Treasury or the President make those decisions.

But once they wanted to be subjected to adjudication and therefore, of court then, as a matter of English, as a matter of reading the Constitution, the judicial power extends to that you can have only one type of court which is --

Mr. Chester Bordeau: Well, of course --

Justice Felix Frankfurter: -- all against the history of the United States.

Mr. Chester Bordeau: Of course, the Congress in the exercise of its powers under Article I is subject to all the other provisions of limitation --

Justice Felix Frankfurter: Well, I take that for granted.

Mr. Chester Bordeau: -- they are to deem the Constitution.

Justice Felix Frankfurter: -- I don't have to recite the liberty that I believe in the Bill of Rights everyday in order to believe in it.

Mr. Chester Bordeau: But I -- in Your Honor's statement, it seems to be -- it seems to me that one of the pause runs through it as being more or less conclusive in your mind is a the fact that a court is creative.

Now, I think the term "court" in itself does not necessarily decide the question.

You may have a court under Article I.

You may have a court under Article III.

You may call it a tribunal.

You may call it an agency.

But the fact still remains that a court is not the determining factor in my mind because a court has certain powers.

The court has certain functions.

And I think in determining this, what are those powers and what are those functions.

The way you would tell the character and the characteristics of a person is by what he does, what is he empowered to do, not what he is called but what he does.

Justice Felix Frankfurter: But I agree --

Mr. Chester Bordeau: That is determining --

Justice Felix Frankfurter: -- I agree with Mr. Gressman because the decisions are clear that there are matters that come before the courts of the United States everyday, the unquestioned courts.

What everybody calls Article III courts that come in question before those courts everyday and questions come before this Court which could have been taking entirely out of judicial determination.

Mr. Chester Bordeau: Well, I think that maybe so.

But that doesn't -- that doesn't prevent the conception of the disinc -- distinction between Article I and Article III courts and those that are performing functions of Congress.

Justice Felix Frankfurter: My point --

Mr. Chester Bordeau: Those -- this Court --

Justice Felix Frankfurter: My point is that if you (Voice Overlap)

Mr. Chester Bordeau: Where is the line (Voice Overlap) where do you draw the line?

Justice Felix Frankfurter: My point is if you read the Constitution to talk about Article I court is to talk mumble jumble as a matter of logic.

I'm not talking as a matter of history.

As a matter of history, there it is like a lot of other things.

Mr. Chester Bordeau: Well, that is -- this test to which I refer is the test which I think we must have if we're going to determine that they are legislative courts in Article I courts, they are Article III courts.

There is going to be a way of our deciding which is an Article I and which is an Article III because we would never know.

I think there's sometime that we ought to know what kind of court it is.

Justice Hugo L. Black: Do you think it would be impossible to read it and say to the court that Congress has the power to carry out certain powers under Article I power, and the mind with that, the kind of courts that Article III provides?

Mr. Chester Bordeau: I think that Congress can, in the exercise of its powers under Article I, may give the execution of those powers to Article III courts.

Justice Felix Frankfurter: The Article I --

Mr. Chester Bordeau: But I don't think that in itself would make the court, an Article III court because, in my mind, the determining test is what power is being used.

What power under the Government is being used?

Justice Hugo L. Black: But is that in the Article III and Article I court if that's the way you're going to have to refer to it as articles?

Mr. Chester Bordeau: Well, the way my mind works on it is Article I or Article III.

There have to be a division of -- of -- the type of court that you have.

Justice Felix Frankfurter: Mr. Bordeau, we're always admonished to be realistic.

Now, the starting point of this whole legislative court business is American Insurance Company against Canter.

And then this Court was confronted with a very practical problem namely, what to do with Florida?

Nobody knowing what will become of Florida.

How long it will remain a territory?

When it will be called into a state and should this Court reach the conclusion that Article III doesn't limit the power of Congress in order to deal with newly acquired territory to establish courts and not give them life tenures.

That's the source of all these business.

In short, what they did, though they didn't say it in words and to say the necessary improper clause of Article I, enables Congress not only to it -- of this country, not only to acquire a new territory but to make effective its Government.

And one way to having Government is to having courts.

But they shrank from requiring life tenure judges in the new terri -- in the Louisiana purchase.

That's the history of this business and unless we remember that all of this is a metaphysical obfuscation.

Chief Justice Earl Warren: We'll recess now, Mr. Bordeau.

Featured:

Glidden Company v. Zdanok - Oral Argument, Part 2 (No. 481)

Tue, 25 Sep 2012 16:44:37 +0000

Case:

Glidden Company v. Zdanok

Media File:

481_19620221-argument-2

Related Transcript:

481_19620221-argument-2

Transcript:

Argument of Cox

Chief Justice Earl Warren: -- continue.

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

Before the recess, I was attempting to develop an antinomy to propositions, both of which are really necessary to set forth our position.

The first is, that in exercising its power to govern the District of Columbia, a power roughly equivalent to that of a state government, the Congress is not required to create courts for the trial of local offenses which have all the characteristics of a court created under Article III, judges with tenure, security and compensation and the like.

At the same time, I must couple with that, the proposition that there are limitations imposed as I see it by the Bill of Rights including specifically the guarantee of a right to jury in trial and the right when one is charged with crime under the Due Process Clause to a judicial determination using judicial in a more general sense that not speaking specifically of judges who have the security that Article III gives the justices of this Court and the judges of courts created under that Article.

Let me put this specifically, I would suggest that there is no inhibition against creating a special criminal court for the trial of local crimes committed in the District of Columbia or the judges of which would be elected for 14-year terms and subject to reelection as under the Missouri claim or in the manner found in the other states.

More specifically and to draw for a second example on a condition which has existed for 150 years, there is no objection to Congress providing that offenses in the District of Columbia shall be tried either before a special criminal court as they were for many years or in a municipal court, the judges of which have a 10-year term.

Also, they are appointed by the President.

There's no election as there is in some state.

This has been true for all history.

Now, that jurisdiction does not extend to the trial of felonies.

I don't mean to say that Lurk could have been tried in the District Court before a judge with a 10-year term.

Unknown Speaker: (Inaudible)

Mr. Cox: Defense is not -- not carrying a sentence to the penitentiary.

Unknown Speaker: Is sentence up to a year?

Mr. Cox: Up to a year, yes.

The point, however, I think Justice --

Unknown Speaker: (Inaudible)

Mr. Cox: I believe, sir.

Oh, yes, yes.

And there's a right of -- to a judicial proceeding I would say under the Due Process Clause.

But there is not by virtue of the statute and never has been in history a right to a trial for offenses below the greater felony before a judge carrying security of tenure and compensation.

And when say that that is not required under the power to govern in the District of Columbia.

Now the question was put to me and I committed partly on it but I perhaps might put it in its context here, could a local trial be tried before the Interstate Commerce Commission?

I would say that such administrative agency is -- as I know it, does not proceed in the manner of a court.

The staff takes a part in the decision in the way that it is not customary in the court.

But there is of course no jury trial but I assume that to pin my answer to that would begging a question.

I don't need to that.

There are other departures from customary judicial proceeding which would cast doubt upon any such statue if Congress were to enact.

An interesting question which was suggested by the question raised by Mr. Justice Black and Mr. Justice Douglas is, well, could Congress provide that in the event of one of the judges of the municipal court would seek that his place should be filled by a man chosen from the Interstate Commerce Commission.

To that, I simply want to make one comment.

Possibly the -- possibly, the right to a judicial proceeding includes the right to be tried before a judge who has had some experience with the law.

I -- and in Interstate Commerce Commission, there would not necessarily have had a broader experience with the law.

But I submit that that case, this hypothetical case of selecting a -- an interim judge to fill the vacancy from the ranks of an administrative agency isn't before us here even putting the worst face on the Government's case.

Judge Jackson was a judge who was appointed, as a matter of fact, after prior judicial experience, with a view to service not only on the Court of Customs and Patent Appeals but on the Courts of the District of Columbia.

Second -- and it was confirmed with the law in that condition.

Second, he was given --

Chief Justice Earl Warren: Would you state that again General, I didn't get it.

Mr. Cox: I said he was appointed --

Chief Justice Earl Warren: Yes.

Mr. Cox: -- with a view to service not only in the Courts of -- and -- in the Court of Customs and Patent Appeals but also to service on the Courts of the District of Columbia.

Chief Justice Earl Warren: (Voice Overlap)

Mr. Cox: The statutes authorized that at that time and prior to his appointment, some judges of the Court of Customs and Patent Appeals as I understand had said in those courts.

There was nothing -- I don't know how much it was taken into mind, I don't mean to say the specific evidence, but the statute contemplated and it was not as Judge Prettyman shows an extraordinary thing.

In addition, Judge Jackson did have so far as the Congress and President could give it to him, security of tenure and security of compensation.

The only possible qualification that I can see on his having those characteristics as of the time he was first appointed was that one Congress is assumed not to be able to buy in succeeding Congress.

Justice Felix Frankfurter: For those --

Mr. Cox: And --

Justice Felix Frankfurter: -- elements that you are arguing in this case, I mean they can't decide --

Justice William O. Douglas: Yes, this is -- this is not an ad hominem a-- argument that (Voice Overlap) --

Mr. Cox: It would seem to me, the only thing that is ad hominem about that was my gratuitous remark that he had had prior judicial services.

I would say that none of the others are gratuitous or irrelevant.

Justice Felix Frankfurter: Not the amount -- they're relevant with the 1922 statute --

Mr. Cox: No, nor fact that he was appointed after.

Justice Felix Frankfurter: No, no, no.

Mr. Cox: Nor that the Senate and the House had given him that.

Justice Felix Frankfurter: No, I didn't refer to that.

Mr. Cox: No, no, in his prior services.

It's a --

Justice Felix Frankfurter: Because under that consideration, some of us are in trouble.

Mr. Cox: Now that was a bit of -- counsel's getting carried away too much but what it can make the most of the fact of this case but all the risk, I submit, go to distinguish this case from the hypothetical case of a trial before an Interstate Commerce Commission.

Now to put the bar --

Chief Justice Earl Warren: General may -- may I ask you before you leave that point, if Congress could pass a statute authorizing the assignment of municipal judges of the district -- to the District Court.

Mr. Cox: Well, I think that that -- I think that one must distinguish at this point with respect to the kinds of cases that come before the District Court.

I would say that there was -- I would draw this distinction and I think it's important in reference to a point raised by Mr. Justice Black.

Let me put it this was and I -- I assure you, I'm coming to the answer to your question which takes more than one sentence.

Mr. Gressman argues that Article III, quoting from the O'Donoghue case, gives the citizens of the District of Columbia the constitutional right to have their cases heard by Article III courts just as the inhabitants of the various states.

Now, the first by that was not in any sense necessary to the decision.

But more important, it seems to me that that is an undifferentiated statement that require some examination as to what is meant by -- have their cases heard before an Article III court of what kinds of cases.

And it seems to me that there are at least three different kinds of cases Mr. Chief Justice that we might have in mind here.

The first is local crimes, offenses against the District of Columbia Code which would not be offenses against the United States if they were committed in Maryland or Virginia or some other state.

And that is what we have in this case and only that.

Now a second type of case might be the general federal crimes such as a violation of the Dyer Act carrying a stolen motor vehicle across the state line or violation of the Mann Act or a criminal violation of the Sherman Act.

A third kind of case, of course, would be a civil case such as the big antitrust case, United States against Parke and Davis that was heard in the District of Columbia where it's the violation of the general law and not one confined to the local code.

I further would -- so that I've got two violations of local law and violations, civil or criminal of federal law.

Now the fed -- violations of federal law, it seems to me that they might permit of a constitutional distinction between citizens of the District of Columbia and citizens of other state.

However, the point that I would emphasize is that we are dealing only with the local criminal offense so that I say that your question, “Could Congress pass a statute authorizing a municipal court judge to sit in the District Court?”

I would say that it could authorize a municipal court judge to sit at the trial of a local crime such as this robbery.

And that -- that is a very different question than the one that would be presented if Parke and Davis in the antitrust case or a person indicted under the Dyer Act or the Mann Act raised objections to having a municipal court judge to sit at the trial of an offense under one of the general federal laws where a quite plainly could not sit on such an -- sit at the trial of such an offense in the Southern District of New York or the Northern District of Illinois.

In other words, I think that the second question is not properly here that Lurk must show that this Court was not properly constituted to try him for the offense of which he was indicted.

And the fact that a day later, the judge may be going to sit in a case, in which he would not be qualified to sit, is to put it colloquially, none of Lurk's business and none of the Court's business in deciding whether Lurk was properly convicted.

And since, I say, that Congress could provide for trying the crime of burglary before the municipal court.

Then surely it can, so far as Lurk is concerned, authorize his trial before the District Court presided over by a municipal court judge.

I see no difference in that respect between the two.

This leaves, Mr. Chief Justice, some questions on deciding, not only questions that of course would puzzle you in making assignments, it also leaves, I should make a claim to the Court some questions undecided that will probably come up from the Court of Appeals of the District of Columbia because I am informed that there are number of cases backed up behind this one which do involve prosecutions for federal offenses.

So the ground of decision I'm suggesting now isn't applicable to all those cases.

It won't solve all of them.

I was tempted to take a broader ground but frankly, this is such a complicated nestle and that it seem to me that I would do best to try and make up my mind about one point at a time and maybe that would be a wise way for the Court to go about it, too.

Ultimately, perhaps Parke and Davis antitrust case will be back here because that's when that Judge Jackson or at least one of the judges in the Court of Customs and Patent Appeals said.

The old Gypsum case is another.

But I don't think we have that kind of problem before us.

Now, the answer I suggested, Mr. Justice Black to the Chief Justice a moment ago seems to me to answer your question if we hold that local crimes in the District of Columbia can be prosecuted before a court whose judges do not have security of tenure and compensation.

Then why won't this spread through the country?

My answer is that Congress doesn't have the power which it has under Article I Section 8 Clause 17 over the District of Columbia in relation to offenses in other parts of the country.

And a fortiori, something that is a violation of a local law and a trial of an alleged local offense need not logically be spread elsewhere in the country.

Justice Felix Frankfurter: If we stretch ourselves and -- and take up every issue that -- that's intellectually implied in this litigation then I could press you with some questions on your last statement, the Congress doesn't have the power that it has over the district.

But by the Tidewater case, there's nothing but trouble for me, why hasn't any different power under the provision of Section 8 of Article I roughly to the district than it has under the Commerce Clause in the same section.

Mr. Cox: That is certainly a question that --

Justice Felix Frankfurter: I don't think we have to decide that.

Mr. Cox: -- can be debated but I think it would be -- I think there are answers that can be drawn.

The best answer, Mr. Justice Frankfurter from -- in my judgment is that there's 150 years of history behind it.

And I can also work out intellectual answers dealing with this point.

Justice Felix Frankfurter: You don't mind my having reference to the answer I gave you, is that true?

Mr. Cox: I think that it's -- what -- no --

Justice Felix Frankfurter: What?

Mr. Cox: -- in the answer to that -- or even if I did, it would be irrelevant.

I pass on now to a second ground of decision which it seems to me that this case can be put on again without facing the very broad constitutional issue.

We submit the petitioner's challenge to the right of Judge Jackson to preside at his trial, came too late.

This point is not raised until the case was on appeal in the Circuit Court of Appeals.

And we submit that under those circumstances, the petitioner cannot be heard or raised but here.

In our brief, we have argued at some length that Judge Jackson was a de facto judge.

And that under the doctrine applicable to de facto officers, his right to occupy the office could only be challenged directly by quo warranto.

I do not intend to spend time developing that further in my early argument.

For the sake of the point that I seek to make now, I assume that a challenge to the composition of the court can be raised by a litigant provided that it is raised at timely fashion.

When he learns the fact as an opportunity to voice his objection, then he may do it, I assume for the moment.

But we submit that when he does not voice his objection at that time when he sits quiet or waits to see the outcome, then if he loses says, “Oh, I have an objection!”

that I could've raised earlier but didn't that the answer is, you're too late certainly where he's been represented by a counsel and all the knowledge was available to it.

The answer that petitioner gives to that argument is that questions relating to jurisdiction can be raised at any time.

And I submit that that doctrine is not applicable here.

This case was clearly being heard in the District Court for the District of Columbia.

The Glidden case, if I may anticipate just a moment, the Second Circuit case involving Judge Madden from the Court of Claims, was unquestionably being heard in this Circuit Court of Appeals for the Second Circuit.

At most, those courts had jurisdiction of the subject matter.

This was the kind of case they were authorized to deal with.

The objection here is not one to lack of jurisdiction to the subject matter but rather to the composition of the court.

Now, so far as we have been able to discover, there is no federal president which holds that a party before a court which does have jurisdiction to the subject matter and knows all the relevant fact could sit back and wait the outcome, and then if it is unfavorable say, “Oh, but that court wasn't properly -- the judge didn't belong there”, that court wasn't properly composed.

All the other cases in this Court, and there are about four of them, are cases in which the objection was raised at the first possible opportunity.

In several, the first possible opportunity was on appeal because you couldn't know who had taken part or haven't taken part of the decision below until it had been made.

But the objection was raised in all the cases at the first possible opportunity.

Assuming that the question is an open one, because I think it is.

Then we say that all the reasons of policy in good sense, the command that there must be an end to litigation, argue for a holding that one who knows the fact cannot sit back and raise his argument if he loses but take advantage of a favorable decision if he win.

This, I think, is the real ground of decision although not exactly as it was put in the opinion in McDowell against the United States, the only case that I recall, dealing with the assignment of a judge from one court to sit in another.

In that case, the objection was not raised until after there had been an unfavorable verdict and there was a motion made in arrest of judgment and the court held that the moving party had no standing to challenge of the right of the assigned judge to sit in the court to question.

The language was in terms of the de facto doctrine which goes broader than anything that I'm presenting here this afternoon.

But the result, it seems to me quite rightly, consistent with what we advocate.

The consequences of any other view are -- are quite appalling and while of course we should have to face them if the decision should be that this can be raised at any time.

Assuming that there is a certain latitude on the authorities, I think the consequences are properly taken into account.

Judge Jackson, I am told, has been set for more than five years in the District Court for the District of Columbia virtually fulltime.

Judge Madden sat for at least a week in the Court of Appeals for the Second Circuit.

Judges of the Court of Customs and Patent Appeals have been sitting in the District of Columbia Court since 1922 with some frequency both in the lower -- in the District Court or Supreme Court as it was for a time and later in the Court of Appeals.

There are now about nine cases of direct attack where the point was raised on appeal pending in the Court of Appeals.

But if this -- if one is to be held entitled to raise this on appeal for knowing the facts he failed to raise it below, it seems to me that it necessarily would follow, but he was entitled to raise it by collateral attack either by habeas corpus or in this big antitrust cases by some direct motion attacking the judgment is void or some -- disregarding the judgment is void and then when it was used, citations for contempt to attack it's validity.

And this would mean that all these cases would be thrown in doubt, would have to comeback to the courts again.

As I say, I don't want to make an in terrorem argument.

This implies that and that implies something else.

But I do think that where the authorities are in their present condition, these consequences of letting parties sit back and not raise a very elegant question like this one would be quite intolerable and that that is a proper judicial consideration.

There is one other point, if the Court please, which again does not go the whole way to the constitutional characterization of the Court of Customs and Patent Appeals although it brushes up against it.

Justice John M. Harlan: Can I ask you one question?

From the point of view of the clearing of the massive backlog or where you choose to call it, meaning, those two grounds of proceeding, do you see -- you have a preference in one over the other?

Mr. Cox: Well, if you -- there is this difference and that is that in the next case, unless you would face the merits, you would have to go on the second ground that I have suggested rather than the first.

It can't be put on the District of Columbia ground.

Apart from that, I think that it would make a -- a starting point in -- clarifying the law to face this question on the first ground -- face this case on the first ground that I argued.

And this -- that would put an end to all these questions here in the district.

Justice John M. Harlan: I believe the Chief Justice (Inaudible) on that.

Mr. Cox: It would leave the Chief Justice out on a limb.

Perhaps, the limb is strengthened a little by the recent departments of judicial -- of additional judges so that the situation that he is confronted with may not be much oppressive.

It would leave him with the embarrassing choice, if there was a court where the only judge available for assignment was a judge of the Court of Customs and Patent Appeals, it would leave him having to decide, it's better to get the business cleared up maybe because maybe it won't clear it up at all or is it better to let the business leg and not create possible future litigation.

I appreciate that problem, my answer comes back to the observation I made earlier in answer to Mr. Justice Frankfurter.

This is such a tangle that if we try to clear up too many questions, I fear that it will just be made worse at least that may only be the limitations of my own thinking, but I find this horrible thinking if one gets into all the possible questions.

Chief Justice Earl Warren: General, if we -- if we decided on this limited theory, I'd like to ask you this question.

But the statute says that the Chief Justice may assign a member of the Court of the -- Court of Patent and Appeals to the District Court in the District of Columbia and he professes to do so, would he have the power, do you think, to restrict him insofar as his being a district judge is concerned by saying that, “Well, I will assign you but I will only assign you to take care of the local cases involving local law”?

Mr. Cox: I've seen no -- no difficulty in his making such an assignment as that.

I think it -- it would -- it would require interpretation of that statute.

But it would seem to me the fair meaning of the statute was that the Chief Justice was given not only the broad power but if he had doubts about the constitutional validity of that to exercise a segment of the broad power included within.

Chief Justice Earl Warren: Well, my -- my point is simply this, that if he is a district judge, is he not a district judge one is defined without any limitation can be placed for him by anyone except that the --

Mr. Cox: I would think not.

Chief Justice Earl Warren: -- the laws --

Mr. Cox: Let me --

Chief Justice Earl Warren: -- do powers of the district judges?

Mr. Cox: To make my thinking clear.

Let me put it this way.

Let's suppose that we had a decision in this case, saying that a citizen, resident of the District of Columbia, does not have the right to be tried for a local offense before a judge having security of tenure and compensation.

And let us have fur -- let us assume further that we had a decision which we don't have yet, but let's assume that we did saying that general -- crimes under the general federal statutes and cases -- civil cases of that kind, cannot be presided over by a judge of the Court of Customs and Patent Appeal.

Then, I am for -- then I should think one has to say when I -- when Congress pass this statute, did it intend to be an all or nothing proposition?

And since it can't be all, does that mean it must be nothing?

I would say no.

I would say that this was a statute which permitted separation that the overwriting intent is to give the Chief Justice as much power as Congress could to get the judicial business of a country done and that giving effect to that overwriting interpretation, one could exercise the invalid part.

And I would think the same excision was permissible where the Chief Justice was bothered by a genuine constitutional doubt.

Chief Justice Earl Warren: I think we ought to consider also that when the Chief Justice assigns a judge as a district judge, the Chief Judge of a Circuit also has the right to use him as a member of the Court of Appeals.

Mr. Cox: Well, if we pass the decision that I stated -- the two decisions I stated, he wouldn't have the latter right -- he couldn't have.

Chief Justice Earl Warren: Yes.

I see.

Mr. Cox: This -- just one more sentence on that point to which -- by way of analogy, if a principle gives me a bundle of power as -- as an agent, I don't have to exercise them all.

I may exercise some part of it.

And I would say that the Chief Justice here was in that relation to -- to the Congress under the statute.

There's a third point which still does not require the position of the broadest constitutional question and that is that even if the Court of Customs and Patent Appeals is not a constitutional court of whatever that may mean, that a court which may exercise what Mr. Gressman calls the judicial power of the United States, still, Judge Jackson had all the qualifications necessary to sit in an Article III court.

Well, I cannot say that this is clear on the face of the opinion of the court below.

It does very strongly suggest to me that the reasoning of that court run like this, and I submit it to this Court as sound, that Judge Jackson was appointed to exercise two functions to sit in the Court of Customs and Patent Appeals and to sit in the Courts of the District of Columbia.

He was appointed for life, given security of compensation and confirmed as a judge exercising either one of those powers that this was enough to make him an Article III judge.

That even if a judge of the Court of Customs and Patent Appeals absently assigned that statute, it wouldn't have gotten security in this respect since the appointment was made in relation to the assignment statute that Judge Jackson did get.

Now, certainly this doesn't defeat any intention of either the Congress or the President into the Senate, I should say, or the President because they confirmed him, because they appointed him for life with security of tenure.

Unknown Speaker: (Inaudible)

Mr. Cox: Yes.

That's what it comes to.

Now the only -- the only objection that could possibly be raised to that if he had been appointed with a view to assignments in the Southern District of New York would have been well he was appointed to -- also performed non-judicial duties and you can't have that.

But, under the -- under the O'Donoghue case, you can have that in relation to the District of Columbia.

So it seems to me that he had --

Unknown Speaker: (Inaudible)

Mr. Cox: The 1922 statute applied only to the district.

I just want to emphasize that this doesn't require going the whole step to other courts.

Unknown Speaker: (Inaudible)

Mr. Cox: It reads --

Unknown Speaker: (Inaudible)

Mr. Cox: Yes.

Unknown Speaker: Court of Customs?

Mr. Cox: That -- yes, yes.

And you will recall that the original Judiciary Act didn't fix any tenure just as the act under which -- as the original act of the Court of Customs and Patent Appeals didn't fix any tenure.

It just assumed the constitutional government.

That was changed in relation to the Court of Customs and Patent Appeals before Judge Jackson's appointment following the decision of the Bakelite case.

But the statute did give him a tenure for life so that the result --

Unknown Speaker: (Inaudible)

Mr. Cox: The Commission is printed in the front of petitioner's brief at page 10, Justice Brennan, page 10.

Unknown Speaker: (Inaudible)

Mr. Cox: Petitioner's brief, the blue -- the thicker blue brief.

Now even if this argument does not establish Judge Jackson's Article I status as of the time he was appointed, surely, he acquired that status after the legislation of 1958 because the only thing possibly lacking in it earlier was that the Congress -- that Congress may have had some power to modify, overturn the action of previous Congress.

But in 1958, when the Congress declared that the Court of Customs and Patent Appeals was a constitutional court, surely, it surrendered what power it could possibly have had left.

And since it was the only agency that possibly did have any power left at that stage, it surrender of it would seem to be complete.

And we --

Chief Justice Earl Warren: And do you think that before 1958, it was constitutional court?

Mr. Cox: No -- no.

No, I think that before 1958, Judge Jackson had all the qualities of a -- required for a judge in the Court of Appeals in the District of Columbia including security of tenure and compensation.

I dislike so far as we can speaking of constitutional court or legislative court because frankly, I don't know what it means or what anybody else means it means that it's -- there are times when one falls into it would it -- it's a -- it's a very difficult phrase.

Chief Justice Earl Warren: Is there any legislative history they show why Congress acted in 1958?

Mr. Cox: There were -- there were two threads that run through the debate.

The dominant one was the desire -- this came up at the time when there was pressure for new judges.

And Congress said, “Well, we will make it possible for the Chief Justice to have greater freedom in assigning judges.

And we'll enable judges of the Court of Customs and Patent Appeals to be assigned anywhere in the country instead of confining them to the District of Columbia which was a regular thing.”

That, I think, it is fair to say was the dominant theme of the debate.

There was also an interest in having the court made a constitutional court.

The Court of Claims had been made a constitutional court overruling so far as Congress could do it putting pressure to overturn the Williams case and there was an interest in having a light constitutional status given to the Court of Customs and Patent Appeals.

But it quite clearly was related to the problem of assignment as well as to this other question.

Chief Justice Earl Warren: What I was saying of this, General, suppose -- suppose that this session of Congress, an act would be passed making the tax courts a constitutional court in giving him permanent -- permanent tenure, do you think that because they are now enable to -- to adjudicate cases that that would make the judges who would retire prior to that time, judges capable of assignments throughout the country?

Mr. Cox: I would think that it would but I would find out that I don't have to go and haven't gone that far because --

Chief Justice Earl Warren: No.

I know.

Mr. Cox: Yes.

Chief Justice Earl Warren: Speculating (Voice Overlap) --

Mr. Cox: Well, it's obvious --

Chief Justice Earl Warren: -- my own problems here.

Mr. Cox: Well, I'm glad to do that but I do want to keep this case simple.

Chief Justice Earl Warren: So let's -- yes?

Mr. Cox: At least it may be decided.

Chief Justice Earl Warren: Yes, I -- I understand you.

Mr. Cox: Our argument does take the next step, Your Honor, and says that yes, if there were no other impediments and I understand you to be assuming no other impediment.

Chief Justice Earl Warren: Yes.

Yes.

Mr. Cox: That Congress could make the retired -- of course these judges, none of them were originally appointed for life at all.

Chief Justice Earl Warren: They were not.

They were not.

Mr. Cox: That's correct.

They have only a term for years.

And our argument does not go so far as to assert people who were originally given a term for years could by an act of Congress be converted into general judges with all the attributes of an Article III judge.

Justice Felix Frankfurter: I don't think they could by an act of --

Mr. Cox: I should --

Justice Felix Frankfurter: -- Congress but the court could be made into one.

And those who had -- previously had a life tenure could upon re-nomination by the President for good behavior term and confirmation by the Senate.

Mr. Cox: Then would --

Justice Felix Frankfurter: Then get --

Mr. Cox: Yes.

Justice Felix Frankfurter: -- that status.

Mr. Cox: It'd slipped to my mind for a moment that these were judges who've been named only for terms.

Chief Justice Earl Warren: Yes.

Mr. Cox: And my first answer was quite wrong.

If the Court finds that it must go further and decide the status of the Court of Customs and Patent Appeals, then we do submit that it is a court created under Article III and Article I Section 8 that therefore Congress did have the constitutional power to authorize the assignment of Court of Customs and Patent Appeals judges to other Article III courts.

I recognized that this involves asking the Court to overrule the Bakelite case and the Williams case.It seems to us that we're wired in making that request for several reasons.

In the first place, the course of decisions of this Court on this question has certainly been far from uniform.

It's only with very great difficulty that the O'Donoghue case can't be squared with the Bakelite case and still greater difficulty that it could be squared with the Williams case.

The Williams case itself overturned a long series of considered expression by this Court saying that the Court of Claims was a constitutional court.

So that I think this is peculiarly a situation where the state of the decision would justify reexamination without any weakening of whatever it's the normal doctrine of stare decisis.

Second, it is surely of someway in deciding whether a court -- whether the Court should reexamine a president that the Congress has both in 1953 and in 1958 expressed it's disapproval of those decisions.

And it's desire if it could to do everything possible to change these courts if the change was required in the constitutional courts and to urge this Court to reconsider the doctrine from the beginning.

And while of course that's not binding and this is a constitutional question where there would be little occasions to have deferred the Congress, nevertheless, it's a reason for being willing to reconsider it, I think, in additional reasons.

Now, I think that in deciding whether the Court of Customs and Pa --

Justice Felix Frankfurter: Why do you -- why do you say this is not a situation which need to defer to, is it because it's the jurisdiction or the judiciary problem?

Mr. Cox: I had Your Honor's statement in the Tidewater Insurance case.

Justice Felix Frankfurter: Yes, I know but that was -- that didn't meet with as much fairer advantage than it does with you now.

Mr. Cox: Well I think because --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Cox: I think -- I think because -- maybe it will still meet with the majority favor --

Justice Felix Frankfurter: I think there -- I think --

Mr. Cox: It either suspects what I have in mind and I take it Your Honor had in mind was that this is a special kind of question.

Justice Felix Frankfurter: I agree with you entirely.

I only want to make this qualification.

To me, there's a difference when there is an act of Congress whatever weakens the statute, containing the jurisdictional or judiciary problem using that word as an adjective, and having given that of any thought that is not now raised yet but that was my view in Lincoln Mills as you know but after the decision by this Court and consideration of the problem conscious consideration by the problem, by the Congress that was true in these enactments after Bakelite, I think you've got a different situation.

Mr. Cox: Well, of course from my --

Justice Felix Frankfurter: How do you --

Mr. Cox: -- from my standpoint in this case and the more weight that the Court is willing to give to its depth.

Justice Felix Frankfurter: Yes -- I'm just --

Mr. Cox: As a general question, I think I would urge to Your Honor that in -- intellectual conversation that a -- even when the matter has been considered, the problem dealing with the judiciary and with -- just what are the implications of Article III that the congressional judgment perhaps deserves somewhat less weight than in dealing with labor legislation or minimum wages.

Justice Felix Frankfurter: I agree with that.

All I'm saying is where you've got to deal with the problem which is inherently returns difficulties so that men are concerned and familiarity with these problems can -- to put it mildly take two views the fact that Congress, in the light of prior decision that this Court has taken the view that it has, has weight which wouldn't be have an issue of.

Mr. Cox: Well, I -- I would certainly urge that and I think that the distinction that I failed to note is -- is well taken.

In deciding whether the Court of Customs and Patent Appeals is a constitutional court, it seems to me wise to stay away so far as we can from these abstract, indeed, rather esoteric question such as the judicial power of the United of States, the non-delegable judicial power of the United States Constitutional Court and the like.

I suggest that having in mind the words and the purposes of Article III that we should seek to judge the character of this Court by looking at four things.

First, what's the court's function?

What is the subject matter with which it deals?

Second, what are the powers, and I mean external power not some inherent reality that you can't see, but what can it reach out and take hold of?

Who can it put in jail?

Who can it subpoena as witnesses of the like?

Third, the qualities of its judgments especially in their finality, are they binding?

Are they subject to review by the executive branch or by someone else and fourth, the tenure and compensation of the judges?

Judged by those standards, we submit that both the Court of Customs and Patent Appeals and in the next case, the Court of Claims are courts out of power with such inferior courts as the District Courts and Circuit Courts of Appeals and in that sense, but I will call roughly Article III courts, having nothing than a loose descriptive meaning in mind.

Let me look -- ask you to look first of the situation as it was shortly after the Court of Customs and Patent Appeals was created in 1909.

The subject matter with which it was created to deal was -- were -- was cases which theretofore had been heard in these old Circuit Courts of the United States.

In other words, it took over a function which had been performed by some of the courts created by Congress as inferior courts of the United States.

These were cases dealing with the classification of articles for the purposes of the tariff law and determinations as to what was the rate of duty do.

And they were cases which have been reviewed on a case within this Court by one -- by certiorari.

They were clearly cases of controversies.

It seems to me undebatable that they arose under the laws of the United States.

And I would submit the Williams case to contrary not withstanding that they were controversies to which the United States was a party.

Certainly, it was one of the parties in interest and the other party, of course, was to first see important.

But in any event, even if they're not controversies to which the United States was a party, they did arise under the laws of the United States and therefore came under their head of Article III jurisdiction.

Looking at the second standards, the powers of this Court in deciding cases, there is no explicit specification of what its power should be in the statute.

But you will find it in our brief that the words of the statute creating the court were borrowed from the legislation creating the Circuit Courts of Appeal.

It follows almost word for word.

And there's every implication therefore that this Court was to be organized in and have the same powers as those courts.

Indeed, the Court of Customs and Patent Appeals is a court of the United States under Section 453 of Title 28.

And it therefore has the powers conferred upon the courts of the United States in the other parts of the Judicial Code including the powers to issue subpoenas and directly to punish itself and to punish people for it for contempt instead of having to refer them to some other tribunal as an administrative agency and presumably the Tax Court would have to do.

So the judge by the second standard, surely, this function in the manner and exerted the external powers of a court.

Third, there's no question between the judgments of the Court of Customs and Patent Appeals after its creation had all the qualities of the judgments of other courts.

Indeed, they had sufficient finality so that in this class of cases, this Court has reviewed.

Fourth, the judges certainly ostensibly had full security of tenure and compensation.

The language of the original act with respect to their term was just like the language of the original judiciary act.

The assumption throughout the debate in Congress as our brief shows was that they would have both security of tenure and compensation.

And their appointments, read in the manner in which all normal judges are appointed.

It is true that following the Bakelite case, the Congress did pass a statute saying that the term of judges of the Court of Customs and Patent Appeals should be during good behavior.

This, I take it, was a situation forced upon the Congress and does not show any departure from its original intention under the 1909 Act, indeed it would tend to confirm it.

And whatever its intention was in 1930, if I may jump ahead, its intention under the 1958 legislation is perfectly plain.

Indeed, the -- the salary of these judges from the beginning was the same as that of an ordinary circuit judge.

Now, as I understand it, there are two arguments that are made by Mr. Gressman against the conclusion that the Court of Customs and Patent Appeals as first setup was what he calls a constitutional court.

First, he says in his brief, although I thought he sort of strayed from the line a little in oral argument when pressed that this is not a constitutional court because it's specialized.

It doesn't deal with a wide range of cases and controversies but with a specific kind of cases and controversies.

I submit that that proposition is untenable on its face of the Emergency Court of Appeals was a specialized court.

The Commerce Court was a specialized court.

As Justice Frankfurter suggested during the oral argument, it's always been assumed that an Article III court, courts that his judges had security of tenure and compensation could be created to hear public cases.

And in recent years of course, there has been much discussion about setting up an Article III court to hear labor cases or to hear administrative cases on the notion that specialization deprived the court I've just stated is contrary to the assumption of the bar and of this Court and others I think at this point.

There is another argument, as I understand it, is that there is nothing which this Court does which is inherently or necessarily requires judicial determination.

And this is a phrase drawn from the Bakelite opinion.

I confess that I find in Article III nothing that suggests any foundation for that language.

And furthermore, I think that it is an exceedingly unfortunate as what we would mean by which inherently are necessarily requires judicial determination.

This would mean that to determine whether a judge has life tenure, he would have to run through all the business that his court is -- and -- is authorized to hear and decide whether any of it necessarily requires judicial determination.

Now this isn't a clear question at all in the light of decision and history over the past 30 years.

It's been a good deal of shifting back and forth between what maybe submitted to the executive or an administrative tribunal and what requires judicial determination.

The -- so that I suggest that as it was constituted, there could be very little question.

But that the judges of Court of Customs and Patent Appeals had all the qualities which go with the judge appointed to one of our regular courts under Article III.

Then when it comes to the question, whether the additional jurisdiction that was vested in that court in 1925 by the trier of fact of that year and again in about 1930 when the jurisdiction of the court -- of the Court of Appeals for the District of Columbia over cases from the Patent Office was transferred to the Court of Customs and Patent Appeals destroyed its character.

Let me speak first into patent jurisdiction.

We have argued in our brief that this -- that this jurisdiction is in truth a judicial power.

Justice Felix Frankfurter: Would you mind --

Mr. Cox: This --

Justice Felix Frankfurter: -- would you mind being specific and state what matters the Court of Customs and Patent Appeals deals with that one dealt with for 50 years by Judge Hand sitting in the District and Circuit Courts in the numerous patent and unfair trade cases that he had.

Mr. Cox: Well in this respect, I think that there is in truth none.

Unknown Speaker: Right.

That's what I thought.

Mr. Cox: That seems to me proposed in Postum Cereal case is wrong -- wrongly decided.

And we have elaborated the reason in our brief.

I would like simply to mention one point because I have trespassed on the Court's time enough already.

If you will note particularly the case of Hoover Company against Coe dealing with the traditional bill in equity to review Patent Office decision, you will find that essentially the same kind of case as the appeal jurisdiction has been dealt with the -- with by the District Court and by this Court for many years.

So that on this point, we think there really is no problem at all.

This leaves the little fringe power of the Court of Customs and Patent Appeals to decide whether there has been an unfair method of competition in the -- by importers of goods.

And it does have a power to review the decisions of the Tariff Commission in that respect, the decision of the Tariff Commission then goes to the President.

And the President has the authority to determine whether to put a heavier duty on these articles or whether to exclude them from importation.

Justice Felix Frankfurter: Well, that isn't -- as I understand it, that isn't -- the subject matter is non-judicial but it isn't final because the President can exercise its political power to -- to reject it.Isn't that right?

Mr. Cox: And on that -- on that, I would make -- I agree if I would go on and -- and make two comments.

First, I think I should say, although it -- there's only been five instances of this throughout the history of this power.

Second, that the Court of Customs and Patent Appeals, for reasons which I don't have time to elaborate, said that the President didn't have authority to disregard the decision upon this question, which is a type of question which of course this Court and Courts of Appeals decide on the Federal Trade Commission Act, what is an unfair method of competition.

Justice Felix Frankfurter: But suppose you -- suppose you take it at face value that they differ from the power which the Courts of the District have which are now constitutional court could fix the rates.

Mr. Cox: No.

And one, I was going to make that, and one other sentence just to suggest the point, I think really, it doesn't differ either Justice Frankfurter from the power that this Court and the number of other courts exercise when they say to the Secretary of State, for example, you may not deny a man a passport on this ground.

It's a question whether later he will get a passport or whether they say to the Labor Board, you may not exclude a union from filing in charge of unfair labor practices upon this ground.

I think our notions of finality in relation to the administrative procedure have developed and that this, too, would require some reexamination of some of the assumptions of the Bakelite case.

For any of these reasons, we think the judgment below should be affirmed.

Chief Justice Earl Warren: Mr. Robb.

Argument of Roger Robb

Mr. Roger Robb: Mr. Chief Justice, may it please the Court.

I appear on behalf of the Chief Judge and the Associate Judges of the Court of Customs and Patent Appeals amici curiae.

In the 10 minutes of my disposal, I should like if I may to make or touch upon two points.

First, I should like to examine the contention of the petitioner that he has a constitutional right to a trial before an Article III court for an offense committed in the District of Columbia.

And second, with deference, I should like to examine, the decision of this Court in the case of Ex parte Bakelite.

Now on the first point, the petitioner contends that he had a constitutional right to be tried before an Article III court and judge for an offense committed here in Washington in the District of Columbia.

We submit that trial for such an offense in the district before a purely legislative court would be constitutional.

That is, we say that no constitutional right of this petitioner was violated even though Judge Jackson was not an Article III judge.

Now, this Court has long recognized and the Congress had recognized that the courts of the District of Columbia perform a dual function, the function of state courts and the functions of regular Federal District Courts.

And pursuant to this doctrine, Congress has provided since early days for the trial of criminal cases arising in the District of Columbia before legislative courts.

As early as 1838, the Congress created in the district what was called a criminal court composed of one judge who did not have life tenure and whose salary was less than that of the District Judge and provided that that judge would try all criminal cases arising in the District of Columbia, all cases in which were involved violations of any law in the District of Columbia.

In 1870, Congress created in the district what was then called the police court which had jurisdiction over all misdemeanor prosecutions concurrently with the District Court.

And that jurisdiction has continued from that day to this.

The name of the court of course hadn't been changed.

The court now have been called -- haven't been changed.

Now, at present, such misdemeanor is triable in this non-Article III legislative municipal court include not only violations of local statutes but violations of general federal statutes which hardly occur in the district would be tried before a Federal District Court which at least made to suggest, may it please the Court.

And perhaps this might have some bearing upon the questions of the Chief Justice.

That the test of the power of Congress to provide in the district for the trial of criminal offenses and before a non-Article III court is not the section of the statute which is involved but rather the venue of the offense.

And if Congress has the right to provide on the trial of all offenses of which the venue is in the District of Columbia before a non-Article III court.

Now, of course, if the reasoning of the petitioner is sound and we suggest that all prosecutions of misdemeanors in this district, perhaps since 1870, had been unconstitutional and void and that frankly is rather hard for me to believe.

We might know it also that of course a defendant worthy tried for a misdemeanor or a felony is entitled to a jury trial to all the guarantees of the Constitution.

Now, I might note parenthetically that the Court in his opinion in Bakelite characterized the then Supreme Court of the District of Columbia as a legislative court.

And yet at that time, the Supreme Court of the District of Columbia exercised jurisdiction over all felony prosecutions here on the district.

So I take it Mr. Gressman will not go along with that portion of the Bakelite opinion.Now --

Justice Felix Frankfurter: What was the tenure advantage Mr. Robb?

Mr. Roger Robb: I beg your pardon?

Justice Felix Frankfurter: What was the tenure of those judges in the Seventh --

Mr. Roger Robb: Life.

Justice Felix Frankfurter: Life.

Mr. Roger Robb: Yes, sir.

Now, coming to my second point, as a lawyer, I have of course an abiding faith that this Court is wiser than I and certainly knows more law than I.

And therefore, it is with some dividends that I suggest that a decision of this Court was mistaken.

However, my duty to my clients requires me to do so in the case of Ex parte Bakelite.

I should like to point out briefly the reasons why we have raised that conclusion.

As Mr. Cox has said in the first place, the jurisdiction invested in the Court of Customs and Patent Appeals by the Tariff Act of 1909 was precisely the same jurisdiction which part of that time had been invested in the Federal District Courts or Circuit Courts which of course were constitutional courts.

Now, the Court in the Bakelite case said that courts established under Article III of the Constitution called constitutional courts share in the exercise of judicial power defined in that section and can be invested with no other jurisdiction.

But turning to the jurisdiction of the Court of Customs Appeals, the court found that that jurisdiction was advisory only.

Now my question is, may it please the Court, if the jurisdiction of the court of -- of the -- of the District Courts was constant -- was that of a constitutional court and those courts could be invested with none other, then I'll pray -- I'll pray can we say that such jurisdiction was not -- not the jurisdiction of a constitutional court when it was transferred to the Court of Customs and Patent Appeals.

It seems to me there is a necessary break in logic in this reason.

Now, we submit that the jurisdiction of the Circuit Courts was plainly judicial, an Article III jurisdiction and it -- and it did not cease to be such when transferred to the Court of Customs and Patent Appeals.

Now, we invite your attention also to the fact that the Payne-Aldrich Tariff Act of 1909 provided that custom cases then pending in the Circuit Courts might be reviewed on appeal by the Court of Customs and Patent Appeals.

Again, we ask, could it be, could it be that a mere legislative court exercising only advisory or administrative jurisdiction could be created by Congress to review the judgments of Federal Constitutional Courts.

We question also the reasoning of Bakelite that the judgments of the Court of Customs Appeals were not judicial for the reason that the matters involved in appeals before that court had been at times confided to executive determination.

We submit that matters which might -- might be confided to such determination may also be the proper business of constitutional courts.

And an example of course, is in cases arising under the Federal Tort Claims Act.

Now finally, on the subject of the custom jurisdiction of the court, we emphasize, as Mr. Cox has pointed out, that only a minute fraction of that jurisdiction was involved in the Bakelite case.

And that fraction was the court's jurisdiction to review on questions of law proceedings leading to a recommendation to the President in the matter of tariffs.

Only six such cases have ever reached the court.

And we think -- think that this particular jurisdiction which by the way was not conferred upon the court until 1922, 13 years after the court -- court was started that this particular jurisdiction, even though it is merely advisory should not taint the entire jurisdiction of the court and should not by its coloration, discolor the entire court.

Now, I see my time is up.

I haven't quite finished my findings.

Chief Justice Earl Warren: You may take another minute to --

Mr. Roger Robb: Thank you, sir.

Chief Justice Earl Warren: -- to finish it.

Mr. Roger Robb: In our brief, may it please the Court, we point out that since the decision or after -- after this Court's decision in the Postum Cereal case.

The statute was changed with respect to patent appeals so that decisions on appeal of the Court of Customs and Patent Appeals now are final.

But apparently, that change in the statute was not called to the attention of this Court at the time of the argument in Bakelite.

And we think it's a very important one.

We have discussed these matters in our brief at further length and I should (Voice Overlap) --

Justice Hugo L. Black: I want to ask you one question.

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: With reference to the first part of your argument.

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: You drew distinctions along the line of difference between a legislative court and an Article III court.

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: I don't -- I find it difficult to decide, difficult to follow that what you meant by that in this respect -- in this respect, I understood you to say that the District of Columbia, a man could be tried for what you call a legislative court.

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: And one wherein could be tried -- which could only be tried in places outside of the District Court.

In other words --

Mr. Roger Robb: Yes.

Justice Hugo L. Black: -- define that murder case.

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: Could you tell me what is (Inaudible)?

In the structure, in the -- the significant in the structure --

Mr. Roger Robb: Well --

Justice Hugo L. Black: -- or in the method of administering the (Voice Overlap) --

Mr. Roger Robb: What I meant to say Mr. Justice Black was that certain violations of general federal statues which do constitute misdemeanors which if they occur here in the district may be tried for -- before the lower court, the statutory court whose judges do not have life tenure.

However, if those offenses occurred in a district, they would necessarily be tried in the Federal District Court.

Justice Hugo L. Black: You draw your distinction there between a misdemeanor and something else.

Suppose its murder, what's the difference?

What could be the difference as the way it functions?

Someone will operate --

Mr. Roger Robb: Any --

Justice Hugo L. Black: -- forgetting the word legislative Article III --

Mr. Roger Robb: Any --

Justice Hugo L. Black: -- and everything else.

Mr. Roger Robb: Any murder case of course would be tried before our District Court here.

Justice Hugo L. Black: Well, I understood you to say though it could -- the cases could be tried differently as the man and the people in other states and places, had to be tried by the federal court one way for their crime but could be tried a different way, crime generally could be tried a different way in the District of Columbia.

Mr. Roger Robb: I don't think I intend to say that, Mr. Justice Black.

Of course -- of course the procedure would be the same.

My only point was that where the venue of any offense is -- is here in -- in Washington D.C. is that offense is a misdemeanor.

The offender is tried before to lower court.

Justice Hugo L. Black: Are you talking about how it is done?

Mr. Roger Robb: Yes, sir.

Justice Hugo L. Black: Suppose it's a murder, are you taking, as I gather, you have drawn in distinction between the way people could decide constitutionally --

Mr. Roger Robb: Yes.

I say --

Justice Hugo L. Black: -- in the district and outside.

Mr. Roger Robb: I would say Mr. --

Justice Hugo L. Black: Could there be?

Mr. Roger Robb: I would say, Mr. Justice Black, that if -- that in the case of a murder, the Congress if it wished to do so as it has done in the past, as it did it -- as it did back in 1838, Congress couldn't provide that such cases should be tried before a court in the District of Columbia whose judges did not have life tenure.

Justice Hugo L. Black: Is there -- is your case dependent on that?

Mr. Roger Robb: Well, my point was that since Congress has that power, this petitioner has no constitutional right to be tried for robbery before a judge having life tenure or before a judge of a constitutional court, if you want to put it that way.

That was my point.

Justice Hugo L. Black: If the argument has been made on the side you are on, leads to the conclusion that people charged with felony or a crime can be tried one way under the Constitution in the District of Columbia, another way in the -- outside of the District of Columbia to the disadvantage of either that would raise different questions so far as I'm concerned.

Mr. Roger Robb: That is correct.

May it please the Court, but I -- I think perhaps if I might say so, the catch in Your Honor's -- in Your Honor's position is --

Justice Hugo L. Black: I don't intend evidently.

Mr. Roger Robb: Oh, no.

Justice Hugo L. Black: I'm trying to find what you meant.

Mr. Roger Robb: Yes -- yes sir.

I think perhaps the -- the -- the point is that I do not believe it -- it is to the constitutional disadvantage of the petitioner in this case or would be.

Justice Hugo L. Black: You mean to be tried by a judge not appointed for life as independent as you know constitutionally --

Mr. Roger Robb: That's been done --

Justice Hugo L. Black: -- right to there -- in the District of Columbia?

Mr. Roger Robb: All I can say is, Your Honor, that it -- it has been done in the District of Columbia in the past by Congress starting in 1838.

And of course that -- that question doesn't necessarily arise here because we have a judge who was appointed for life.

Justice Hugo L. Black: I -- that's what I thought.

Mr. Roger Robb: Yes, sir.

So, I would say that perhaps -- perhaps the question isn't -- isn't here in this case.

Justice Hugo L. Black: Well, I hope it's not.

Mr. Roger Robb: Well --

Justice Hugo L. Black: But I can't see is that if the whole argument is based on that assumption --

Mr. Roger Robb: Whole?

Oh, no.

Justice Hugo L. Black: -- it is not here.

Mr. Roger Robb: Oh, no, sir.

Oh, no.

Oh, no, not indeed.

No indeed sir.

My point merely was in the past that was done.

I think that threw some light upon the present situation.

But here in this case, we do not have a judge.

We do not have a question of a man being tried for murder before a judge who serves only for fix term of years, which I can see it might make a difference.

Justice John M. Harlan: Well, the Solicitor General says that he makes that either inconsiderable the Congress could do it, could provide.

Mr. Roger Robb: I beg your pardon?

Justice John M. Harlan: The Solicitor General meets Justice Black's question had on by saying that for a local crime in the District of Columbia, Congress could provide for a trial written through an Article III judge in the sense of one having (Inaudible).

Justice Felix Frankfurter: And so do you.

Mr. Roger Robb: Yes, sir.

Justice John M. Harlan: -- (Voice Overlap) -- backing away from that argument --

Mr. Roger Robb: No, sir.

I'm not backing away from our --

Justice John M. Harlan: So your case doesn't involve it.

Mr. Roger Robb: No, sir.

I --

Justice Felix Frankfurter: But you've said it explicitly that you agreed in that.

Mr. Roger Robb: That's correct, I do.

Justice Potter Stewart: The Congress not only could do it but did do it.

Mr. Roger Robb: They did do it in the past, yes.

Justice Potter Stewart: In the 19th century.

Justice Felix Frankfurter: The other way around is Justice Black's trouble --

Mr. Roger Robb: But --

Justice Felix Frankfurter: -- the other way around is important too.

Not that Congress did it, but couldn't.

Justice Hugo L. Black: That's my problem.

Mr. Roger Robb: I think they could Mr. Justice Black --

Justice Hugo L. Black: Sometimes --

Mr. Roger Robb: -- and they have.

Justice Hugo L. Black: -- sometimes they say that Congress could not do it that way.

Mr. Roger Robb: Now, of course, may it please the Court, if the man were tried in a state court for murder, he would very -- and unusually is tried before a judge who doesn't serve for life.

Justice Hugo L. Black: Well that's a state court.

Mr. Roger Robb: That's correct.

Justice Hugo L. Black: The District of Columbia is not a state.

Mr. Roger Robb: Oh, no.

But Congress at this point --

Justice Felix Frankfurter: -- (Voice Overlap) -- was that -- what pre-held in Tidewaters.

Mr. Roger Robb: As this Court has said, Congress, may it please the Court, Congress acts as a state legislature for the District of Columbia and has done so.

Justice Hugo L. Black: If that -- if by that is mean that people in the district must be -- can be tried for crimes precisely the argument in state, they can be tried in the state according to this Court's previous opinion without an indictment, without a jury and as you say without judge appointed for life.

Justice Felix Frankfurter: I would -- I would say, may it please --

Justice Hugo L. Black: Do you say that that can -- that the people of the district can be tried without juries?

Justice Felix Frankfurter: No, sir.

Justice Felix Frankfurter: (Voice Overlap)

Justice Hugo L. Black: -- (Voice Overlap) -- different.

Mr. Roger Robb: Because this Court has so held.

Justice Hugo L. Black: The -- they can in state.

Mr. Roger Robb: Because, may it please the Court, as this Court has said emphatically, the District of Columbia is subject to the first 10 Amendments of the Constitution and jury trial is guaranteed.

This Court said that specifically in the Keller case, pointed that out and although, for instance we can -- a man may be tried here for a misdemeanor before a judge who served for only 10 years.

Nevertheless, he has the right to a jury trial.

Justice Hugo L. Black: Well then of course, you are not saying that the people here can be tried as they are tried in the state.

Mr. Roger Robb: No sir, not entirely.

No, sir.

Justice Hugo L. Black: Just according to a pick and choose method.

Mr. Roger Robb: No, sir.

I say that where the Bill of Rights specifically guarantees a man a right here, he gets it.

But when he doesn't, then that's the question.

Justice Hugo L. Black: Suppose one thought that the Bill of Rights including your whole Constitution, includes the right to be tried by a judge appointed for life independently --

Mr. Roger Robb: Well --

Justice Hugo L. Black: -- what about that?

Mr. Roger Robb: Well, then -- then of course the Court would say I was wrong.

Chief Justice Earl Warren: Mr. Gressman.

Argument of Eugene Gressman

Mr. Eugene Gressman: Mr. Chief Justice.

In the few minutes remaining in me, I like to briefly discuss several points mentioned by the Solicitor General.

In the first place, and then align with the discussion that just taken place, I challenge the right of Congress to provide that a crime -- that a felony can be tried in the District of Columbia other than before an Article III court or an Article III Judge.

This Court has never said to my knowledge that a person charged with a felony in the District of Columbia may be tried before a legislative court or a legislative judge.

Now, I think there are serious questions, serious constitutional questions raised by any assumption or by any effort by Congress to provide that the person accused in the district of a serious felony crime is not entitled to the constitutional independence of a judge assigned to sit in judgment of that case.

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: Well that brings into a consideration -- entirely different line of factors, namely, the historical difference recognized between felonies and misdemeanors and the historical doctrine which has always been recognized that in misdemeanors may be tried before petty courts.

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: But --

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: That is true.

That comes under the district clause of the constitution authority.

But I do not concede that when a felony is involved that that district clause necessarily gives the authority to Congress to establish that the crime maybe tried before the municipal court.

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: No.

The Constitution Article III provides that you may have cases heard arising under the laws of the United States.

And this Court has held consistently and the Court of Appeals has held that a crime against the District of Columbia is a crime against the United States and that the District Code is a law of the United States under -- within the meaning of a constitutional phrase.

Now, it seems to me that --

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: Well, that comes then into your historical and always a recognized exception solely in terms of misdemeanors.

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: Well, at least as far as congressional legislation but that doesn't mean that that was necessarily a constitutionally recognized distinction or lack of distinction.

Justice Felix Frankfurter: We should heed common law history but not American history, is that right?

Mr. Eugene Gressman: Well, I'm saying that --

Justice Felix Frankfurter: History of more than 100 years.

Mr. Eugene Gressman: Well, that -- that was a -- at the very beginning of the operation of the district and it was soon changed.

Justice Felix Frankfurter: But I --

Mr. Eugene Gressman: As I recognized it --

Justice Felix Frankfurter: But I should hope -- I should suppose that in the earlier days, the Congress probably knew as much as judges, has much part of the Constitution as we know now.

Mr. Eugene Gressman: Well, that may well be true.

But I suggest that to make a distinction as to felony crimes as between those accused of felonies in the District of Columbia and those in other parts of the country called before Federal District Courts is to create again a most serious discrimination because Your Honors are well aware of the fact that there is an assimilative crime statute which provides that -- that -- giving jurisdiction to Federal District Courts all around the country to try serious felony crimes committed on felony -- on federal property.

And any person accused and tried in a Federal District Court in Kentucky for the crime of burglary or robbery or murder committed at Fort Knox is certainly entitled to a trial on that charge before an Article III judge and an Article III court.

And I sub -- and that too, the power to provide for such trials comes again out of Article I Section 8 Clause 17, the same clause, the same Section of the Constitution which is involved in this case, the District of Columbia Clause, the Clause that gives Congress the power to legislate and provide for situations arising on other federal property.

But again, this problem need not be reached.

The Solicitor General is so anxious to avoid to -- to a constitutional question.

It seems to me that this is another problem that can be avoided because the plain fact, undeniable fact is that we are not dealing with what Congress might have done with respect to the trial of felonies, we are dealing with Congress -- what Congress has done to it.

Unknown Speaker: (Inaudible)

Mr. Eugene Gressman: I have this constitutional challenge that the petitioner makes, goes to -- to the validity of that 1922 statute as elaborated in 1958 and the expansion thereof but it seems to me that the Bakelite case gave warning in 1929 that there might be serious constitutional questions about such assignments.

Justice Felix Frankfurter: But I thought Justice Lamberth had said that the answer to the argument was, but he got the 1922 statute for purposes of assignment in the district.

I --

Mr. Eugene Gressman: Well he said --

Justice Felix Frankfurter: I can't read that otherwise on the last page of his opinion.

Mr. Eugene Gressman: He's --

Justice Felix Frankfurter: He's indicating that he thought it's alright for them to sit in the District Court.

Mr. Eugene Gressman: Well, there you get you -- Your Honor into the other elaborating problem in the Bakelite, which as you are well aware, referred to the District of Columbia Courts as legislative courts which was later expressly overruled in the O'Donoghue case.

Justice Felix Frankfurter: I know.

Mr. Eugene Gressman: So that you -- we have this -- this is not a matter of complete consistency in -- in rulings and determinations.

Justice Felix Frankfurter: But that's what I've been trying to suggest to you all through your arguments.

Mr. Eugene Gressman: But I would say in conclusion, Your Honor, that there is a consist -- a line of consistency that runs through the opinion of this Court in which constitutes, it seems to me, the key to this entire case.

And I think its best expressed at page 579 of the Williams case in 289 United States which again reiterates that precise demarcation which I have tried to develop in this case.

And again, Justice Sutherland, speaking for unanimous court in that case goes back to Murray's Lessee against Hoboken Land and Improvement Company and points out by quotation that there are certain matters which once invoked by Congress absolutely require judicial determination and cannot be delegated to any other agency of the Government.

And at the -- on that time -- and at the same time, there are matters involving public rights growing out of Article I which Congress can as it sees fit, give either to an administrative and executive or a legislative or even a judicial arm of the Government.

Now, if it does only the latter such as it -- the Court said in the Williams case, since all matters were made cognizable by the Court of Claims are equally susceptible for -- of legislative or executive determination.

They are of course matters in respect of which there is no Constitutional right to a judicial remedy.

And the Court thereby does not become one created or authorized to exercise Article III judicial power.

Now, this -- this maybe esoteric considerations but at the same time, they are considerations that go to the very heart of the separation of powers doctrine.

Justice Felix Frankfurter: You couldn't possibly justify the Commerce Court on that general talk of Justice Sutherland because that court had nothing but a jurisdiction which need not have been conferred on Court.

Mr. Eugene Gressman: Exactly, but they had one other thing, Your Honor, and this I think was critical that judges that were selected for that court were not only given jurisdiction.

Justice Felix Frankfurter: Yes, but the Court wasn't -- the Court wasn't.

Mr. Eugene Gressman: We are talking about judges Your Honor in this case.

Justice Felix Frankfurter: I'm saying that therefore the Commerce Court was not a constitutional court.

Mr. Eugene Gressman: I am saying Your Honor that the judges thereof were Article III court judges because they were not only given jurisdiction and power to execute the functions of the Commerce course -- Court.

They were expressly given the authority by statute and in -- to exercise the authority of the regular circuit and district judges.

And they were to be assigned thereto with the expressed power having been given to.

Justice Felix Frankfurter: But Mr. Gressman, if that same statute were passed today and I was sitting on the Court of Appeals and I were appointed by the President of the United States whereas to sit on the Commerce Court, I could say very respectfully as John Jay did to Washington, you're asking me to perform non-Article III duties and to a great respect, I decline to do so.

Mr. Eugene Gressman: Well, this precise situation arose with the Emergency Court of Appeals.

They superimposed upon Article III judges as in the sense -- as exactly what they did in the Commerce Court, they impo -- superimposed upon judges qualified to exercise Article III powers and additional function.

Justice Felix Frankfurter: We're talking across purposes.

I'm saying that they couldn't superimpose on me with the enlightenment you've given me, duties to serve on a court which is not a constitutional court.

Mr. Eugene Gressman: Well, I think it's constitutional for the sense that -- in the sense that the judges or you would already have Article III judicial power.

Justice Felix Frankfurter: Yes, but there is a difference between a tribunal and the members there are.

Mr. Eugene Gressman: Exactly.

Justice Felix Frankfurter: And if the tribunal is charged with delegable duties so that which Congress as to the Emergency Court could've left with the Food Administrator or the Secretary of Agriculture, a tribunal was created according to your insistence that was not of an imperative judicial nature and no federal judge could be compelled to serve a tribunal of an imperative non-judicial nature.

Mr. Eugene Gressman: Well, if the court --

Justice Felix Frankfurter: I'm trying to learn from your lesson.

Mr. Eugene Gressman: If the court and the judges thereof are established for the sole purpose, the sole purpose of exercising this ambiguous --

Justice Felix Frankfurter: And they can do it?

Mr. Eugene Gressman: -- ambivalent jurisdiction.

Justice Felix Frankfurter: Can they --

Mr. Eugene Gressman: I --

Justice Felix Frankfurter: -- do it then?

Mr. Eugene Gressman: -- say it is not an Article III court.

But if they want to give this ambivalent jurisdiction to Article III courts or to judges who are already qualified under Article III, that is perfectly permissible.

That's the basic distinction.

Justice Felix Frankfurter: It isn't because Hayburn's case said we wouldn't do it.

Hayburn's case refused to do it, the judges refused to exercise that power, why?

Because that which they were asked to do are subject to review by the Secretary of the Treasury.

Mr. Eugene Gressman: Then that's another line -- that's another line of distinction.

If you're going to try to impose on an Article III judge, what is not a case or controversy or what is not judicial at all in nature.

Justice Felix Frankfurter: But I'm -- according to your definition, the Commerce Court was not a judicial body in the sense of Article III.

Because --

Mr. Eugene Gressman: No.

Justice Felix Frankfurter: -- it's jurisdiction, I'm not talking about the judges, its jurisdiction -- it was given jurisdiction over matters which need not have been conferred on a court.

Mr. Eugene Gressman: Well, only in the same sense that the Emergency Court of Appeals was a specialized tribunal.

Justice Felix Frankfurter: That's equally subject to your condemnation.

Mr. Eugene Gressman: No, Your Honor because it seems to me those are the only two exceptions in all American history where Article III judges previously qualified to exercise Article III judicial power have had given to them in the -- in the format of a specialized tribunal superimposed upon them, this ambivalent jurisdiction.

Justice Felix Frankfurter: I understand all that but it doesn't deal with your argument which I thought of -- sent to it -- you said it's sent to it.

Mr. Eugene Gressman: Right.

Justice Felix Frankfurter: -- that a court -- that as a party isn't a judge free tribunal unless it has been given by Congress the jurisdiction which necessarily must be given to court.

Mr. Eugene Gressman: And I think it also -- the judges at the same time.

Justice Felix Frankfurter: Alright.

Mr. Eugene Gressman: Thank you (Inaudible).

Chief Justice Earl Warren: Mr. Gressman, the -- the Court takes notice of the fact that you're appointed by the Court of Appeals to represent this indigent defendant and that you've not only carry it through your obligation there what you've done here in a very extensive and a very able way and we're very grateful to you for what you have -- what you have done.

We thank you -- we thank you Mr. Robb for your representation of -- of the Court of Customs and Patent Appeals and of course, you, Mr. Solicitor General for your helpful manner representing the Government.

Featured:

Glidden Company v. Zdanok - Oral Argument, Part 2

Tue, 25 Sep 2012 22:34:18 +0000

Case:

Glidden Company v. Zdanok

Media File:

242_19620226-argument-2

Related Transcript:

242_19620226-argument-2

Transcript:

Argument of Chester Bordeau

Chief Justice Earl Warren: The Glidden Company, Incorporated, Petitioner, versus Olga Zdanok, et al.

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

Chief Justice Earl Warren: Mr. Bordeau.

Mr. Chester Bordeau: On our last session which was on Wednesday, February 21st, we were in this posture that Mr. Justice Whittaker, as I recall, had put the question as to what was an Article I court.

And I made reply to the question of Mr. Justice Whittaker by stating that in my opinion, from the rulings made by this Court in Bakelite and in Williams, that the answer was a -- that Article I court was a court which performed the functions and the powers of Congress.

Functions which were cognizable by Congress.

Functions and powers which were susceptible of performance by Congress and not requiring judicial determination.

I think that is a rule that might be deduced from the statements of this Court in the Bakelite and in the Williams cases.

I believe that the rules stated there are sound.

I believe that they are sound for these reasons.

In that -- in those cases, there was a very careful review made by the members of this Court with respect to the history and res -- and with respect to the powers and functions of the Court of Appeals.

It was established, I submit, that the Court of Claims performed only those functions and powers which were adherently the functions and powers of Congress under Article I.

I think it was established also the -- from the debates of the Congress in 1854 and 1855 that the purpose for the creation of the Court of Claims was to relieve the Congress of the heavy burden which had come upon it by reason of presentation of bills.

Justice John M. Harlan: Could I ask you a question?

At the time the case was argued at the Court of Appeals, had the Lurk case as it first came to this Court been decided?

Mr. Chester Bordeau: I believe the -- I don't think so, Your Honor.

I don't know definitely.

Justice John M. Harlan: What I'm trying to get at is (Voice Overlap) --

Mr. Chester Bordeau: I know.

Justice John M. Harlan: I was wondering why this claim wasn't made before the Court of Appeals.

Mr. Chester Bordeau: Well, frankly, we didn't know about it, that's a frank answer to your question.

We did not know about it.

The -- our case was argued in February of 1961.

And I believe that the petition in the Lurk case was on May 29, 1961, some two or three months later.

But to answer your question, Mr. Justice Harlan, we didn't know of the existence --

Justice John M. Harlan: (Voice Overlap)

Mr. Chester Bordeau: -- of this objection.

Justice John M. Harlan: A very frank answer.

Mr. Chester Bordeau: Now, in 1929, the Bakelite case.

Decided in 1933, the Williams case.

Justice Felix Frankfurter: Would you mind stating again what -- what you -- what reliance you'd place on the debate which you referred a minute ago?

What do those debates show?

Mr. Chester Bordeau: Those debates show, Mr. Justice Frankfurter, that the purpose -- the purpose, which was referred to over and over again in the debates in 1854 or 1855 was to create a court for the purpose of relieving the Congress of the very heavy burdens which have been placed upon it in connection with the presentation of bills for the payments of moneys or payments of debts of the United States and the consideration thereof.

I have a -- at page -- I think it's one -- page 16.

Justice Felix Frankfurter: I take the word for it.

Suppose Congress had chosen instead of creating a separate court.

Suppose Congress had chosen to confer that jurisdiction to the existing district of Circuit Courts of the United States exclusively no -- no separate Court of Claims, would that have been the conferment of Article III jurisdiction upon the federal court.

Mr. Chester Bordeau: I believe the -- I submit the answer could be to your question, Mr. Justice Frankfurter, that Congress could have delegated to the inferior courts created by Congress under Article III the performance of the function --

Justice Felix Frankfurter: Well, does that make a difference -- does it make a difference to the characteristic, the judicial significance in judicial powers sense, in Article III sense that it established the separate court to which that jurisdiction was given exclusively?

Would that make a difference to the content of what the business was in order to determine whether it was or wasn't judicial power?

Mr. Chester Bordeau: I believe it does, sir.

Justice Felix Frankfurter: It does?

Mr. Chester Bordeau: And for this reason that in the creation of inferior courts and the establishment of this inferior courts under Article III, I submit that the distinction in carrying between the two courts is this, that an Article III court possesses the power and the function to pass upon cases and controversies which are not susceptible to determination by an Article I court that would be, for instance, a -- a controversy between the parties in this case.

The Glidden Company and the Zdanok an agree -- a breach of contract case, a breach of a collective bargaining agreement, I say that type of case, of course, could not be heard or determined by Congress.

Justice Felix Frankfurter: But --

Mr. Chester Bordeau: Is not cognizable by it.

Is not susceptible to determination by Congress and it requires a suggestion in the Bakelite and Williams cases a judicial determination under Article III, a court that determines cases and controversies which are not susceptible and which are not cognizable by an Article III cou -- or by Congress.

Justice Felix Frankfurter: Or -- or the inference I would draw --

Mr. Chester Bordeau: (Voice Overlap)

Justice Felix Frankfurter: The inference I would draw from what you've just said is that there may be matters, argumentatively to agree with me, there may be matters conferred on courts created under Article I which are not "judicial power in the sense of Article III."

But what entitles you to the logical or the reasonable inference that because some tribunals can be created under Article I and give them authority to -- to decide, avoid the word adjudicate, to decide which wouldn't be given to Article III courts that things that could be given to Article III courts can't be vested in a specialized court?

Mr. Chester Bordeau: Well, I -- I don't know that I understand your question but I will --

Justice Felix Frankfurter: What I'm saying is, what is there in, excuse me -- was in there in Article III which prevents Congress from establishing Article III courts and vesting in them limited jurisdiction.

What is there in Article III --

Mr. Chester Bordeau: I --

Justice Felix Frankfurter: -- that says what would have prevented Congress from 1789 or if you please, tomorrow to create separate courts of equity, giving them exclusively equitable jurisdiction in other courts, giving them exclusively jurisdiction on the lower side?

What is there in Article III that so fetters and confines Congress?

Mr. Chester Bordeau: I don't think there is anything in Article III which prevents Congress from vesting in an Article III court the performance of some of the functions and powers which are susceptible of performance by the Congress.

I don't believe that's true.

But I think if we're going to have legislative courts and Article III court --

Justice Felix Frankfurter: Well, but you evade the question as soon as you talk, put a label on it called legislative courts.

Mr. Chester Bordeau: Well --

Justice Felix Frankfurter: What makes them legislative courts --

Mr. Chester Bordeau: What makes the legislative --

Justice Felix Frankfurter: -- in your sense?

Mr. Chester Bordeau: In my thinking Your Honor?

Justice Felix Frankfurter: Not in your thinking but in your sense of legislative courts namely --

Mr. Chester Bordeau: (Voice Overlap) -- I think --

Justice Felix Frankfurter: -- jurisdiction that can't be conferred on Article III court.

Mr. Chester Bordeau: I say where a court performs solely those functions which are the functions of Congress that that court is an Article I court, where it performs those functions inherently the functions and the powers of Congress under Article I and nothing else.

I say that court is an Article I court.

Justice Felix Frankfurter: Well then, if I understand you, Congress can confer its legislative function of settling claims against the United States on Article III courts.

Is that right?

Mr. Chester Bordeau: It's correct.

Justice Felix Frankfurter: It can do it.

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: But if it conjoins with that other things then its judicial power or va -- or the converse if it convert -- if it exclusively limits the court to that which Congress could do legislatively then it isn't a court.

Mr. Chester Bordeau: It is not a --

Justice Felix Frankfurter: Is that right?

Mr. Chester Bordeau: I don't see it's not a court.

Justice Felix Frankfurter: I mean it's not an Article III court.

Mr. Chester Bordeau: It's not an Article III court.

Justice Felix Frankfurter: And how do you get that out of Article III?

Mr. Chester Bordeau: I get that from Article III from the decisions made by this Court.

Justice Felix Frankfurter: But we are now re-canvassing the local (Voice Overlap) --

Mr. Chester Bordeau: And -- well, that's what I wanted to address myself to as to the soundness of the rulings of this Court in Bakelite and in Williams and in the subsequent decisions of this Court to which reference was made the mem -- some of the members of this Court who are sitting here today.

I -- if I may proceed from that point, in the year 1941, this Court had before it the case of Sherwood against the United States.

On that Court, Mr. Justice Black sat, Mr. Justice Frankfurter sat and Mr. Justice Douglas sat.

And that court had before it the question as to whether or not a United States District Court could entertain jurisdiction of a suit commenced by a judgment creditor of a claimant against the United States, a claimant who had claim under the Tucker Act.

The Court held that this Court could not -- the U.S. District Court could not entertain jurisdiction of such a suit.

The reason being that in that suit, they had to be made a defendant another party, that was the judgment debtor.

And it was stated by this Court that in view of that additional feature, that someone else had to be made a party defendant to that lawsuit meant that we did not have just a clear waiver of sovereign immunity where the United States could be sued.

Justice William O. Douglas: What was the citation to that?

Mr. Chester Bordeau: That citation is 312 U.S., Your Honor.

Now, in that case, Mr. Justice Stone delivered the opinion of the Court.

And I would just like to quote very briefly from the statement concurred in by unanimous court incidentally.

As I say concurred in by Mr. Justice Black, Mr. Justice Frankfurter and Mr. Douglas -- Justice Douglas.

The Court acclaimed it is a legislative not a constitutional court.

Its judicial power is derived not from the judiciary article of the Constitution but from the congressional parter -- power to pay the debts of United States which it is free to exercise through judicial as well as through non-judicial agencies.

That was concurred in as I -- unanimous opinion concurred in by Your Honor, Mr. Justice Frankfurter.

Justice Felix Frankfurter: I'm sure you could bring many commission -- commissions of error against me.

That doesn't make it right --

Mr. Chester Bordeau: I don't think --

Justice Felix Frankfurter: -- you know.

Mr. Chester Bordeau: I won't agree to that.

Now, in 1949, this Court also had another case.

Justice Felix Frankfurter: Was there anything that mattered with that decision?

Mr. Chester Bordeau: With the --

Justice Felix Frankfurter: As a decision --

Mr. Chester Bordeau: -- Judge Stone?

Justice Felix Frankfurter: As a decision, not the talk but a decision.

Mr. Chester Bordeau: I think the decision in the Sherwood case is correct.

Justice Felix Frankfurter: And unrelated to this problem?

Mr. Chester Bordeau: Unrelated to this problem but I think that the statements which I have read were appropriate and necessary considerations on the part of this Court in coming to the conclusion to which it gave.

Now, in 1949, this Court had before it the National Merit -- what's the name of that case?

Justice Felix Frankfurter: Tidewater.

Mr. Chester Bordeau: The National Mutual Insurance Company against the Tidewater.

Your Honors will recall that in that case, there were four opinions written.

There were two majority opinions and two dissenting opinions.

Justice Felix Frankfurter: May I correct you?

Mr. Chester Bordeau: If you may call on that.

Justice Felix Frankfurter: May I correct you?

There were two opinions contradicting one another to both of which --

Mr. Chester Bordeau: Yes.

Justice Felix Frankfurter: -- totaled up to a contradictory but ex --

Mr. Chester Bordeau: That's --

Justice Felix Frankfurter: -- inclusive result.

Mr. Chester Bordeau: That's exactly correct.

Now, in that -- in that case, -- in that case, Your Honors, there was reference made in the opinion of Mr. Justice Jackson who wrote one of the prevailing opinions, joined in by Mr. Justice Black and by Mr. Justice Burton.

There was a concurring opinion written by Mr. Justice Rutledge concurred in by Mr. Justice Murphy.

A dissenting opinion by Mr. Chief Justice Vinson, joined in by Mr. Justice Douglas.

And another dissenting opinion written by Mr. Justice Frankfurter concurred in by Mr. Justice Reed.

Now, in that case, references were made to the determination made by this Court in the Bakelite and in the Williams cases.

There was no disapproval of the rulings made by this Court in the Bakelite and Williams cases except possibly with respect to a matter to which I shall refer later in our argument but I will advert to very briefly at this time.

And that is that there was disagreement with the expressions contained in the opinion of Mr. Justice Sutherland in the Williams case to the effect that that provision in Article III, Section 2 of Article III providing for controversies to which the United States to be a party.

With reference to which Mr. Justice Sutherland stated that that was to be construed that where the United States was a party plaintiff and not a party defendant.

Now, that statement in the Williams case was not approved by the members of this court in the discussions in the Tidewater case but it defies the holding that the Court of Claims was a legislative court.

There was no expressions contained in any of the opinions in that case although reference was made to the Williams case as to its not being approved by this Court.

Now, an attempt is now being made to overrule or to have this Court or to ask this Court to overrule both the Bakelite and the Williams case, the Williams case in which I am particularly interested.

One of the first reason that it is urged for the overruling of the Williams case is this, it is said that the -- this Court in the Williams case, disregarded the earlier rulings of this Court with respect to the Court of Claims, if not the rulings at least the views expressed by this Court with respect to the Court of Claims.

Now, the fact is that in the cases earlier like Bakelite or Williams, there was no discussion, there was no consideration of the question as to whether or not the Court of Claims was an Article I or an Article III court.

There were statements made by members of the court to the effect that the Court of Claims was a constitutional or Article III court.

But there was no discussion in the briefs.

There was no discussion in the opinions and no consideration given to the specific point as to whether or not the Court of Claims was an Article I or an Article III court.

It was not until 1929 when this Court considered the Bakelite case where the very full discussion was given with respect to the United States Court of Customs and Appeal or Custom Appeals was engaged in and also a very thorough discussion with respect to the Court of Claims.

What was said of course with respect to the Court of Claims was very enlightening and very inspective but was not before the court in the Bakelite case.

Although it was so inherent and so inter-involved with the determination as to what the U.S. Customs and Court of Appeals was, I believe it was proper, quite proper for a full discussion to be made with respect to the Court of Claims.

And in 1933, of course, there was a specific consideration of the question as to whether or not the Court of Claims was an Article I or an Article III court.

For in that case -- for in that case that this court had for determination whether or not legislation which had been passed providing for the reduction in the pay and the remuneration and compensation of judges of the Court of Claims could be effectively made.

It was urged on behalf of Judge Williams who was the plaintiff in that case in the Court of Claims which was moved to this Court immediately, that he was a constitutional or Article III court judge.

And therefore, under the provisions of Article III of the Constitution, guaranteeing him life tenure and irreducibility in salary or compensation that this legislation was unconstitutional.

Justice Felix Frankfurter: Would you --

Mr. Chester Bordeau: The question was squarely put in that case and squarely considered and squarely and fully briefed by the parties to the suit.

Justice Felix Frankfurter: Would you -- how do you explain why what I think is the real -- the real difficulty, with the Court of Claims as a so-called constitutional court has never been canvassed or urged by counsel namely, that its judgments are entirely of the caprice of Congress?

Mr. Chester Bordeau: Well, I don't know that so anymore, Your Honor.

I think that was true at one time.

I don't think that's true --

Justice Felix Frankfurter: But do you say this is --

Mr. Chester Bordeau: I think the judgments today and they have been for some years have been final.

I don't think they're subject to the approval of Congress --

Justice Felix Frankfurter: Of Congress.

-- except insofar as --

Justice Felix Frankfurter: Congress can --

Mr. Chester Bordeau: -- appropriation may be necessary --

Justice Felix Frankfurter: Well --

Mr. Chester Bordeau: -- for purpose of carrying the judgment into effect.

Justice Felix Frankfurter: But your exception knits -- knits up the whole principle.

Congress --

Mr. Chester Bordeau: That's true in Article III courts, too, Mr. Justice Frankfurter.

Judgments against the United States in an Article III court.

There still has to be appropriations --

Justice Felix Frankfurter: Well, I know but --

Mr. Chester Bordeau: -- before any judgment can be paid.

Justice Felix Frankfurter: But Article III courts so-called, the ordinary District Courts in courts of -- in Circuit Courts -- the old Circuit Courts and the Courts of Appeal and this Court are not exclusively preoccupied with adjudications against the Government involving exclusively money judgments against the Government to which Congress can whistle.

Mr. Chester Bordeau: Oh, I think that's correct.

Justice Felix Frankfurter: (Voice Overlap) you may --

Mr. Chester Bordeau: But I think that's also true if I -- if I may submit.

I think that's also true of judgments that may be entered in Article III courts in (Inaudible) --

Justice Felix Frankfurter: Yes, but if you cut away those judgments for the Court of -- Court of Claims, you've got nothing there.

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: Except advisory opinions --

Mr. Chester Bordeau: That's --

Justice Felix Frankfurter: Frankly, advisory opinions.

But if you cut away that jurisdiction of the District and Circuit Courts and Courts of Appeals and this Court, you got a vast amount of jurisdiction there.

Mr. Chester Bordeau: Oh, I -- I agree with that and I --

Justice Felix Frankfurter: Therefore --

Mr. Chester Bordeau: And that --

Justice Felix Frankfurter: Therefore the fact --

Mr. Chester Bordeau: That may be -- that may --

Justice Felix Frankfurter: The fact that the Court of Claims' judgments are entirely at the grace of Congress except insofar as a moral -- a moral claim behind it, doesn't apply to the regular courts of United States.

Mr. Chester Bordeau: Oh, I think -- I think its part --

Justice Felix Frankfurter: I'm not suggesting that that is (Inaudible) --

Mr. Chester Bordeau: I mean --

Justice Felix Frankfurter: -- an answer to my problem.

But what I'm suggesting --

Mr. Chester Bordeau: No.

Justice Felix Frankfurter: -- that seems to me a real basis for attack.

Mr. Chester Bordeau: But I'm -- I'm afraid -- I'm afraid of this sir in -- that in your statement, Mr. Justice Frankfurter, there is a statement of the fact that with respect to judgments entered in the Court of Claims, that an appropriation is still necessary for the purpose of satisfying the judgment.

And I may be wrong about this but I think the same is true with respect to judgments entered against the United States in the U.S. District Court.

Justice Felix Frankfurter: But I've given you the answer to that.

Suppose therefore, some astute counsel one of these days will say that jurisdiction conferred on the federal courts through the Tucker Act confer a so-called jurisdiction which had the defect namely, that the judgment is merely a moral leading by the court, federal courts and Congress may disregard that.

Suppose the Tucker Act jurisdiction was cut away from the federal courts, has all the jurisdiction left on the bankruptcy, admiralty, patents, diversity jurisdiction, constitutional questions which we decide everyday almost or every Monday.

All that's left, when if that effect is a -- is a valid effect then nothing is left of the Court of Claims.

Mr. Chester Bordeau: Well I think -- I think there is subs --

Justice Felix Frankfurter: It had no tort jurisdiction.

It has exclusively contract --

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: -- jurisdiction against the United States.

Mr. Chester Bordeau: Only against the United States.

Justice Felix Frankfurter: Each of which involves a judgment which for all that Congress is concerned can be a piece of paper.

Mr. Chester Bordeau: And it's --

Justice Tom C. Clark: It comes back to jurisdiction, doesn't it?

Mr. Chester Bordeau: Pardon?

Justice Tom C. Clark: Does it have to attack jurisdiction?

Mr. Chester Bordeau: I think not.

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Chester Bordeau: I think I have listed, Mr. Justice Clark, in my -- the appendix to our main brief the various jurisdictional matters that are granted to the Court of Claims and I don't see anything about taxes there.

I don't re --

Justice Felix Frankfurter: There is, involving a tax issue but always against the United States.

Mr. Chester Bordeau: Oh yes, that could be.

That's correct.

Well, that's under the general provision about your laws of United States.

Yes, that's correct.

But not a specific provision about tax claims like the Tax Court that has a provision for its considered tax claims.

Justice Tom C. Clark: (Voice Overlap) negotiation under a term of the contracts, cancelled contracts, (Inaudible).

I think (Inaudible) --

Mr. Chester Bordeau: I am not too sure about that, sir.

Now, as I say one of the reasons that's been urged for the overruling of the Williams case has been this alleged disregard of the earlier cases.

I just part -- tried to meet it if I may, the objections that have been made to the Williams case and the reasons that it have been urged here for the overruling of the Williams case.

The first has been, as I suggested, that the Williams case did not follow the previous statements of observation of this Court with respect to the Court of Claims but I say that is not true.

It's true that there were observations and statements made by courts with respect to the Court of Claims and being a -- an Article III or constitutional court but it was only in Bakelite and in Williams that you have the square presentation of the issue and the consideration of the question and where the question was fully mooted and fully considered and decided by unanimous court.

Now, it has also been urged that Williams should be overruled for this reason.

It is urged that in the Williams case, it was stated by the unanimous court there that in addition to the fact that the Court of Claims performed solely congre -- congressional matters, susceptible to congressional dissemination, that in that case, it was stated by Mr. Justice Sutherland that in view of the fact that the courts up here -- that the United States District Courts did not have jurisdiction in those cases where the United States was a defendant under that clause reading controversies to which the United States shall be a party.

It was stated with reference to that clause in Section 2 of Article III by Mr. Justice Sutherland that under that clause, the United States could not be sued in courts created by Congress under Article III because it was not contemplated that the United States would be a defendant and it's through to that sort.

Now, the fact is, however, that in the Williams case, the statements made by Mr. Justice Sutherland were completely unnecessary to that opinion.

There had been a full determination and discussion made by the court with respect to the fact that the Court of Claims was a -- an Article I congressional court sitting at the whim and will of Congress, performing the work of Congress, relieving Congress of its burdens.

And the fact that it was unnecessary.

The fact that it was dictum was pointed out by Mr. Chief Justice Vinson in the Tidewater case, pointed out in the footnote at page 640, pointed out that the discussion there and this Mr. Justice Black joined in this particular opinion, it was pointed out that that statement by Mr. Justice Sutherland was unnecessary and was dictum.

Justice Hugo L. Black: In which opinion did you say?

Mr. Chester Bordeau: This is in the Tidewater case, Your Honor.

Justice Hugo L. Black: Justice Jackson's opinion?

Mr. Chester Bordeau: Not in Ju -- Justice Jackson and the opinion of Mr. Chief Justice Vinson, think that's page 640.

And I believe that Your Honor concurred in the -- that opinion of Mr. Chief Justice Vinson.

It was pointed out there that that part of the opinion was not decisive and therefore the reason urged here that because reference was made to that fact in the Williams case, if that is a reason for the overruling of the Williams case, I think is that with much merit.

Justice Felix Frankfurter: Mr. Bordeau, I hope you'll leave --

Mr. Chester Bordeau: Yes.

Justice Felix Frankfurter: -- yourself enough time to -- to deal with what was not involved in the Williams case, maybe the 1953 Act namely --

Mr. Chester Bordeau: Well, I do -- what I do want to that -- I'm -- I do want to --

Justice Felix Frankfurter: (Inaudible) -- well, it's beyond the power of Congress --

Mr. Chester Bordeau: (Inaudible)

Justice Felix Frankfurter: -- that you contend that it can create a constitutional Court of Claims.

Mr. Chester Bordeau: I would -- I would like to address myself to that right now although I didn't want to --

Justice Felix Frankfurter: Well, don't -- it take --

Mr. Chester Bordeau: -- take a few minutes to discuss the other reasons that are urged for the overruling of the Bakelite and Williams cases which I do not believe.

Justice Felix Frankfurter: I don't mean to derail you.

I just think that that's very important.

Mr. Chester Bordeau: Well, I -- if it's in Your Honor's mind right now, I -- I would like if I may to answer it right away.

In 1953, the Congress enacted an amendment to Section 171 of Title 28 of the United States Code by enacting an additional sentence to provide that the Court of Claims is hereby declared to be a court established to organize whatever particular work was under Article III that was in 1953.

In 1956, and again by additional legislation in 1958, the Congress enacted legislation which came out in the form of Section 293 (a) of Title 28 of the Judicial Code to provide that the Chief Justice could decide a justice of the Court of Claim or a judge of the Court of Claims to serve on a United States Court of Appeals as was done in this case with respect to Mr. -- to Judge Madden.

Now, it is our intention that that declaration by Congress in 1953 was a mere declaration without any effect.

The legislation of 1953 did not undertake to enlarge the powers or the functions of the Court of Claims.

It did nothing but spell out this statement a label that that it wanted to give to the Court of Claims.

It gave this label or gave this additional amendment to Section 171 for the reason of attempting to repudiate this Court's determination.

This Court's ruling with respect to the constitutional applications of the Act in effect in 1932 which Mr. -- Judge Williams attempted to have declared unconstitutional in the Williams case.

Now, what Congress has done, they said, we will supersede the Supreme Court of United States and we will interpret the Constitution.

And we don't agree with what Supreme Court has said with respect to the Constitution and we're declaring the law to be so and so.

We say that is a repudiation, a futile attempt to repudiate the rulings of this Court with respect to the Constitution and is completely ineffective.

We say it's also ineffective for this reason, that in making this declaration in 1953, as I stated before, the Congress did not enlarge the powers or functions in the Court of Claims.

It's been our contention here that the powers and the functions of a court are the characteristics which determine whether it is an Article I or Article III Court.

That was the test that was laid down in Bakelite.

In that case, Mr. Justice Van Devanter stated that the test is not what in -- what the intention of Congress was.

It was what was the actual jurisdiction conferred on a court.

What were the powers?

What were the functions conferred upon a court?

Those were the matters.

Those were the factors which determine its character as an Article I or in Article III court and not what Congress intended.

That statement again was then adhered to by Mr. Chief Justice Vinson in the Tidewater case to which I have referred and it's with -- with which opinion Mr. Justice Black concurred.

Justice Hugo L. Black: I didn't think I have.

Mr. Chester Bordeau: I -- I think -- I think that's true.

Justice Hugo L. Black: Justice Vinson's opinion?

Mr. Chester Bordeau: Oh, I'm sorry.

I'm sorry.

What I said, Justice Black, I should have said Mr. Justice Douglas.

Justice Hugo L. Black: Yes.

Mr. Chester Bordeau: I'm sorry.

It's Mr. Justice Douglas who concurred with Mr. Justice -- Chief Justice Vinson.

I'm sorry.

Justice Felix Frankfurter: Justice Black was one of the men who made harmony out of this Court.

Mr. Chester Bordeau: Well, I --

Justice Felix Frankfurter: You made three -- three and three contradictory opinion is equal to one vote company as I mean --

Justice Hugo L. Black: I've tried to make three and three, you mean to say?

Mr. Chester Bordeau: Oh, I have --

Justice Felix Frankfurter: In English, that's what --

Justice Hugo L. Black: I'm not a good mathematician.

Justice Felix Frankfurter: That was legal arithmetic.

Mr. Chester Bordeau: Well, I am trying to address myself to the question put by Mr. Justice Frankfurter as to the effect, if any, of the amendment --

Justice Felix Frankfurter: I do want to say before you go on that the Tidewater case really didn't raise these questions.

Mr. Chester Bordeau: Its --

Justice Felix Frankfurter: Really didn't raise these questions before.

The Tidewater problem --

Mr. Chester Bordeau: There's a lot of--

Justice Felix Frankfurter: -- wholly different problem.

Mr. Chester Bordeau: There were lots of -- lot of discussion on that and I agree with you Your Honor.

Justice Felix Frankfurter: What I mean is does the simple question was whether diversity jurisdiction --

Mr. Chester Bordeau: Is --

Justice Felix Frankfurter: -- could be exercised with reference to denizens of the district.

Mr. Chester Bordeau: I must say--

Justice Felix Frankfurter: Whether the district was a state or didn't have to be a state or so on.

Mr. Chester Bordeau: But there was full discussion, I assume, given by the justices of this Court that --

Justice Felix Frankfurter: I would say --

Mr. Chester Bordeau: -- was considered appropriate for the occasion.

Justice Felix Frankfurter: I would say -- I would say two-fold.

Justice Hugo L. Black: I would say that was equal, certainly enough.

Mr. Chester Bordeau: Now, I --

Justice Felix Frankfurter: A field then for discussion.

Mr. Chester Bordeau: I don't know that if I have answered the specific question, Mr. Justice Frankfurter, which you have put to me as to the effect if any of the legislation passed in 1953.

I say that juri -- that legislation accomplished nothing.

Its -- was a pure declaration without meaningful action taken by Congress that is meaningful in the sense that there was a conferring by Congress of any power or any function different from what have been theretofore conferred upon a Court of Claims.

Justice Felix Frankfurter: That's the deduction of your postulate that Congress cannot create a tribunal to which is given as exclusive jurisdiction that with which Congress can deal legislative, alright?

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: I've tried to follow your argument, I won't tell you what I think of it --

Mr. Chester Bordeau: Well--

Justice Felix Frankfurter: -- but I --

Mr. Chester Bordeau: I must say that in the presentation of this argument that I have been set by some of the contrary statements and conflicting statements that are made by this Court and I have been a little confused myself in trying to appreciate the full meaning of what has been said.

That is my answer to the question with respect to the legislation passed in 1953.

Now, the additional legislation passed in 1956 and in 1958 empowering the Chief Justice to make a designation and assignment of a judge of the Court of Claims to sit on the United States Court of Appeals, I say, is unconstitutional in this way that Mr. Justice or Judge Madden rather was appointed in 1941 confirmed by Senate to a court -- a Court of Claims.

Clearly, we submit, an Article I court without the guaran -- guarantee of life tenure and irreducibility in compensation that his assignment to sit in a court where that was a fundamental and basic constitutional requirement is -- was an unconstitutional legislation which permitted the -- the Chief Justice to meet this assignment and designation.

Justice Hugo L. Black: To what do you attribute his life tenure now and his power to hold for life?

To what do you exercise --

Mr. Chester Bordeau: I -- I -- you mean Judge Madden?

Justice Hugo L. Black: Yes.

Mr. Chester Bordeau: I see Judge Madden still doesn't have it.

I still see that Judge Madden up -- he's still sitting, I don't know if he resigned or not.

But if he is still sitting, he didn't -- retirement or otherwise on the Court of Claims, I say that still the Congress may repeal the statute whereby he was given life tenure --

Justice Hugo L. Black: So you say he has --

Mr. Chester Bordeau: -- tenure during --

Justice Hugo L. Black: You say he has a statutory and not a --

Mr. Chester Bordeau: That's a --

Justice Hugo L. Black: -- constitutional --

Mr. Chester Bordeau: Statutory as dis --

Justice Hugo L. Black: -- life tenure.

Mr. Chester Bordeau: Perhaps as distinguished from constitutional.

That's correct, sir.

Justice Felix Frankfurter: What you are saying is that's -- as though Congress dis -- tomorrow afternoon pass the statute giving the director amend for the Director of the Budget your life tenure.

That's all he has.

Mr. Chester Bordeau: That's right.

And I say it's only done with respect to Judge Madden and tomorrow or the day after or the next Congress may repeal this legislation.

And we must keep in mind, also, that in this legislation which purport -- which gave Judge Madden life tenure.

There was no provision as contained in Article III with respect to irreducibility in compensation that was not done.

And yet I don't think, maybe assumed so that the Congress could, certainly with respect to the compensation, reduce that at any time.

And I think they could do the same with respect to the tenure in office.

There is no statute that Congress passes that is irrepealable.

Every Congress may act as it sees fit in the interest of the public as it should be -- is required to, any succeeding Congress may do the same.

Justice Hugo L. Black: Would you mind stating to me in a sentence if you could, why, if you accept as fully valid the statement in Sherwood, forget all about dictum or whatever view points of it, you accept it now, why do you say it necessarily follows that Judge Madden's precedents and the -- this Court should invalidate the judgment?

Mr. Chester Bordeau: For this reason that Judge Madden not having the constitutional guarantee provided for by Article III of the Constitution with respect --

Justice Hugo L. Black: You mean of life -- you mean of life tenure?

Mr. Chester Bordeau: Of life tenure and irreducibility in compensation not having that and his sitting on a court where upon the appointment of a judge to that court, a judge immediately becomes vested with a constitutional guarantee of vesting of life tenure and irreducibility in compensation.

And I -- I go on from there to say that a litigant properly in United States District Court, properly in the United States Court of Appeals has the right, the constitutional right to have a court that is constituted of judges who possess that very fundamental qualification under Article III.

And that a denial of that right to a litigant in that court is a denial of the protection given the public by Article III with respect to life tenure and irreducibility of compensation and under Amendment V --

Justice Hugo L. Black: You consider --

Mr. Chester Bordeau: -- of the Constitution.

Justice Hugo L. Black: You consider it the same as though the Congress had passed the law which said that judges of the Court of Appeals for the Second Circuit should not have life tenure?

Mr. Chester Bordeau: That's correct.

Justice Hugo L. Black: Or as though you would say that if they assign eight, they have five judges from the Court of Claims so that the court would have five people there who did not have constitutional --

Mr. Chester Bordeau: That's correct.

Justice Hugo L. Black: -- life tenure --

Mr. Chester Bordeau: That's correct.

Justice Hugo L. Black: And security of salary and therefore they could not sit in that court.

Mr. Chester Bordeau: That's correct, sir.

Now, I don't have -- I haven't had the opportunity to discuss all of the reasons why I think that the grounds urged for over ruling.

Justice Felix Frankfurter: You go from your postulate to the irrelevance of these other indicia of life tenure and non-reductibility of sala -- salary instead of going from this indicia to finding out whether it's a court.

Isn't that right?

Mr. Chester Bordeau: It's a court.

I think it's a court.

They are courts under --

Justice Felix Frankfurter: I mean it's a court (Voice Overlap).

Mr. Chester Bordeau: -- Article I.

Justice Felix Frankfurter: Yes.

Mr. Chester Bordeau: They are courts under Article III.

Justice Felix Frankfurter: You go from your postulate -- you go from your postulate that this can't be done to saying that these legislative determinations are irrelevant instead of taking these incidents and from them deducing whether it could be an Article III court.

Mr. Chester Bordeau: I -- I don't say--

Justice Felix Frankfurter: Isn't that the test here?

Mr. Chester Bordeau: I don't see irrelevant, I say that these legislated enactments are --

Justice Felix Frankfurter: Well, you --

Mr. Chester Bordeau: -- are repealable.

They're not -- not --

Justice Felix Frankfurter: But I don't mean to say they're not irrelevant but the man doesn't get a salary he gets, but tomorrow it can be changed.

That they --

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: They'd be talking nothing.

Mr. Chester Bordeau: That's correct.

Justice Felix Frankfurter: They'd be talking nothing.

Justice Hugo L. Black: You take the Court of Claims, I assume, as being a court by the Congress has selected these people to serve it and deciding who it would pay what it owed if it does owe and accept them or reject them.

And that it could be the same whether they call them a court or commission.

Mr. Chester Bordeau: That's correct.

Justice Hugo L. Black: Or a committee of Congress.

Mr. Chester Bordeau: That's correct.

Justice Hugo L. Black: Same as giving the power, I assume you would say to the Finance Committee or the court -- the Committee on Claims in the Senate, giving them life tenure.

Mr. Chester Bordeau: That's correct, sir.

Justice Hugo L. Black: Are here appointed.

Mr. Chester Bordeau: That is correct.

Justice Hugo L. Black: (Inaudible)

Mr. Chester Bordeau: And I think that's Congress should have the right to have a court or an agency or a commission or a board to relieve it of the heavy burdens that it has in the performance of its functions.

This Court, that is a Court of Claims performs one of those functions.

Justice Hugo L. Black: Well, I can testify that's a heavy burden of tenure service are.

Mr. Chester Bordeau: Not having been honored but I've heard a great deal about it.

Now, as I -- in a few remaining minutes that I have, I would like to address myself very briefly to the question that's made by the opposition to the effect that we're right about all of these things.

And the court was improperly constituted and so forth then our opponents urged -- well, then we will consider Judge Madden as a de facto judge.

Let us consider him that.

Now, the cases that they cite with respect to de facto are cases, I submit to Your Honors, cases where there have been omissions to carry out formalities in the making of a designation or an assignment of a judge.

They have not been cases and there is no case that I know of whether you have what we have here, a constitutional impediment on the part of Judge Madden in sitting in the United States Court of Appeals.

I might -- I see my --

Justice Hugo L. Black: Can I ask you, am I wrong in taking that the court has -- that the Congress has now -- I'm -- I'm not sure about it, provided military Courts of Appeals with life tenure?

Chief Justice Earl Warren: No.

Justice Hugo L. Black: Have they done that here?

Mr. Chester Bordeau: I don't think they had.

I don't think they had.

Justice Hugo L. Black: What -- what term do they have?

Mr. Chester Bordeau: I don't think -- you consider it a term.

I don't know if a term has even set but those courts I can -- I understand are not the Article III courts.

Justice Tom C. Clark: 15 years?

Justice Hugo L. Black: No, I --

Mr. Chester Bordeau: 15 -- 15 years.

Chief Justice Earl Warren: (Inaudible)

Mr. Bordeau, you may have five minutes to summarize in conclusion if you -- if you wish it.

Mr. Chester Bordeau: I'd be happy sir.

Chief Justice Earl Warren: And you, Mr. Shapiro, if you need it, you may have five minutes more too.

Mr. Shapiro.

Argument of Morris Shapiro

Mr. Morris Shapiro: Mr. Chief Justice, may it please the Court.

I should like to address myself preliminarily to the question as to whether the question which this petitioner has raised in this Court for the first time, is a question that he can't raise.

And for that purpose, we associate ourselves fully with the argument made by Solicitor General in the Lurk case that the issue of Judge Madden's competence to sit in the Court of Appeals for Second Circuit has been waived by not being raised in that court when the appeal was heard.

May I indicate to this Court the extent of the neglect of this petitioner to raise that question.

The appeal was argued in the Court of Appeals on February the 8th, 1961.

The petition for certiorari was filed in this Court on July 21st, five months and 13 days later.

That was the first time this issue was raised by the petitioner.

It is no answer for the petitioner to say, "We weren't aware of this question.

We didn't know about the issue being raised in the Lurk case."

The fact is that the issue came up first in the Bakelite case.

That was decided in 1929 and reported in the official reports.

It was followed by the Williams case in 1933 that was, likewise, reported.

And that was followed by the comment which has been quoted from the Sherwood case in 1941.

And I think it's no answer from my adversary to say that he was unaware of what this Court said in these several cases as an excuse for not having raised that issue before the Court of Appeals.

Now, the public policy phase of this question, I think, is also relevant.

The Administrative Office of the United States Court in answer to an inquiry by me indicated on the date of December 26, 1961 that three judges of the Court of Claims have from time to time been assigned by the Chief Justice to sit in the various Courts of Appeal both in the District of Columbia and in the Second Circuit.

The only statistics available as to the number of cases which they heard and participated in decision apply only for the year 1961 at which time the record indicates that Judge Madden in a period of one week.

We can question where this particular case was argued during that one week where which statistics are available participated in 18 cases.

Now, if we follow my adversary's position, that there is a jurisdictional defect in the sitting of Judge Madden and the assignment of Judge Madden to Court of Appeals and that that jurisdictional defect can be raised at any time five months and 13 days later as it was in this case for five years later.

Then of course, the decisions in all of these cases would be of no effect.

And the questions could be raised by a motion to vacate the judgments.

Justice William O. Douglas: Of course, you have here the unique fact that without Madden there's one judge on each side of the question below.

Mr. Morris Shapiro: Well, I don't know but that may have occurred in other cases, too.

There -- there are no statistics available to us although we've made inquiry which might not indicate that that's situation might prevail.

But, I think it's mere coincidence that you have this situation of one judge dissenting with Judge Madden being part of the majority.

I think that's pure coincidence because if the question should have been raised then as a matter of a public policy that I believe disposes of the question.

Justice John M. Harlan: Are there any figures showing a number of times the Court of Claims judges have been assigned to Courts of Appeals or --

Mr. Morris Shapiro: Yes, I have those.

Justice John M. Harlan: Have you?

Mr. Morris Shapiro: Yes.

Justice John M. Harlan: Were --

Mr. Morris Shapiro: Judge --

Justice John M. Harlan: Are they -- are they printed in your brief?

Mr. Morris Shapiro: No, they are not.

This information came to us later.

And we would be pleased to submit it in the supplemental brief would you --

Justice John M. Harlan: You got it by years?

Is it tabulated by years or --

Mr. Morris Shapiro: We -- we only know the period of time that they sat tabulated by years.

We don't know the number of cases.

May I just indicate, Your Honor, what that situation is?

Justice Felix Frankfurter: Beginning with what year?

Mr. Morris Shapiro: At 1958.

And Judge Madden has sat regularly each year since 1958.

In 1958, he sat for a period in February and again in June in the Court of Appeals for the District of Columbia.

Commencing in 1959, Judge Madden has sat regularly in the Court of Appeals for the Second Circuit for a period of one week each year, 1959, 1960, 1961.

In addition to that, Judge Laramore and Judge Whittaker of the Court of Claims have sat in the Court of Appeals for the District of Columbia only in the year 1958 and not since.

In other words, just to summarize, Judge Madden has been the only Judge who has sat for any longer period of time beyond the year 1958.

And of course, in the Lurk case, we have the situation of Judge Jackson and so far as Judge Jackson is concerned, he sat in the Court of Appeals for the District Court of Columbia for the period of 10 days in 1958.

Justice Hugo L. Black: If you assume that they are right, just assuming that, and telling the court its different, just assume that, you assume they are right in saying that -- that no judge of the Court of Claims has constitutional rights to sit on the Court of Appeals, suppose all three of them have been judges of Court of Claims, would you still say they'd have to raise it?

Mr. Morris Shapiro: Yes.

Yes.

And I think if Your Honors will examine the three cases which have been cited by the petitioner on this appeal, the American-Foreign Steamship case, the Ayrshire Collierie case and Frad against Kelly.

In all three cases where there was a claim of the lack of jurisdiction in the court in all three cases it appeared beyond contradiction that the protest was made at once at the earliest possible moment when the protest was made apparent or the basis for the protest was made apparent.

And in -- in my view, I think the reverse of that situation would be true that absent such a protest when the defect becomes apparent, the question cannot be raised at a later date.

Of course, in our case, we take a position that in the absence of a protest by the petitioner in the Court of Appeals, Judge Ma -- Madden had all of the characteristics of a de facto judge in the Court of Appeals.

Justice Hugo L. Black: Suppose -- suppose that Congress had provided that United States Commissioners could be designated, they had their jobs for life.

Would say they could sit, could have to be no (Inaudible) there has to be challenge?

Mr. Morris Shapiro: Well, I think you have to go one step further.

In other words, the man who was appointed to sit in the Court of Appeals must be a judge.

He must have been performing judicial duties.

In other words, I think to take the question posed by --one raised by Mr. Justice Douglas, you couldn't take a commissioner from the Security and Exchange Commission or a retired Commissioner from the Securities and Exchange Commission and permit him to sit on the Court of Appeals.

You have to have a judge who has been performing judicial duties and who has engaged in judicial business and who has come from a court and authorized him to sit and there must have been some regularity or attempted regularity of his designation.

Justice Hugo L. Black: And where would you draw the lines, suppose of the Court of Military Appeals?

Mr. Morris Shapiro: A Court of Military Appeals is -- is composed of judges who do not have life tenure.

Justice Hugo L. Black: Suppose, they give them life tenure.

Mr. Morris Shapiro: Well, I should suppose that if you have a Court of Military Appeals that had all of the premise that exist with respect to the U.S. Court of Appeals and if they were performing judicial business if they had life tenure and so on, all of these things --

Justice Hugo L. Black: They had legislated life tenure, you mean.

Mr. Morris Shapiro: If the--

Justice Hugo L. Black: Not constitutionally.

Mr. Morris Shapiro: If -- if they were performing judicial business which could be placed within the scope of Article III -- Article III, I must emphasize that as a necessary element in this situation.

Justice William O. Douglas: For some commiss -- Commissioners do -- perform that kind of business.

Mr. Morris Shapiro: A commission may perform such functions.

But it doesn't follow that just because a commission may perform such functions that a commissioner may be assigned to the Court of Appeals.

In other words, you have to have that total picture.

And you can't segregate and carve out some of the elements and say, "Well, could this man go to the Court of Appeals and sit."

Obviously, not.

But in this case, we had all of the elements that went into the making of Judge Madden as at least a de facto judge of the Court of Appeals.

Chief Justice Earl Warren: (Inaudible)

Mr. Morris Shapiro: One important element --

Chief Justice Earl Warren: Mr. Shapiro, the -- the Congress, at least in the last session was giving some consideration to the establishment of a -- a court to settle the pension claims, veterans claims of all kinds.

And suppose they did set up a court just for that -- just for that purpose and said we'll give life tenure and -- and protection against reducing their salaries, would that -- would that in and of itself make -- make that the kind of a court that -- that would be Article III court?

Mr. Morris Shapiro: Well, I don't want to stray too far on --

Chief Justice Earl Warren: Well, I don't think that straying very far.

They are -- they are deciding claims against the Government just as the Court of Claims is deciding claims against the Government and -- and supposing that they give them that power and -- and said, "Well, now, they are an Article III court, would that -- would -- would those things in and of themselves make it a three-judge court?"

Mr. Morris Shapiro: I --

Chief Justice Earl Warren: Or (Inaudible) --

Mr. Morris Shapiro: I would -- I would say --

Chief Justice Earl Warren: That they would -- Article III court --

Mr. Morris Shapiro: I would say that if they were handling cases, determining cases which arise under the laws of the United States in the language of Article III, if they were given life tenure, irreducibility of compensation and if their judgments became final and they had the authority to render final judgments and if they were constituted as a court engaged in the performance of judicial duties and they had all of that trappings of a court, they are a court vested with judicial power.

Chief Justice Earl Warren: Yes, I just --

Mr. Morris Shapiro: And it isn't an answer to say, "Well, its specialized jurisdiction."

Justice Felix Frankfurter: Congress created a few years ago there is now sitting an Indian -- a Commission on Indian Claims, I'd like to have somebody tell me why Congress can, instead of doing what it did to creating a commission with limited tenure because it was expected, hopefully expected that those claims will be settled in a few years and therefore you don't want to have a lot of life long functionary.

I wish somebody would tell me so I can understand it, why Congress cannot create a court to deal with claims arising under treatise with the Indians and under statutes in relation to the Indians and give determination of those issues with adjudication that is not subject at least to revision by the Secretary of the Interior or Secretary of the Treasury, bring to one side the power Congress to withhold appropriation.

Why Congress couldn't -- instead of giving that jurisdiction as it well might as it has in the past the regular so-called Article III court?

Why it couldn't deposit that adjudicatory function into a separate court.

I like to have somebody explain that to me.

Chief Justice Earl Warren: Well, of course the issue --

Mr. Morris Shapiro: Of course --

Chief Justice Earl Warren: Is that the question -- is that question before us?

There is no -- I don't think anybody questioned with what Congress could establish a court of that kind.

But my question knowning the -- went to this, does that in and of itself make it an Article III court.

And that's the only problem we've got here.

I don't know that anybody is contending that Congress had no power to establish a court of that kind.

Justice Felix Frankfurter: But I was --

Chief Justice Earl Warren: (Voice Overlap)

Justice Felix Frankfurter: -- addressing myself to the Chief Justice's question that -- but as to -- I see no reason why Congress couldn't have done what it didn't do in the cases giving rise to the so-called Hayburn's case, which involved six separate determination for the determination of pension claims by veterans of the revolutions, of the American Revolution.

I see -- I don't see why Congress can't confer that either on court spread throughout the country or a tribunal exclusively dealing with it if it didn't do -- if it -- if it avoids doing what it did in that case, namely to make the determinations contingent upon the Secretary of Treasury or War, I forget which, I think Treasury instead of War, approving of it.

But I was addressing myself with reference to these Indian claims, of these pension claims to Mr. Bordeau's postulate that because Congress would pass an act, it couldn't turn it into an honest to God litigation before an honest to God court.

Mr. Morris Shapiro: Well I -- I take the position that although we -- we -- one say that this was necessary to reach that point.

In our case, that Congress can do this and if we meet all of the elements that are essential to the creation of an Article III court that is to say, the creation of a court within the scope of the language of Section 2 of Article III vested with that kind of jurisdiction with the power to render final judgment.

The mere circumstance that the court is exercising jurisdiction between litigant A and litigant United States Government is not in court here.

Justice Felix Frankfurter: Mr. --

Mr. Morris Shapiro: If --

Justice Felix Frankfurter: -- Shapiro, I find the two lawyers don't dwell on what seems to me to be the operative concept of this problem, namely the term of the concept "judicial power."

The question is, is it judicial power in the undefined sense in which Article III used them and the undefined sense which defines from the practice of those people that Holdsworth and (Inaudible) construe that clause the things familiarly were decided by Courts of Westminster.

That's the guts of the case to me.

What its judicial power -- of its judicial power and there's nothing in Article III or any other part of the Constitution which says you can't give specialized limited jurisdiction as Congress had done time and again with reference to the court, the federal courts the so-called "unquestioned federal court."

Mr. Morris Shapiro: May I, in this context, read to Your Honors what President Lincoln said in 1861 when the issue was of considerable and critical importance to give to the Court of Claims as it had recently been constituted the power to render final judgments as -- as one of the elements of the judicial power.

And I think it's important as denoting the statutory intent when Congress acted as it did in 1863 and ultimately in 1866.

Justice Felix Frankfurter: Well, you should state what preceded that message of Lincoln.

Mr. Morris Shapiro: I -- I should be delighted to do that.

Here, up to 1855, as the Court knows, all claims against the United States Government -- Government were presented to the Congress.

In 1855, the question arose as to the manner in which Congress could divest itself of the burden of passing upon these claims.

And so they decided after the consideration of whether a commission should be appointed or commissioners delegated to the task, they decided to create a court, and that court was the Court of Claims.

And it was delegated with the job -- vested with the job of hearing and determining claims against the United States Government.

But Congress at once modified this power to hear and determine by saying that the report on these claims as they were determined were to be referred back to Congress which in effect gave to Congress the right to reverse, to ignore --

Justice Felix Frankfurter: I must correct you -- I must correct you.

Section 14 of that Act gave the Secretary of Treasury -- of the Treasury power to modify the determination of the Court of Claims.

That was the violence.

Mr. Morris Shapiro: In -- in -- in 1861, at the outset of the civil war and with the enormous rise in claims against the United States Government, the issue arose of having a speedier and a final determination of these claims.

And the message of President Lincoln was indicative of the desire of the President and the later action of Congress confirmed that, that the intent was to vest them with judicial power.

And if I may be permitted, I should like to quote from President Lincoln's message.

"It is as much the duty of Government to render prompt justice against itself in favor of citizens as it is to administer the same between private individuals.

The investigation and adjudication of claims in their nature belonged to the judicial department.

It was intended by the organization of the Court of Claims, mainly to remove this branch of business from the halls of Congress."

Now, Congress acted once again in the light of this message.

And this Court, after Congress acted in the Gordon case, held that the act of Congress did not represent a final judgment in the legal sense because there was a necessity of the Court of Claims reporting to the Secretary of the Treasury for the purpose of appropriation.

And Congress once again acted in 1866 by removing this offensive clause that was referred to in the Gordon case.

And so from 1866 until 1929, for all purposes, the Court of Claims had all of the characteristics of a court vested with those powers which in the total sum represent the judicial power.

And there was never any question raised about it until Bakelite and Williams.

Now, when this Court held as it did in Bakelite and Williams, Congress once again acted in 1953.

And Congress declared that the Court of Claims was an Article III court.

Now, at the very least --

Justice Hugo L. Black: Does that --

Mr. Morris Shapiro: At --

Justice Hugo L. Black: -- settle it?

Mr. Morris Shapiro: What, sir?

Justice Hugo L. Black: Does that settle it?

Does that settle the question?

Mr. Morris Shapiro: In my view, it does.

But I say at the very least.

That Act of Congress in 1953 is entitled to great respect as indicating what Congress has decided was its own intent as a body acting at some prior time.

Justice Hugo L. Black: Would you agree or disagree with the statement that Article III at least contemplates that this shall be some courts exercising some kind of judicial power where the judges have to be appointed for life and where they cannot have their salaries reduced?

Mr. Morris Shapiro: Yes.

I agree to that.

And the Court of Claims is such a court.

Justice Hugo L. Black: Would you agree that Congress could've exalt this, create new courts, legislative courts so that they can take the place of all the courts that heretofore have had judges appointed for life just by naming other courts.

Saying they could have a job for life, Congress could thereby do away with any courts under Cons -- under Article III.

Mr. Morris Shapiro: Well, I -- I should suppose that Congress could do that.

But the point of the -- of the argument is this, that having created the Court of Claims and having provided for life tenure.

So far as the judges of that court are concerned and having granted to them what we termed the judicial power that is --

Justice Hugo L. Black: And -- and granted them by legislative exercise of legislative power, life tenure which could be taken away tomorrow.

Mr. Morris Shapiro: Well, how else could this be done?

The power to -- the power to create inferior courts has been vested in the Congress.

The only court mentioned in Article III is this Court, and then it goes on to refer to inferior courts.

And inferior courts such will have the --

Justice Hugo L. Black: Are they to be appointed for life or not?

Mr. Morris Shapiro: What's sir?

Justice Hugo L. Black: Are they do be appointed for life or not?

Mr. Morris Shapiro: They shall have life tenure.

But the power to create inferior courts is vested in the Congress, every inferior court derives its authority and its powers at its source of appointment from legislation enacted by Congress.

And that applies to the District Courts, the Courts of Appeal, the Court of Claims, the Court of Custom and Patent Appeals and many other courts of a wide variety.

Justice Felix Frankfurter: And abolish them tomorrow, all of them?

Mr. Morris Shapiro: That's correct, sir.

Justice Felix Frankfurter: It couldn't -- it couldn't terminate the service the tenure of the judges but it could abolish the court, not with all court out, in connection with the Commerce Court.

Mr. Morris Shapiro: That's correct, sir.

Justice Felix Frankfurter: The court was -- the court was created.

The court was abolished.

They were judges having all the incidence of article -- so-called Article III judges and therefore their tenure couldn't be terminated but their business was put out of business.

Justice Hugo L. Black: Does it follow from that that the Congress has power to create courts to try murder cases, contract cases, all other kinds of litigation between different parties and provide that they shall not have tenure for life.

Does that follow from the fact that they can abolish them?

Mr. Morris Shapiro: I would say that if they seek to this in a court, judicial power as we understand it from Article III Section 2, then all the other things must follow and that is to say that --

Justice Hugo L. Black: What other things?

Mr. Morris Shapiro: Such as life tenure, that irreducibility of compensation --

Justice Hugo L. Black: You mean follow constitutionally?

Mr. Morris Shapiro: Yes.

Chief Justice Earl Warren: Does that include cases and controversies?

Mr. Morris Shapiro: Yes.

Chief Justice Earl Warren: Only?

Mr. Morris Shapiro: Well, it would include those types of cases which are within the scope of Article III that is to say, those cases in whi -- lower equity arising out of the Constitution, the laws of the United States, treaties made and so on.

If they don't arise in that fashion, of course, Congress could do otherwise.

And that was always the attitude of this Court for a period of 101 years from Canter until Bakelite from 1828 until 1929.

There was no deviation at all in the attitude of that court.

And in the Canter case, we had a very specialized situation thereof necessity the -- the life of the court which was adjudicating controversies in the territory of Florida was temporary.

The tenure of the judges was temporary.

And -- and this Court in 1828 carved out for the first time this concept of a legislative court which would apply and which they did apply to courts in territories and to counsel of courts.

But for 101 years, that principle was not extended until the issue came up in Bakelite and in Williams.

And I say, that if you have the Bakelite and Williams case on the one hand, dealing as they said with what they refer to as the intent of the Congress as to the power of the court.

And on the other hand, a manifestation of the intent of the Congress as exemplified, characterized by the 1953 Act, then I say that Bakelite and Williams must yield to the 1953 Act.

Justice Hugo L. Black: Does that mean that in order to sustain your position, Bakelite and Williams must be overruled?

Mr. Morris Shapiro: Not at all.

The contrary --

Justice Hugo L. Black: Why?

Mr. Morris Shapiro: The contrary because the 1953 Act came after Bakelite against Williams and this Court could in all --

Justice Hugo L. Black: Of the 1953 Act, was an act of Congress providing for that which these other cases, as I read them, indicated was required by the Constitution.

Mr. Morris Shapiro: In the Bakelite -- in the Williams case, this Court held the basis of the court's reasoning was that the fact that the United States was a party defendant did not make the cases of -- as -- of cases considered by the Court of Claims, cases which involved the judicial power of the United States.

In the Williams opinion and in the Bakelite opinion, the Court never touched upon the question of the judicial power as it extended to all cases arising under the laws of the United States.

Now, I don't know whether the Court considered it or not.

But clearly here was a broader, a broader scope for the grant of judicial power.

And I say that the Court of Claims is dealing constantly with cases which arise under the laws of the United States and it does all of the other things that any other court could do with the jurisdiction that it exercise are under appropriate legislation.

And the mere circumstance that it's an act of Congress doesn't differentiate the Court of Claims from the District Court or the Court of Appeals.

And while I -- I want to emphasize once again that Williams and Bakelite need not be overruled.

I -- I want to say that they need not be overruled for several reasons.

This Court could hold that there was a waiver of this question.

This Court could hold that at the very least, Judge Madden exercised de facto authority.

And this Court could hold that the 1953 Act was an expression by Congress that this Court was vested beyond all prevention of doubt with judicial power.

And in our view, Congress is the source of such a declaration in all cases.

Justice Felix Frankfurter: If we don't reach -- if we don't reach the question, the ultimate reach of the question that whether the Court of Claims is a constitutional court, whether the Court of Customs and Patent Appeal, whether the District Court has rightly deemed the constitutional court or whether dissenters were right in O'Donoghue.

If we go off on this national law adjudicate on de facto jurisdiction of a specialized situation of the district, we leave this whole apostating, metaphysical mess where it is now.

Mr. Morris Shapiro: I just want to make one final comment, and I think these deals with the question raised by Mr. Justice Frankfurter.

The Court of Claims' determinations are not subjected to the will of Congress.

The characteristic of a court is to adjudicate a controversy between litigant A and litigant B whether they'd be private litigants or the Government.

Once that court has made a final determination, it has acted in terms of an expression of judicial power.

The fact that Congress could sit back and say try to enforce that judgment is of no relevance whatever in terms of a consideration of judicial power.

The fact is that when the Court of Claims act, it renders a judgment which is final for all purpose.

And it is a judgment which Congress cannot reverse by any act of Congress.

That it cannot do.

A judgment may be ineffective, but the judgment itself is not at the whim of Congress.

And for those reasons, we say that the judgment of the court below should be affirmed.

Chief Justice Earl Warren: Mr. Solicitor General.

Argument of Cox

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

The United States sought and was granted leave to intervene in this case because it drew and question the -- the constitutionality of an act of Congress.

In this instance, the Act of Congress authorizing the Chief Justice to assign judges to the Court of Claims to sit in other courts.

And of course, it was under that statute that Judge Madden was assigned to the Second Circuit.

I intend to direct the bulk of my argument to the constitutional question with which we're directly concerned here.

But I would like to emphasize that in our view, this case like the Lurk case argued last Wednesday, can and should be decided upon the ground that this issue concerning the qualifications of a particular judge to sit in the court, is an issue which can and was waived by the failure to raise it in the court below.

And we think it's therefore unnecessary and would indeed be wise not to embark into this constitutional thinking, if I may call it, sir.

Justice Felix Frankfurter: Why do you think that?

Except on the general question with which I have great sympathy, you shouldn't reach constitutional questions but it leaves -- it leaves the Chief Justice of United States hanging on a limb, does it?

Mr. Cox: It -- it leaves that question unresolved.

Justice Felix Frankfurter: Yes.

Mr. Cox: Yes, no doubt about -- there was no doubt about that.

Well, I simply think that a -- of the -- the general failing that Your Honor expressed I think, where one has a series of cases that there's uncertainty about them, where the problem in terms of our history, as well as the analysis as a confused and confusing one that it is wise to decide as little as one can at a time.

That's the only -- I've no particularsm that it's conceivable that in view of the administrative problems that that general admonition is applicable.

I have a sense that it -- is --

Justice Felix Frankfurter: The reason I --

Mr. Cox: -- particularly pertinent here.

Justice Felix Frankfurter: I think it's particularly not pertinent here, because we are not dealing with a social policy.

We're not dealing with a legislative policy.

We're dealing with something regarding which this Court as -- or ought to have peculiar competence for decision since it concerns the internal arrangements of the federal judiciary.

Mr. Cox: Well, I -- I have prepared to go on and argue the question and give the Court such assistance as I can on the constitutional question.

Justice Felix Frankfurter: I quite appreciate your position and as you know it goes against my --

Mr. Cox: Yes --

Justice Felix Frankfurter: -- strong general attitude most of the time.

Mr. Cox: I would like to develop in the half hour available to me four points.

First, I shall argue to the Court and I think they're really can be very little dispute about this.

The judge by the character of its business by its organization has the powers that it exercises, by the quality including the finality of its judgments, and by the security of tenure and compensation that the Congress sought to give the judges.

The Court of Claims is like our normal Article III courts.

Second, I shall point out that Congress has from at least 1863 forward and we think from the beginning, intended to establish the court as an art -- Court of Claims as an Article III court.

Then I would like to say a few words about the -- what we deem to be the faults and the reasoning in the Williams case.

And finally to discuss the congressional reference jurisdiction of the Court of Claims, under which it does occasionally, not more than once a year on the average render reports to the Congress of which are not strict in judge -- judgments and which therefore does bear upon its standing in the constitutional separation of powers.

May I first say just one word about the jurisdiction of the Court of Claims, it is conferred jurisdiction under the statute to hear claims against the United States founded upon the Constitution, upon any statute, upon a regulation of an executive department, or upon a contract expressed or implied.

That is the great bulk of the Court of Claims' jurisdiction.

It also has a certain appellate power in tort cases against the United States under the Tort Claims Act.

The parties may by agreement go to the Court of Claims from the District Court, instead of going to the Circuit Courts of Appeals.

Justice Potter Stewart: Under the Federal Tort Claims Act?

Mr. Cox: Yes.

Justice Potter Stewart: Does that ever in fact happen?

Mr. Cox: I know of no instance in which it happened but I didn't make a thorough study.

It requires consent of both parties and it seems to me rather unlikely that would happen.

But I thought perhaps it should be useful to have described what kind of cases the court may get.

It may, of course, hear tax cases and does hear tax cases seeking a refund under the first general head of jurisdiction.

It hears cases from the Indian Claims Commission.

And it does have today this congressional reference jurisdiction.

It's only the old executive reference, as been abolished by statute but the Congress does very occasionally ask the Court of Claims to report the facts in a situation where it does not grant judgment.

And I'm going to deal with that at the end of my argument even though it does seem to me to be one of the very essential considerations.

Chief Justice Earl Warren: General, are those Indian claims really cases and controversies --

Mr. Cox: As to -- as to some of them, I think, there's a question, Mr. Chief Justice.

The authority of the Indian Claims Commissions to make the words to the Indians, as I understand it, and I think I'm right with that.

I'd -- I don't want to go too far in assuring the Court of things that I've -- have only a general idea about it.

As I understand it, the Indian Claims Commission, may make awards to the Indians on grounds that would not be applicable in a suit between Your Honor and myself or other private citizen.

And it therefore occurred to me when the question was asked earlier about setting up a court to hear claims of the Indians that if they -- it had the full power that the Indian Claims Commission does but then it would seem to me that it was not the type of case or controversy or the type of judicial business that the framers of the Constitution had in mind when they wrote Article III.

And that therefore, a man appointed to sit whatever term he was given by Congress would not be entitled to the security that Article III gives to a federal judge.

Justice Felix Frankfurter: We've had a petition for certiorari coming from the Court of Claims reviewing Indian Commission issues?

Mr. Cox: I -- that's true.

But it's my understanding is that since the jurisdiction of that commission was increased and it was brought in the early 1950s, I think --

Justice Felix Frankfurter: I mean within a year, I think, we had a petition.

Mr. Cox: You -- you've granted just one since that broadening of jurisdiction.

And it may be that some questions will arise if the cases that are taken up are not ones founded upon the narrower grounds, I think were applicable in all instances.

Justice Felix Frankfurter: But if you are suggesting that Congress cannot create a court to which is given what I call traditional conventional Westminster court jurisdiction but also gives it none such or give it a valuable opinion that that precluded from being a court for cases that are cases in controversy, is that what you're suggesting?

Then you'll get into a lot of trouble I suggest, suppose with the reference to the Court of Claims and with reference to the District Court of Columbia.

Mr. Cox: Well if it -- it involves a lot of trouble and I was not intending to go beyond saying at this moment that some of the business that may come before the Indian Claims Commission is not necessarily judicial business judge by the time -- by what was heard at Westminster or thought of his judicial business in 1789.

I -- I did not intend to go beyond that point at all to reply anything further.

Chief Justice Earl Warren: I -- the reason I asked you the question, I seem to remember I may be wrong but that there's something in that Act which says that the Indian Claims Commission may decide those claims without regard to law --

Mr. Cox: Yes.

Chief Justice Earl Warren: -- correctly.

Mr. Cox: Yes.

They -- it does have a -- it has a broader power.

And I don't think this Court has ever -- has taken a case involving a grant based on the broader ground.

I've -- it has taken at least one case since the jurisdiction was brought.

But I don't think that that involved the claim on the broader ground.

And I know we've had discussion in the department as to whether some of the denials of certiorari in these cases might not have been based in part of the theory that the Indian Claims Commission was no longer simply awarding judicial judgment.

Justice William O. Douglas: We had one --

Mr. Cox: But that's --

Justice William O. Douglas: We had one case where the question arose as to the right of the parties to get interest on the judgment.

You remember that case?

Mr. Cox: Yes.

Yes.

Justice William O. Douglas: So in that I -- I gather we ended up rather sort of an advisory opinion.

Mr. Cox: Well in -- that the underlying judgments may have been based upon contract say, or --

Justice William O. Douglas: Knowing --

Mr. Cox: -- something that wasn't simply generalized --

Justice William O. Douglas: We've --

Mr. Cox: -- yes, by the Federal Government.

Justice William O. Douglas: We refused the allowance of interest.

Mr. Cox: Well, for that -- that -- that still could be based on a judgment based on legal right underneath.

Justice Felix Frankfurter: But -- that the question before us wasn't this but the power of a Commission, the question was as to the judgment of the Court of Claims on review of something that the Commission did.

Mr. Cox: Commission had done.

Justice Felix Frankfurter: And therefore, of course, it was not only the Court of Claims but all the courts of the -- all the Courts of Appeal of this country review determinations of non-judicial bodies.

Mr. Cox: This would take us into an area where I -- I'm afraid I'm not qualified to be much help as to whether the scope for the grounds of review by the Court of Claims.

If they were confined to questions of law in the conventional sense then, of course, this would be like review of other administrative agency action.

Justice William O. Douglas: I don't see why you should be reluctant to get into that field.

We've been in and out of it for several times in the last few days.

Mr. Cox: I guess that I had a different field in mind that Your Honor does.

I do sub -- submit --

Justice Hugo L. Black: Before you leave the Indian business, I may say that I think there has been a question raised about that being judicial whether that's a power to exercise in a judicial way or just under the power of Congress to give away its fund as it wishes?

Justice Felix Frankfurter: But it would have -- it would've had to be not what we thought about the Indian Commision but what we thought about the exercise of power by the Court of Claims.

Mr. Cox: Yes, yes, though there -- there's no -- when one is concerned with the --

Justice Hugo L. Black: I think (Voice Overlap)--

Mr. Cox: -- judicial quality of the --

Justice Hugo L. Black: -- about that also?

Justice Felix Frankfurter: That's a very different question because this Court react and reviewed time out of mind since the 16th -- no the second Gordon case early in the 1917, I think.

This Court have been reviewing adjudication by the Court of Claims for nearly 100 years during all of which time the Court of Claims had also had what you indicated, inquisitorial or investigatorial power before Congress.

But for 100 years, this Court had been sitting and deciding that the Court of Claims is a -- the judicial body for purposes of case of controversy to give this Court jurisdiction although contemporaneously the Court of Claims have been doing a lot of non-judicial business.

Mr. Cox: Not only does it seem to be to establish that, but to establish two other points which are relevant here.

One is that this is not only a case that the Court of Claims' business.

It's not only concerned with cases or controversies but that these are cases or controversies to which the United States is a party or in the other event which arise under the laws of the United States.

I think that it's quite clear that they fall under both heads of Article III power and in that respect that the Williams case was erroneous.

Furthermore, I would emphasize one other thing about the nature of the Court of Claims' business.

It's been suggested during the argument by Mr. Bordeau and by Mr. Gressman last week, that a court cannot be an Article III court unless it hears some cases that must be heard by courts.

Apparently, they've conceived of two kinds of judicial power, one which only Article III courts can exercise and another which Article III courts can but don't have to.

Now, some of the business of the Court of Claims, it seems to me, is the kind -- involves the kind of question, which this Court has held, must be the subject of a judicial determination.

I have in mind particularly the cases where the United States is sued for a taking not by eminent domain but simply by a superior force, the Standard Oil.

The early case of the Monongahela Navigation Company, this Court said that the determination of what is just compensation is peculiarly a judicial function and must be det -- must be made in the last instance by a court.

So that we think on this account, the Court of Claims clearly exercises judicial power in the ordinary sense of looking to see what it does.

It's also plain that the Court is organized in the manner and has the powers including the contempt powers and subpoena power which go to the court.

And I would emphasize third that its judgments every since the Act of 1866 have been final and binding.

It is true that the Court has no power to levy execution.

The payment depends of a -- upon Congress passing in appropriation.

And there is a suggestion in the opinion prepared by Chief Judge -- Justice Taney in the Gordon case that -- that was the -- that the lack of power to levy execution was the fault in the 1863 statute.

Indeed, he dwelt on that somewhat more, I think, than he did on the power of the Secretary of the Treasury to revise.

But since the power of the Secretary of the Treasury to revise was struck down, no one has ever questioned of the finality of the Court of Claims' judgment or the justiciability of the cases that are submitted to him.

Indeed, each judgments are exactly like those rendered by the District Courts under the Tucker Act, exactly in this respect like those rendered by the District Courts under the Tort Claims Act.

And I think our history makes it plain that one can have a legally binding judgment at least against the sovereign without having to have the Court have power to levy execution.

Chief Justice Earl Warren: We'll recess now until 2:30.

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